Client firms verify subcontractor trustworthiness through graduated trial contracts, not reputation alone

Evidence

These are stringent conditions. In general, it is clear that client firms do not rely solely on reputation to determine the trustworthiness of a subcontractor, in the sense of his willingness to uphold the terms of the moral contract. To know whether a subcontractor is trustworthy (and this is my fourth point) they rely additionally on their own experience. One manager said a minimum of a year and a number of contracts was required, though he claimed that after three months he had an intuitive sense of how things would turn out based on personal contact with his opposite number. Another firm gave the figure of two to three years. During this period they operated a conscious testing process. Initially short-term contracts were given, it being understood that renewal would depend on performance. Once satisfied, a one-year contract was offered in which for a fixed price they guaranteed a level of work. At this point, ‘according to the manager, the two firms were partners. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2613

Categorization

• XREF: Connects to the reader’s trust/observable-constraints framework: the staged contract escalation is literally Hardin’s point that trust requires observable constraints on opportunistic behavior, enacted institutionally.