Trust and the market for technology

Conditional on the decision to enter the market for immature technology, we test for the effects that trust—proxied by the context in which the negotiating parties first met—has on the likelihood that these negotiations are successful. Using survey responses from 860 university–firm and firm–firm technology transactions, we find that trust matters: parties with high levels of trust (i.e. know each other from a previous business) are between 6 and 23 per cent more likely to conclude a transaction compared with those with low levels of trust (i.e. cold-callers). We also find that patents can effectively substitute for a lack of trust and that trust is more important in upstream stages (basic or applied science).