Determinants of trust in the international fresh produce business between Ghana and Europe

Abstract

Abstract: In the fresh fruit and vegetable trade between Ghana and Europe, there seems to be higher level of mistrust between the exporters and the importers. As a result, the exporters and the importers incur high transaction cost in the form of establishing, monitoring and enforcing their agreements with each other. This implies that if the exporters and the importers are able to build trust, their transaction costs can be lowered and performance improved. In this study, we determine how Ghanaian fresh fruit and vegetable exporters and European importers can build trust with one another by identifying the factors that influence development of trust in their business relationships. We based our studies on 101 interviews with Ghanaian exporters of fresh fruits and vegetables. The study revealed that whereas non-economic satisfaction, price satisfaction and goal attainment have positive impact on trust, excessive use of power and cultural dissimilarities are related negatively to trust. We conclude that exporters and importers can reduce transaction cost in their exchange if they build trust with one another through the provision of good economic incentives, exploit less power and ensure understanding organizational practices of each other.