The role of trust in contractual relationships

The paper investigates the opinion of small- and medium size enterprises in agri-food chain on the role of trust in contractual relationships using a survey in Central Hungarian region. Contrary to our expectations, a relatively high share of respondents poses written contracts. Estimations show that there are no significant differences between various levels of agri-food chain regarding to existence of written contract. Our results suggest that asset specificity, firm size and frequency of partner change increase the probability of written contract. Trust in most important partner has ambiguous impact upon the existence of a formal contract. Trust in public legal enforcement and the efficiency of the legal system also play important roles on the existence of written contract. Sectorial specificity has positive and significant effects on the written contract