Trust and the market for technology

Abstract

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 (bas..