A MiddLab Project

Reputation Flows

This paper exploits a survey of manufacturing firms in five transitioning countries to evaluate the factors that affect whether or not information on contractual disputes between firms is disseminated to other market participants. We find that these reputation flows are channeled both through informal communication among firms as well as through third party organizations; in addition, they are sensitive to firms' perceptions of the macro-institutional environment and specific features of the bilateral relationship in which the dispute occurs. The finding that some trade associations play a meaningful role in coordinating these flows suggests that their private and social value is significant.


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