Cambridge Journal of Economics 28:471-488 (2004)
Cambridge Journal of Economics, Vol. 28, No. 4, © Cambridge Political Economy Society 2004; all rights reserved
The role of trust and contract in the supply of business advice
Address for correspondence: Robert J. Bennett, University of Cambridge, Department of Geography, Downing Place, Cambridge CB2 3EN, UK; email rjb{at}cam.ac.uk.
The use of legal contract and personal trust are compared in this paper for the relationships between clients and their different advisers who supply business advice. Personal trust between client and adviser is found to operate as an exclusive means to manage relational exchange only for social and family relationships. Using a sample survey of small and medium sized enterprises, results demonstrate that trust and legal contract are most commonly overlapping categories. Comparing different types of adviser, the level of trust, extent of legal contract, service intensity, service costs and client impact and satisfaction are each found to interact. There are major differences between suppliers, but except in the case of social and family relationships to advisers, higher reliance on trust alone is generally associated with lower levels of client impact and satisfaction received. The combination of trust with contract tends to be the route which is most associated with higher levels of client impact and satisfaction.
Key Words: Trust • Consultancy • Small firms • Business Link
JEL classifications: D23, L14, L80, M13
Manuscript received May 2, 2000; final version received September 16, 2002.
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