Trust and information sharing in supply chains

Neda Ebrahim-Khanjari*, Wallace Hopp, Seyed M.R. Iravani

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

100 Scopus citations


Drawing on behavioral research, we construct a multi-period model with which to examine the role of trust and other social characteristics in a supply chain. Specifically, we focus on trust building in the context of a salesperson who acts as a representative of a manufacturer and shares demand forecast information with a retailer. The actions of the salesperson affect both her immediate economic gain and her future credibility as determined by retailer's trust. Our analysis reveals that, in such environments, although salespersons of widely varying types (e.g., honest, self-serving, benevolent, loyal) lie some extent about their forecast information, they tend to be trusted in long relationships, provided their forecasting accuracy is higher than that of the retailer. Furthermore, while the presence of a salesperson can improve the profits of both the retailer and manufacturer, there are cost structures under which the manufacturer is better off without a salesperson. Finally, we make the general observation that the appropriate salesperson compensation scheme depends on her social characteristics, and the specific observation that when the salesperson cares for the retailer, the linear compensation scheme commonly suggested in the literature as the optimal compensation scheme for the salesperson is no longer optimal.

Original languageEnglish (US)
Pages (from-to)444-464
Number of pages21
JournalProduction and Operations Management
Issue number3
StatePublished - May 2012


  • information sharing
  • salesperson
  • social characteristics
  • supply chain
  • trust

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation


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