Three types of trust in economic exchanges are identified: weak form t
rust, semi-strong form trust, and strong form trust. It is shown that
weak form trust can only be a source of competitive advantage when com
petitors invest in unnecessary and expensive governance mechanisms. Se
mi-strong form trust can be a source of competitive advantage when com
petitors have differential exchange governance skills and abilities, a
nd when these skills and abilities are costly to imitate. The conditio
ns under which strong form trust can be a source of competitive advant
age are also identified. Implications of this analysis for theoretical
and empirical work in strategic management are discussed.