Long-Term Orientation in Trade

Trust does not work in the same way across cultures. This paper presents an agent model of behavior in trade across Hofstedes cultural dimension of long-term vs. short-term orientation. The situation is based on a gaming simulation, the Trust and Tracing game. The paper investigates the micro-dynamics of trust in a trade relationship, focusing on one dimension of culture only. This is a deliberate simplification that is made in order to highlight the role of this particular dimension of culture. The dimension is relevant for trade between East Asia and the Western world. The paper discusses the cultural dimension of long-tern vs. short-term orientation and specifies decision rules for trading agents, differentiated across the dimension. The paper contributes to bridging the gap between macro level analysis of intercultural trade and micro level knowledge about culturally determined behaviour. To this end the agent model is implemented in a multi-agent simulation. Potential applications of the model are to be found primarily in research into the formation and performance of supply chains and networks, and secondarily in training, education, and advice systems. The implementation of the model has been verified to qualitatively represent the effects expected on the basis of Hofstedes theory.