A Sociocognitive View of Repeated Interfirm Exchanges: How the Coevolution of Trust and Learning Impacts Subsequent Contracts

Abstract

I augment the study of repeated interfirm exchanges with social cognition to expand the understanding of trust development and learning and how these combined forces shape subsequent contracts. Although scholars have extensively examined the independent effects of trust and learning on contracts in repeated exchanges, their coevolution and combined impact have received much less attention. I argue this omission occurs largely because social cognition is not typically considered in these literatures, even though both trust development and learning are sociocognitive processes influenced by each other, as well as by heuristics (contract frames) and cognitive biases (intergroup attribution bias). When these processes are examined in a positive exchange, the contract frame (prevention or promotion) influences initial reputation-based trust or prior development of knowledge-based trust (competence or integrity), which biases what is learned. This biased learning further impacts knowledge-based trust developmen...