"We Know Their House, Family, and Workplace": Trust in entrepreneurs' trade credit relationships in weak institutions

This study explores the processes of trade credit relationship development and enforcement by small and medium-sized enterprise (SME) entrepreneurs and the role of trust in a developing economy context. Drawing on institutional, trade credit and trust theories, data were collected and analyzed from 16 SMEs owner/managers trading across cultures using qualitative interview approach and thematic analysis. The results show that SMEs develop and enforce trade credit relationships through their embeddedness in institutional contexts. They use personal trust and specific social-cultural norms in the enforcement of trade credit agreements in absence of formal institutional trust. Conclusion, implications, limitations, and further studies are delineated.