Cost motives alone cannot sustain subcontracting without trust and loyalty

Evidence

Cost considerations, then, dictated the initial switch from in-house production to reliance on the market. Further discussion showed, however, that these evolving market relations were a far cry from those of the standard textbook, where ‘faceless buyers and sellers meet for an instant to exchange standardized goods.’ By 1984-85 the firms had begun to use a suggestive word to describe their relationship to these new subcontractors: partnership (partenariat). In the course of conversations in which I myself participated, other equally emotive terms evoked the nature of interfirm relations: the importance of loyalty (fidélité); the existence of a moral contract (contrat moral); and the need for mutual trust (confiance mutuelle). This language suggests a certain anxiety inherent in subcontracting, and the need for something like trust if the relationship was to work smoothly. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2495

Categorization

• XREF: Directly parallels the reader’s Luhmann/Hardin synthesis: trust arises precisely where monitoring/observability gaps make pure market exchange inadequate
• ADDENDUM: Connects to the Milgrom law-merchant material read earlier — the same shift from faceless market to reputational, trust-bearing private ordering appears in trust and private-judge institutions.
• DEFINE: The passage provides the operative vocabulary — partenariat, fidélité, contrat moral, confiance mutuelle — grounding what ‘trust’ means in the subcontracting setting.