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Institutions, exchange and trust: A study of the Russian transition to a market economy

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  • Johanson, Martin
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    Abstract

    A fundamental element of planned economies is the idea that exchange between units and firms should be planned by authorities remote from the performance of the exchange. The institutions, where plan governance is the main mechanism, are therefore assumed to affect how trust is developed and maintained in an economy. However, when the planned economy undergoes institutional changes and plan governance erodes, trust is likely to play a different role. The paper proposes a model for analysis of development of trust depending on the institutions involved and the exchange characteristics. The model suggests that both inter-unit exchanges and inter-firm exchanges contain three dimensions, which are influenced by the degree of plan governance: knowledge use, interaction, and dynamics. Depending on the plan governance, the use of the knowledge produced takes different forms, but the plan governance also influences the interaction in the exchanges. Moreover, it is proposed that plan governance has an effect on the exchange dynamics. A 10-year longitudinal one-firm case study from the Russian printing industry is divided into two periods: the planned economy between 1987 and 1991 and the transition economy from 1992 to 1997. It shows that plan governance in various degrees influenced the exchanges, which, in turn, gave a different level of importance to the role of trust in the economy.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 14 (2008)
    Issue (Month): 1 (March)
    Pages: 46-64

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    Handle: RePEc:eee:intman:v:14:y:2008:i:1:p:46-64

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    Related research

    Keywords: Trust Institutions Inter-unit exchange Inter-firm exchange Interaction Knowledge use Dynamics Transition Russia;

    References

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    1. Richard E. Ericson, 1991. "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 11-27, Fall.
    2. Stanley Fischer & Alan Gelb, 1991. "The Process of Socialist Economic Transformation," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 91-105, Fall.
    3. Eliasson, Gunnar, 1998. "From plan to markets," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 49-68, January.
    4. Davis, James H. & Patterson, J. Dennis & Grazin, Igor, 1996. "The collapse and reemergence of networks within and between Republics of the Former Soviet Union," International Business Review, Elsevier, vol. 5(1), pages 1-21, February.
    5. Fred Luthans & Dianne H B Welsh & Stuart A Rosenkrantz, 1993. "What Do Russian Managers Really Do? An Observational Study with Comparisons to U.S. Managers," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 741-761, December.
    6. Pettigrew, Andrew M., 1997. "What is a processual analysis?," Scandinavian Journal of Management, Elsevier, vol. 13(4), pages 337-348, December.
    7. Keith J. Blois, 1999. "Trust in Business to Business Relationships: An Evaluation of its Status," Journal of Management Studies, Wiley Blackwell, vol. 36(2), pages 197-215, 03.
    8. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change
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    Cited by:
    1. Klaus Meyer & Ornjira Thaijongrak, 2013. "The dynamics of emerging economy MNEs: How the internationalization process model can guide future research," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1125-1153, December.
    2. Gelbuda, Modestas & Meyer, Klaus E. & Delios, Andrew, 2008. "International business and institutional development in Central and Eastern Europe," Journal of International Management, Elsevier, vol. 14(1), pages 1-11, March.

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