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Ties, Trust, and Trade

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  • Mark Lorenzen

Abstract

Industrial clusters are associated with positive economies of networking only because the benefits of specialization and trade among clustered firms are not offset by coordination costs. This article, drawing upon a diversity of theoretical sources, elaborates on this insight, explaining why coordination is particularly efficient in industrial clusters compared to other trade contexts. It argues that in clusters, firms are able to lower coordination costs of networking by means of social trust, while firms outside clusters have to rely on more costly coordination mechanisms. It defines and discusses trust and its origin, defines and discusses coordination and coordination problems, and explains the dominance of social trust within clusters through focusing upon information costs and social ties.

Suggested Citation

  • Mark Lorenzen, 2001. "Ties, Trust, and Trade," International Studies of Management & Organization, Taylor & Francis Journals, vol. 31(4), pages 14-34, December.
    • Handle: RePEc:taf:mimoxx:v:31:y:2001:i:4:p:14-34
    DOI: 10.1080/00208825.2001.11656825
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    Cited by:

    1. Sowjanya Dhulipala & Gopal R. Patil, 2021. "Identification of freight generating industry complexes: A descriptive spatial analysis," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2680-2712, December.
    2. Mark Lorenzen, 2005. "Localized Learning and Social Capital The Geography Effect in Technological and Institutional Dynamics," DRUID Working Papers 05-22, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Mielke, Jahel & Steudle, Gesine A., 2018. "Green Investment and Coordination Failure: An Investors' Perspective," Ecological Economics, Elsevier, vol. 150(C), pages 88-95.
    4. Kevin P. Heanue, 2008. "Measuring Industrial Agglomeration in a Rural Industry: The Case of Irish Furniture Manufacturing," Working Papers 0830, Rural Economy and Development Programme,Teagasc.

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