Inter-firm cooperation and seller trade practices: empirical investigation of small firms

The purpose of this study is to assess the trade practices used by firms in developing countries using Eritrea as a case. The study specifically focuses on the effects of cooperation between suppliers and their customers on the sellers' trade approaches. It examines what types of trade approaches firms use (cash, credit, and/or both), how they apply their approaches and why they choose those approaches. Then it studies if these approaches are influenced by the existence of inter firm cooperation or networking (as measured by association, information, trust, supplier concentration and transaction cost) between supplier firms and their customers. This study indicates that the firms use more personal visits to communicate among themselves and the overwhelming majority of them do not belong to any business association. Firms which have network or association with established relationship and trust sell more on both credit compared to those which do not have. The firms, who believe that the transaction cost is expensive, relatively sell less on both credit and cash compared to those which said "it is not". Implications of these findings and future research directions are discussed.