Social Trust and Channel Relationship: Evidence from the Tire Industry in China

Abstract

Social trust is believed to reinforce society’s economy and firms’ financial performance. In this study, we explore the impact of social trust on channel relationship and reduce the likelihood of channel conflict and opportunistic behavior. We examine these hypotheses empirically using national wide survey data from the tire industry in China and second-hand data from the China Commercial Credit Environment Index. Consistent with theory prediction, results show that social trust decrease channel conflict and opportunistic behavior. Moreover, negative relationships are more pronounced when market dynamics is higher. The results have significant implications for marketing managers to build channel relationship and achieve competitive channel advantages.