Proceedings of the 8th International Conference on Intellectual ...

Rita Babiliūtė and Kęstutis Kriščiūnas
key role as facilitators <strong>of</strong> trust in that <strong>the</strong>y produce shared “taken for granted” knowledge. Thus,
institutional environment plays an important stabilising effect on inter-firm transactions by minimising
<strong>the</strong>ir risk (especially when <strong>the</strong>re is no previous experience between <strong>the</strong> parties <strong>of</strong> <strong>the</strong> exchange).
However, <strong>the</strong>re is no consensus regarding <strong>the</strong> limitations <strong>of</strong> institutional approach to trust-based
relations.
On one hand, Rus and Iglič (2005) emphasise <strong>the</strong> advantages <strong>of</strong> institutional trust over inter-personal
trust because it generalizes trust, embodies values <strong>of</strong> impartiality, justice and truth, enable <strong>the</strong>
transactions <strong>of</strong> parties with no prior experience <strong>of</strong> cooperation and is much more open to <strong>the</strong>
outsiders. Thereby institutional trust enables to bridge different social circles and different pools <strong>of</strong>
resources, and promotes <strong>the</strong> more modern forms <strong>of</strong> organization. Bachmann and Inkpen (2011)
support <strong>the</strong> advantages <strong>of</strong> institutional trust by claiming that “macro/institutional trust in <strong>the</strong> advanced
socio-economic systems can hardly rely on interaction-based forms <strong>of</strong> trust creation alone”. Authors
argue that <strong>the</strong> individual trust building process can consume a lot <strong>of</strong> time and money, while <strong>the</strong>re is no
guarantee <strong>of</strong> success. Alternatively, <strong>the</strong> presence <strong>of</strong> institutionalized trust may be much more
effective as <strong>the</strong> parties willing to cooperate can refer to <strong>the</strong> institutional safeguards, hereby developing
trust without any previous mutual experiences. Thus, <strong>the</strong> argument goes that trust induced by <strong>the</strong>
institutional environment provides positive experiences <strong>of</strong> interaction and help to build inter-personal
trust. In o<strong>the</strong>r words, following this approach, inter-personal trust stems from institutional trust.
On <strong>the</strong> o<strong>the</strong>r hand, Humphrey and Schmitz (1998) associate <strong>the</strong> institutional framework with minimal
trust that is necessary for <strong>the</strong> basic, on-<strong>the</strong>-spot transactions to take place, but does little to promote
<strong>the</strong> more complex and long-term interactions. The institutional trust depends to a large extent on <strong>the</strong>
legal contracts and sanctions that are hard to enforce in <strong>the</strong> case <strong>of</strong> e.g. knowledge exchange. The
more sophisticated forms <strong>of</strong> governance call for trust on both micro- (e.g. personal interaction,
“shadow <strong>of</strong> <strong>the</strong> future”) and meso-levels (e.g. reputation in <strong>the</strong> pr<strong>of</strong>essional group). In knowledge
partnerships it is very hard to rely on legal-institutional safeguards due to <strong>the</strong> intangible nature <strong>of</strong>
knowledge, while losing business partners or social ejection from <strong>the</strong>ir group are potentially more
grave sanctions against opportunist behaviour.
What can we draw from this debate regarding <strong>the</strong> trust and reliance on institutional framework? To
what extent are <strong>the</strong> institutional measures capable <strong>of</strong> reinforcing trust? One can assume that <strong>the</strong>
functioning institutional framework, as a context for interaction <strong>of</strong> parties to <strong>the</strong> exchange, plays an
important role in promoting inter-personal trust. However, it does not substitute <strong>the</strong> inter-personal trust
and over-reliance on institutional-legal instruments may imply <strong>the</strong> insufficient extended trust in <strong>the</strong>
system.
To conclude, both inter-personal (micro-level) and institutional (macro-level) approaches to trust may
prove <strong>the</strong>ir use at explaining <strong>the</strong> inter-organizational interactions. However, as far as trust
development in inter-organizational relations is concerned, <strong>the</strong>re is no clear consensus as to whe<strong>the</strong>r
<strong>the</strong> emphasis on personal or institutional trust would prove as being more effective. It may well
depend on <strong>the</strong> specific national and industrial contexts <strong>of</strong> firms, which will be later explored in this
paper, with a specific focus on trust in <strong>the</strong> knowledge-intensive industrial clusters.
2. Trust in industrial clusters: Theoretical considerations
Over <strong>the</strong> last decade, <strong>the</strong> globalising competition environment was accompanied by a seemingly
opposite trend - <strong>the</strong> growing importance <strong>of</strong> local inter-organizational structures, such as industrial
districts or clusters. Firms’ ability to cooperate and build sustainable business partnerships is
regarded as one <strong>of</strong> <strong>the</strong> key factors underlying <strong>the</strong>ir competitive advantage.
The industrial clusters can be regarded both as economic agglomerations <strong>of</strong> industrial actors that are
specialising in specific activities (e.g. car manufacturing cluster in Detroit) and as <strong>the</strong> reservoirs <strong>of</strong>
specialised knowledge and competence, where <strong>the</strong> unique innovative activities are taking place (e.g.
Silicon Valley). The latter are usually referred to as “innovative clusters” or “knowledge-intensive
clusters”. Preissl and Solimene (2003) define innovative cluster as “a set <strong>of</strong> interdependent
organizations that contribute to <strong>the</strong> realisation <strong>of</strong> innovations in an economic sector or industry”. The
importance <strong>of</strong> innovative clusters is also supported by <strong>the</strong> paradigm <strong>of</strong> “open innovation”
(Chesbrough, 2003), which claims that much <strong>of</strong> valuable knowledge is located outside <strong>the</strong> boundaries
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