SEMESTER I 2023/2024

SAU219E ECONOMY, ENTREPRENEURSHIP & CULTURE

MODULE:
Business Networks, Markets, and Money

TITLE:
Individual Assignment (Trust, Power or Money: What Governs Business
Relationships)

PREPARED BY:
NURUL HANANI BINTI ABDUL AZIZ (165034)

PREPARED FOR:
PROFESSOR DR. CHIN YEE WHAH
 The Embeddedness of Trust in Business Relationships: Trust, Power, and Money

The article "Trust, Power or Money: What Governs Business Relationships?" by

Bachmann and Kroeger (2017) primarily explores the notion of trust in business relationships

and its correlation with power and money. The authors argue that trust should be

conceptualized as a general symbolic communication medium within business relationships,

and they explore how trust, power, and money are intertwined in different types of business

systems, specifically liberal and coordinated market economies. This article aims to

demonstrate that trust is a fundamental concept in social theory and that understanding it

through the lens of embeddedness provides valuable insights into the dynamics of economic

relationships.

The article’s main economic concern is the role of trust in shaping and governing

business relationships. According to Bachmann and Kroeger (2017), trust is viewed as a

symbolic communication tool rather than just a simple belief in the reliability of others. This

means that trust acts as a channel through which information, expectations, and cooperation

flow between business partners, making it essential to facilitate economic transactions and

collaborations.

Embeddedness, in the context of this article, refers to the idea that trust is closely

linked with other factors such as power and money within economic relationships. The

authors contend that trust is embedded within the broader framework of business interactions

and is influenced by power dynamics and financial concerns. This embeddedness perspective

challenges the conventional economic belief in rational and self-interested individuals in the

marketplace.
 Trust is a complex concept deeply embedded in the economic, social, and institutional

contexts of different market economies. For example, in a liberal market economy, trust is

based on the pursuit of financial gain through contractual arrangements and legal safeguards,

influenced by the expectation that these agreements will be upheld. In contrast, in a

coordinated market economy, trust is rooted in social and relational aspects of business

interactions, relying on long-term partnerships and social networks. Trust is cultivated

through repeated interactions, shared norms, and mutual expectations, tied to the social fabric

of the business environment and the power structures that emerge from collective

decision-making processes.

Bachmann and Kroeger's argument challenges the conventional economic view that

trust can be reduced to a calculative and instrumental factor in business, highlighting that

trust's nature and functioning are not universal but contingent on specific economic and

institutional settings. Therefore, policies and strategies to foster trust in economic

transactions should consider the embeddedness of trust within the broader socio-economic

context.

In conclusion, the article by Bachmann and Kroeger (2017) sheds light on the intricate

relationship between trust, power, and money in business relationships. By emphasizing the

notion of embeddedness, the authors challenge traditional economic assumptions and provide

a more nuanced understanding of how trust operates in different market economies. Trust is a

complex concept that is deeply rooted in a specific context's economic, social, and

institutional fabric, emphasizing the need to consider its embeddedness when analyzing and

addressing economic issues in business relationships.

(493 words)
REFERENCE

Bachmann, R., & Kroeger, F. (2017). Trust, power or money: What governs business

relationships? International Sociology, 32(1), 3-20.

https://doi.org/10.1177/0268580916673747