Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as “the organizational advantage,” rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital; (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and proces...

https://www.jstor.org/stable/pdfplus/259373.pdf

Social Capital, Intellectual Capital, and the Organizational Advantage

In this article we offer a view that suggests that a firm's critical resources may span firm boundaries and may be embedded in interfirm resources and routines. We argue that an increasingly important unit of analysis for understanding competitive advantage is the relationship between firms and identify four potential sources of interorganizational competitive advantage: (1) relation-specific assets, (2) knowledge-sharing routines, (3) complementary resources/capabilities, and (4) effective governance. We examine each of these potential sources of rent in detail, identifying key subprocesses, and also discuss the isolating mechanisms that serve to preserve relational rents. Finally, we discuss how the relational view may offer normative prescriptions for firm-level strategies that contradict the prescriptions offered by those with a resource-based view or industry structure view.

https://www.jstor.org/stable/pdfplus/259056.pdf

The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage

The authors develop a framework for understanding the behaviors and practices of service providers that build or deplete consumer trust and the mechanisms that convert consumer trust into value and loyalty in relational exchanges. The proposed framework (1) uses a multidimensional conceptualization for the trustworthiness construct; (2) incorporates two distinct facets of consumer trust, namely, frontline employees and management policies and practices; and (3) specifies value as a key mediator of the trust–loyalty relationship. The authors test the proposed model using data from two service contexts—retail clothing (N = 264) and nonbusiness airline travel (N = 113). The results support a tripartite view of trustworthiness evaluations along operational competence, operational benevolence, and problem-solving orientation dimensions. Moreover, the authors find evidence of contingent asymmetric relationships between trustworthiness dimensions and consumer trust. For frontline employees, benevolent b...

Consumer Trust, Value, and Loyalty in Relational Exchanges:

Previous research suggests that knowledge diffusion occurs more quickly within Toyota’s production network than in competing automaker networks. In this paper we examine the ‘black box’ of knowledge sharing within Toyota’s network and demonstrate that Toyota’s ability to effectively create and manage network-level knowledge-sharing processes at least partially explains the relative productivity advantages enjoyed by Toyota and its suppliers. We provide evidence that suppliers do learn more quickly after participating in Toyota’s knowledge-sharing network. Toyota’s network has solved three fundamental dilemmas with regard to knowledge sharing by devising methods to (1) motivate members to participate and openly share valuable knowledge (while preventing undesirable spillovers to competitors), (2) prevent free riders, and (3) reduce the costs associated with finding and accessing different types of valuable knowledge. Toyota has done this by creating a strong network identity with rules for participation and entry into the network. Most importantly, production knowledge is viewed as the property of the network. Toyota’s highly interconnected, strong tie network has established a variety of institutionalized routines that facilitate multidirectional knowledge flows among suppliers. Our study suggests that the notion of a dynamic learning capability that creates competitive advantage needs to be extended beyond firm boundaries. Indeed, if the network can create a strong identity and coordinating rules, then it will be superior to a firm as an organizational form at creating and recombining knowledge due to the diversity of knowledge that resides within a network. Copyright © 2000 John Wiley & Sons, Ltd.

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Creating and managing a high‐performance knowledge‐sharing network: the Toyota case

The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

The Economic Institutions of Capitalism

List of figures List of tables Acknowledgements Introduction Part I. Theory and Concepts: 1. A spectrum of transactional patterns: from ACR to OCR 2. Trust and organisational efficiency Part II. Case Studies and Survey: 3. Setting the scene 4. JJ Electric, GB Electronics and TCP (UK) 5. The analysis of supplier companies Part III. Explanations of Variations: 6. Economic and technological factors 7. The legal framework 8. Banks and financial links 9. Employment system links 10. Entrepreneurship, and the dynamics of small firm creation Part IV. Outcomes and Implications: 11. How ACR-P OCR patterns relate to competitiveness 12. Conclusions Appendix Notes Bibliography.

Price, Quality and Trust: Inter-firm Relations in Britain and Japan

This study examines the determinants of inter-organizational trust by using survey data from over 1000 suppliers in the automotive industry. Drawing on transaction cost economics, game theory and sociological exchange theory, we define trust and derive a model of its determinants. Regression analysis results indicate that determinants of trust are different from determinants of opportunism. US–Japanese differences are found in three respects: (i) the way trust is conceptualised by suppliers is more complex in Japan than in the US; (ii) the level of trust is higher in Japan than in the US; and (iii) the factors facilitating trust and those attenuating opportunism differ in the US and Japan.

/pdf/determinants-of-trust-in-supplier-relations-evidence-from-1shlbbsxtk.pdf

Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States

Forthcoming In Ctuistel Lane and Rclnhard Backmann (eds.) Trust Within and Between Orgmi:anotu Oxford Univcrsl ty I%css. Does Trust improve Business Performance? hlarl sako Dots trust buslncss \vhcre Lhc. mpro~c business performance? And f so, how can trust be created In rc IS none? These are [he two quest]ons \vhich this chapter addresses. The mam aim of the chapter Mto e~'aluatevarious theories which touch on the causes and outcomes of trust, and to pro~idc cmplncal tests of those theories using a large scale sumey of automot]jc parts suppllcrs In [he United States, Europe and Japan, A growing Interest In bulldlng trust betu " een orgamsatlons stems from the belief that [rust cnhanccs buslncss perforrnancc. For Instance, trust has been identified as an important component tvhich makes partncrsh]ps, strategic alliances, and nehvorks of small Ilrrns SUCCCSS1 " U1 (Brusco !985, Pouch 1996, Smltka 1991), Trust ]s also of great releiance today beeausc the maintenance of consistently high quall~, }vhich is an imprtant source of competltlvcncss, Measier in a h]gh-trust production system than in a low-trust one (Sako 199-). In a slmllar \cln, Fukuyama (1995) attnbutcs national Industnal competitiveness to trust as a soclctal-lctcl cultural norm and a soaal capital. According to him, people's capacity to Instltut]onallzc trust In the realm of tvork and business awoun~ for the industnal success In Japan and Germany. By contrast, the 'missing middle', namely the absence of Intermediate sccml groups in the area betw'centhe family and Iargc, centralised organisations hke the church or [hc sta[c, accounts for the rclau~c economic backwardness of Latin Catholic countnes (like Italy, France and Span) and Chinese soelctlcs (Fukuyama 1995, p. 55-56). In Fukuyanm's (1995) study, as In others, the Ilnk betfveen trust and business performance is plausibic but not proven. Ncvcrthelcss, [he idea is so appealing that at the pracu[ioncr ICVCI, an increasing number of studies exhort business to create trust as an essential component in making partnerships bet~vccnfirms successful (SMMT & DTI 1994, Ingersoll Engineers 1995). [n business strategy, recent ~vorkon trust between organizations focuses on the possibility of using it to create and malntaln competitive advantage (Barney and Hansen 1994, Jarillo 1988). While thcorctieal explorations on the link behveen trust and performance abound, empirical studies in this ara are rare (exceptIons include Mohr and Spekman 1994). This chapter presents evidcncc ~vhlchfills this lacuna. The second, re]a[ed, question ~vhlchthis paper addresses-how can trust be created !vhen there is none?-has …

/pdf/does-trust-improve-business-performance-3oetkw1hs1.pdf

Does Trust Improve Business Performance

Prices, Quality and Trust: Inter-Firm Relations in Britain and Japan.

This study of vocational education in advanced industrial countries contributes to two different areas of debate. The first is the study of the diversity of institutional forms taken by modern capitalism, and the difficulties currently surrounding the survival of that diversity. Rather than analysing economic institutions and governance in general, the authors specifically focus upon the key area of skill creation. The second theme is that of vocational education and training in its own right. While sharing the consensus that the advanced countries must secure competitive advantage in a global economy by developing highly-skilled work forces, the authors draw attention to certain awkward aspects of this approach that are often glossed over in general debate: 1. The employment-generating power of improvements in skill levels is limited: employment policy cannot depend fully on education policies; 2. While the acquisition of skills has become a major public need, there is increasing dependence for their provision on individual firms, with government action being restricted to residual care for the unemployed, rather than contributing at the leading edge of advanced skills policy. Covering France, Germany, Italy, Japan, Sweden, the UK, and the USA, this book provides a unique approach to education and training within the broader political and economic environment. As such, it will appeal to students, teachers, and practitioners concerned with vocational training, human resource management, industrial relations, and the sociology of the economy.

Mari Sako

Papers

Price, Quality and Trust: Inter-firm Relations in Britain and Japan

Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States

Does Trust Improve Business Performance

Prices, Quality and Trust: Inter-Firm Relations in Britain and Japan.

Are Skills the Answer