Discovering, Creating and Appropriating Value
Chapter 4: How Trust and Contracts Coevolve
* While there are numerous examples in the literature where control chases out trust and situations in which trust seems to remove the necessity for control, there are equally as many examples of trust and control being complementary, or going hand in hand. (Bachmann et al., 2001: v) INTRODUCTION In this chapter, I discuss the evolution of trust, distrust and formal coordination and control in interorganizational relationships. I suggest that the degree to which managers trust and distrust their partners during initial stages of cooperation leaves strong imprints on the development of these relationships in later stages of collaboration. This derives from the impact of trust and distrust on (1) formal coordination and control; (2) interorganizational performance; and (3) the interpretations that managers attribute to the behaviour of their partners. Collectively, my arguments give rise to a conceptual framework, which indicates that there is a high propensity for interorganizational relationships to develop along vicious or virtuous cycles. By integrating and reconciling previous work on the trust–control nexus, and by emphasizing the dynamics associated with it, this chapter contributes to a more comprehensive and reﬁned understanding of the evolution of interorganizational cooperation. WHAT WE KNOW ABOUT THE INTERPLAY BETWEEN TRUST AND CONTROL Interorganizational governance issues have attracted growing attention from academics and practitioners owing to the increasing number of alliances, outsourcing relationships and other forms of inter-ﬁrm exchange, * An earlier version of this chapter has been published before. I wish to thank Sage Publications for its permission to reprint...
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