The Economic Nature of Network Capital in B2B Transactions

Abstract

Social scientists, including numerous economists, have explored the incidence and importance of social capital embedded networks as a governance mechanism in business operations. The buyer-seller dyads represented by twelve large-scale dairies and seven feed suppliers were studied to contribute to our understanding of network capital in business-to-business (B2B) transactions. A high incidence of institutional and personal trust was found in these buyer-seller networks. Trust facilitates economic exchange through uncertainty management, information sharing, and time savings.