Trust, Trustworthiness, and Information Sharing in Supply Chains Bridging China and the United States

Abstract

Whether and how trust and trustworthiness differ between a collectivist society, e.g., China, and an individualistic one, e.g., the U.S., generate much ongoing scientific debate and bear significant practical values for managing cross-country transactions. We experimentally investigate how supply chain members' countries of origin -China versus the U.S. -affect trust, trustworthiness, and strategic information sharing behavior in a cross-country supply chain. We consider a two-tier supply chain in which the upstream supplier solicits demand forecast information from the retailer to plan production; but the retailer has an incentive to manipulate her forecast to ensure abundant supply. The levels of trust and trustworthiness in the supply chain and supplier's capability to determine the optimal production quantity affect the efficacy of forecast sharing and the resulting profits. We develop an experimental design to disentangle these three aspects and to allow for real-time interactions between geographically distant and culturally heterogeneous participants. We observe that, when there is no prospect for long-term interactions, our Chinese participants consistently exhibit lower spontaneous trust and trustworthiness than their U.S. counterparts do. We quantify the differences in trust and trustworthiness between the two countries, and the resulting impact on supply chain efficiency. We also show that Chinese individuals exhibit higher spontaneous trust towards U.S. partners than Chinese ones, primarily because they perceive that individuals from the U.S. are more trusting and trustworthy in general.This positive perception towards U.S. people is indeed consistent with the U.S. participants' behavior in forecast sharing. In addition, we quantify that a Chinese supply chain enjoys a larger efficiency gain from repeated interactions than a U.S. one does, as the prospect of building a long-term relationship successfully sustains trust and trustworthiness by Chinese partners. We advocate that companies can reinforce the positive perception of Westerners held by the Chinese population and commit to long-term relationships to encourage trust by Chinese partners. Finally, we also demonstrate that both populations exhibit similar pull-to-center bias when solving a decision problem under uncertainty (i.e., the newsvendor problem).*

Exploring the Consistency of Higher Order Risk Preferences

“…To minimize currency effects, the payoffs in ECU were the same in all sessions, but the exchange rate for one ECU was different in every location (see Bohnet et al., ; Herrmann et al., ; Özer et al., for similar approaches). We selected exchange rates by putting equal weight on the UBS Prices & Earnings survey (UBS, ) data (this measure is also used by Özer et al., ), and the country‐level purchasing power parity provided by the OECD () (this measure is also used by Roth et al., ; Buchan and Croson, ; and Ehmke et al., ). This procedure led to payments that were inside the feasible bandwidth for subject payments in Tianjin and Boston but were somewhat higher than the usual average payoff in Tianjin and somewhat lower than the usual average payoff in Boston.…”

“…The experiments in China and in the United States were conducted by local experimenters who also spoke German. The two local experimenters also conducted one session each in Germany, which allowed us to control for idiosyncratic experimenter effects (Bohnet et al., ; Özer et al., ). These measures have also been advocated by Roth et al.…”

“…These, along with all the computer pages, were translated using the back translation procedure (Brislin, ). This procedure is now commonly applied in cross‐cultural research in economics (see, e.g., Buchan and Croson, ; Bohnet et al., ; Herrmann et al., ; Ehmke et al., ; Özer et al., ).…”

Comunicaciones y confianza: ¿información o identidad? El caso del sector vitivinícola chileno hacia el mercado chino

“…Esta dualidad podría reflejar -al menos en los casos observados-el cambio desde una sociedad colectivista propia de las culturas latinoamericanas a una más individualista, relacionada con culturas donde predomina la idea de avanzar hacia el desarrollo económico (Hofstede, 2014). China, en cambio, es considera-da como una cultura colectivista, característica que afecta la estructura relacional de sus organizaciones (Özer, Zheng y Ren, 2014).…”

Investigating the impact of behavioral factors on supply network efficiency: insights from banking’s corporate bond networks

“…Studies have also investigated other types of cognitive biases, or even more general estimations of cognitive abilities of decision makers, and their impact on supply chain-related operations (Wu and Chen 2014;Narayanan and Moritz 2015). Some researchers have studied the effect of trust between members of supply chains (Özer et al 2014;Read et al 2014). Others have emphasized psychological aspects such as social psychology, group dynamics, or system dynamics in the context of behavioral operations and supply chain management (Bendoly et al 2010;Bendoly 2014).…”