The Constitution of Inter-organizational Trust through
Interpersonal Trust: Effects on the Use of Management
Controls
Name: Jill Pijnappel
Address: Het Wildezand 5, 7384 CB Wilp
Telephone: +31 (0)6 12 43 18 78
Email: jill_pijnappel@hotmail.com
Student number: 2068818
University of Groningen, the Netherlands
Master track: MSc BA Organizational & Management Control
Supervisor: A.R. Abbasi
Co-assessor: H. Van Elten
Date: 20-01-2015
Word count: 18.498
ABSTRACT: This thesis investigates the effects of interpersonal trust on the
inter-organizational trust and management control nexus. It fills several gaps in literature by
taking a multilevel approach for trust and contributing to an understanding of in between
level dynamics. Theory is developed on the basis of a case study at a start-up company in the
Netherlands. Based on the results of in-depth interviews and a survey it is concluded that
inter-organizational trust can be constituted through interpersonal trust and the balance
between inter-organizational trust and management controls is settled down faster if
interpersonal trust between boundary spanners is present within the inter-organizational
relationship. A slight move towards inter-organizational trust is discerned because of the
increasing flexibility in the handling and design of management controls when interpersonal
trust is present.
2
Content
1. Introduction... 3 2. Literature Review ... 6 2.1 Inter-organizational Relationships ... 6 2.2 Management Control ... 7 2.3 Trust ... 9 2.3.1 Inter-organizational trust ………10 2.3.2 Interpersonal trust ………..12 2.3.3 Boundary spanners………..13 2.3.4 Sub-research questions ………13 3. Methodology ... 16 3.1 Research Method ... 16 3.2 Case Description ... 163.3 Data Collection Methods ... 17
3.4 Data Analysis ... 18
4. Results ... 20
4.1 Influence on Inter-organizational Trust ... 20
4.1.1 Influence of interpersonal trust on inter-organizational trust……….……….20
4.1.2 Influence of inter-organizational trust on interpersonal trust..………..21
4.1.3 Interaction between interpersonal trust and inter-organizational trust………..………22
4.2 Constitution of Inter-organizational Trust ... 22
4.3 Domain Specifity... 24
4.4 Management Controls ... 25
4.4.1 Influence of interpersonal trust on management controls ..……….………25
4.4.2 Influence of management controls on interpersonal trust………..26
4.4.3 Interaction between interpersonal trust and management controls………27
4.5 Influence on Nexus ... 27
4.8 Survey Results ... 28
5. Discussion ... 30
5.1 Influence on Inter-organizational Trust ... 30
5.2 Constitution of Inter-organizational Trust ... 31
5.3 Domain Specifity... 32
5.4 Management Controls ... 32
5.5 Influence on Nexus ... 33
6. Conclusion ... 37
6.1 Limitations and Future Research ... 38
7. References ... 40
8. Appendix 1 Survey ... 44
3
1. Introduction
The contemporary globalization increases the probability of working with strangers (Lau & Rowlinson, 2009). Inter-organizational cooperation is increasing in the business environment, so there has also been an increase in literature about the inter-organizational ties. Various forms of inter-organizational cooperation are present and researched, as well as factors and contingencies affecting these relationships (Zaheer, McEvily & Perrone, 1998).
Long term self interest might drive individuals or companies to enter a transactional relationship with other parties (Vosselman & van der Meer-Kooistra, 2009). The relationship is crafted when discrete market exchange is abandoned and a step forward is taken to intensify the contact between the partners. By crafting a relationship firms enable themselves to realize mutually beneficial outcomes, together they perform value creating activities, pool resources, determine tasks to be performed and divide the labor (Dekker, 2004). According to exchange theory people will stay in a relationship as long as they think the balance between costs and rewards is as good as various alternatives open to them (Lai, Singh, Alshwer & Shaffer, 2014; Lau & Rowlinson, 2009). Within relationships interests of the parties might differ from each other and investments necessary for the relationship need to be appropriated. This might cause opportunistic behaviour to occur, seeking for self-interest at the expense of the other parties in the relationship (Dekker, 2004; Vosselman & van der Meer-Kooistra, 2009).
Having a mechanism to corb such opportunism is important. Formal control structures are commonly used to constrain the appearance of opportunistic behaviour by one of the partners (Velez, Sanchez, & Alvarez-Dardet, 2008; Vosselman & van der Meer-Kooistra, 2009). A contract is a common used instrument, which providse a base for punishment when one of the parties behaves opportunistically and by this ensures mutually beneficial outcomes (Lau & Rowlinson, 2009). Uncertainty is eliminated as much as possible through communication and the formal contract between the partners entering a relationship (Lau & Rowlinson, 2009). However through bounded rationality there will always remain some uncertainty, as partners are not able to write a contract which covers every possible future contingency (Dekker, 2004). So partners will always run some kind of risk in relationships, which makes them vulnerable. A lot of different theoretical lenses describe ways of dealing with risk. For example, agency theorists propose to use control systems as a mean to deal with risk. Stewardship theorists however say that the use of trust to manage risk is more appropriate (Schoorman, Mayer & Davis, 2007).
4
human relationships, however the literature does not offer much support in understanding the process by which inter-organizational trust develops (Das & Teng, 1998; Mayer et al., 1995).
Trust in economic exchanges can be conceptualized on different levels, often mentioned are trust relationships as individual level phenomenon as well as organizational level phenomenon. Often there is ambiguity about the level at which a trust relationship is present within an exchange, but in literature cross-level fallacies can be found also (Rousseau, Sitkin, Burt & Camerer, 1998; Zaheer et al., 1998). Mayer et al. (1995) mentioned that a lack of specifity of trust referents leads to confusion in levels of analysis. Rousseau et al. (1998) as well as Schoorman et al. (2007) demand for papers taking a multilevel perspective to reflect the array of entities, individuals, groups and firms in which trust plays a role. The integration of the different levels is lacking in literature, it needs to get out of currently existing intellectual silos (Schilke & Cook, 2013). This thesis will overcome this problem and provides in taking a multilevel approach.
So there is a difference between interpersonal trust and inter-organizational trust, the focal object differs across the two levels. Trust is propagated by an individual human, but the possibility of collectively held trust of one organization in the other does exists and is considered inter-organizational trust (Velez et al., 2008; Zaheer et al., 1998). Lau and Rowlinson (2009) show that for interpersonal trust direct contact is needed – experience, face-to-face communication and integrity - while this is not as much the case for inter-firm trust, needing cooperation - frequent interaction and a long working relationship. Other authors model factors which explain trust on multiple levels (eg. Mayer et al., 1995; Schoorman et al., 2007). Between-level dynamics stay unanswered however, leaving a gap in the literature and understanding of trust (Huang, Luo, Liu & Yang, 2013; Schilke & Cook, 2013). Within this thesis these between-level dynamics will be researched and our understandings of these will be refined.
The relationship between trust and control is a very complex one and has been given a lot of attention in literature (eg. Costa & Bijlsma-Frankema, 2007; Dekker, 2004; Velez et al., 2008). There is still much controversy about whether the two concepts are substitutes and thus inversely related (eg. Das & Teng, 2001; Dekker, 2004; Inkpen & Curral, 2004), or complements and thus additively related (eg. Das & Teng, 1998; Dekker, 2004). For the substitutive perspective often it is claimed that the use of management controls is a sign of distrust towards the other, this claim is mainly made by social scientists (Das & Teng, 2001; Dekker, 2004; Inkpen & Curral, 2004; Klein Woolthuis, Hillebrand & Nooteboom, 2005). Another claim is that the use of formal controls is moderated by having trust in each other’s performance (Dekker, 2004). On the other side, using a complementary view, it is claimed that objectivity is brought into the relationship and risk is reduced by using management controls. Also mutual transparency is provided and the achievement of common goals is facilitated. Transaction cost economics and contract theorists see contracts as being a basis for trust, they limit the incentives as well as objectives for opportunism. This restriction provides a base for trust in a relationship, making contract – as being a formal control – a prerequisite for trust (Klein Woolthuis et al., 2005).
5
Schoorman et al., 2007; Tomkins, 2001; Velez et al., 2008). Most recent studies take a dynamic view, which also might be logical, respected the fact that for both substitutive as well complementary views evidence is to be found. Vosselman & van der Meer-Kooistra (2009) and Tomkins (2001) state that the dynamics between the two concepts are being downplayed by simply taking a substitutive or complementary view. Either a complementary or substitutive nature of the relationship between trust and control could be present, depending on the type of control – social or formal control (Das & Teng, 2001). Klein Woolthuis et al. (2005) conclude this might depend on the intentions with drawing up contracts and using them. The interaction between the two concepts is captured in this research by taking an interaction perspective, emphasizing the dynamic and complex relationship between trust and control. According to Vosselman & van der Meer-Kooistra (2009) “control needs trust, and trust needs control” (p. 269).
The role of interpersonal trust in the inter-organizational trust-control nexus is not highlighted yet in literature. Often interpersonal trust and inter-organizational trust are distinguished or linked towards performance (eg. Lau & Rowlinson, 2009; Zaheer et al., 1998). To shed a light on this relationship and fill the gaps mentioned previously the main research question of this thesis is:
‘How does the existence of interpersonal trust influence the relation between inter-organizational trust and management control practices?’
By answering this question, entrepreneurs might be helped in developing and designing inter-organizational relationships. How are interpersonal trust relationships of influence on the relationships they have in the business field? The research addresses the importance of the interpersonal network of entrepreneurs and how this might provide benefits on the domain of their business. Entrepreneurs gain insight about the design of management controls and pitfalls that might occur when designing management control practices. They get to know which influence interpersonal relationships have and how they could communicate them within their companies, but also how the business field in his turn can have an influence on the interpersonal relationships of an entrepreneur.
6
2. Literature Review
In this section the most important concepts within this research – inter-organizational relationships, management control and trust – will be addressed. These concepts will provide a background of existing literature for the main research question: ‘How does the existence of interpersonal trust influence the relation between inter-organizational trust and management control practices?’. The objective of this research is to see how an inter-organizational relationship is designed in terms of management control, if interpersonal trust is to be found between key-persons, and how this effects the emergence of inter-organizational trust. A comparison is made between relationships in which interpersonal trust is present and relationships in which interpersonal trust is not – yet - present. As can be deducted from the main research question and the objective, trust will be divided in two levels: the individual level and the organizational level.
Based on the literature about the concepts, sub-research questions will be developed which help to answer the main research question as being formulated above. This section will start with discussing inter-organizational relationships, followed by the concept of management control. Trust is the third concept dealt with and a conceptual framework will be developed to provide an overview of the research. As already said, within trust a distinction is made between the individual level and the inter-organizational level, and also the role of boundary spanners will be discussed.
2.1 Inter-organizational Relationships
Repeated interaction, which involves the passing of information between parties, may cause the movement towards a close relationship (Tomkins, 2001). Close relationships do not necessarily have a predetermined end point, as they often are open ended. Open-ended inter-organizational relationships are evolving in nature (Velez et al., 2008) and thus might develop over time when more interaction is present. Various forms of inter-organizational relationships are present: alliances, joint ventures, supply agreements, licensing, co-branding, franchising, networks, etc. (Parmigiani & Rivera-Santos, 2011). The reasons for firms to make use of inter-organizational relationships may diverge even as benefits they might bring towards the parties involved.
7
between individuals is important (Parmigiani & Rivera-Santos, 2011). Huang et al. (2013) found that business ties might be seen as a strategic tool to gain advantages. It could secure key and scarce resources, facilitate business transactions through informal social mechanisms and navigate changes in institutional and market environments when the legal framework is relatively underdeveloped. The decision for collaboration is made based on the forecast that the required rate of return for the risk that is attached to the collaboration is able to be earned back. Thereby a party must see a prospect to earn fair rewards for the individual risks it takes (Tomkins, 2001).
From the former is to be concluded that both economic and sociological forces might be driving forces behind inter-organizational relationships (Parmigiani & Rivera-Santos, 2011). The plurality of inter-organizational interactions are caught by several factors in literature. Chen et al. (2014) mention shared goals, relational embeddedness and influence strategies to be key antecedents of organizational trust and knowledge sharing. Relational embeddedness is most important, concerning the degree to which relationships are facilitated using trust, mutuality and flexibility. Parmigiani & Rivera-Santos (2011) mentioned the focus on co-exploration or co-exploitations in inter-organizational relationships is very important. Skills required to manage the inter-inter-organizational relationships, trust, opportunism and cooperation are argued to differ between these two forms. Das & Teng (1998) mentioned the confidence in partner cooperation to be the perceived level of certainty that a partner firm will pursue mutually compatible interests in the alliance rather than act opportunistically. So it is “a firm’s perceived certainty about satisfactory partner cooperation” (p. 492). Trust differs from confidence, with trust, risk is to be recognized while this is not the case with confidence (Mayer et al., 1995). The amount of confidence that is needed in a relationship depends on the type of knowledge involved, the amount of resources committed, the objective in the alliance and the type of alliance. So the demanded confidence level may differ from situation to situation and there is no mention of a common level of confidence. Two sources are assigned to this confidence, namely control and trust (Das & Teng, 1998).
2.2 Management Control
In literature it is mentioned that a certain level of trust is needed to be able to have effective controls in any organizational relationship (Das & Teng, 1998). However formal management control does provide a base for aligning interests and avoiding opportunistic behaviour – if one party does behave opportunistically, the other will be able to assign a sanction, and might also be able to create some form of trust (Vosselman & van der Meer-Kooistra, 2009).
8
The control practices have to be agreed upon by the parties. They will help to monitor actions of the parties and provide a base for incentives as well as sanctions (Dekker, 2004; Liu, Vredenburg & Steel, 2014; Vosselman & van der Meer-Kooistra, 2009). The partners within a relationship are motivated by controls to reach desired or predetermined outcomes and their interdependent tasks are being coordinated (Dekker, 2004). Through contractual obligations or controls deviant behaviour might be limited, but also via limiting incentives for deviant behaviours this could be obtained (Laan, Noorderhaven, Voordijk & Dewulf, 2011). So the establishment of proper control mechanisms – organizational arrangements determining and influencing what organizational members do – is important to make the attainability of predetermined goals more predictable (Das & Teng, 1998). Motives to use control mechanism may deviate between different firms. Firms might use them to routinize activities, or to promote non-routine activities (Das & Teng, 1998). Mayer et al. (1995) recognize control mechanism to be used to avoid self-serving behaviours as well as potential litigation. Also the usage for laying a foundation for trust and safeguarding against unforeseen contingencies are mentioned in literature (Klein Woolthuis et al., 2005). In general management control systems are assigned two different purposes in literature. One is monitoring, measuring and rewarding performance by keeping track of the accomplishment of the goals. It is behavior directed to gain information about another party’s level of cooperation. The other is coordination, here management control systems are used to reduce uncertainty, to direct attentions and also to assist in planning (Costa & Bijlsma-Frankema, 2007; Dekker, 2004; Ferrin, Bligh & Kohles, 2007; Klein Woolthuis et al., 2005). Partner control tries to make the pursuit of mutually compatible interests by the partner more predictable (Das & Teng, 1998). Different forms of partnering require different kinds of control mechanism appropriate (Das & Teng, 1998), but also different task characteristics require different control mechanisms (Ouchi, 1979).
9
trust. Informal control mechanisms may help to solve agency problems and facilitate market processes (Malhotra & Murnighan, 2002). Informal control is seen as an important way to build trust (Costa & Bijlsma-Frankema, 2007; Das & Teng, 2001; Inkpen & Curral, 2004).
Management control can create thin trust between the parties involved in a transaction. It does not produce positive behavioural expectations, but it does ensure compensation for expected negative behaviour (Vosselman & van der Meer-Kooistra, 2009). This is what some researchers have called calculus based trust, which is trust based on the formal control mechanisms. They help provide for some base of stability and for reducing risk of contingencies and opportunistic behaviour. An example is a contract, this written agreement may provide in being able to punish a partner whenever he does not conform to the contract and shows opportunistic behavior at the expense of the other parties (Lau & Rowlinson, 2009). This thin trust can be enforced by trust from the institutional environment – social, economic and legal environment - giving credible threats to formal control structures and providing credibility and effectiveness of the formal controls. Thin trust, providing for a zero-positive situation – negative behavioural expectations are compensated, but positive behavioural expectations are not present - is a necessary condition for a transaction to take place. However it will not be sufficient in facilitating a durable relationship (Vosselman & van der Meer-Kooistra, 2009).
2.3 Trust
A common weakness in much of the current literature on trust is the limitation to research trust at just one single level of analysis (Schoorman et al., 2007). Often literature deals with trust on the inter-organizational level. Lots of different definitions are thus to be found in prior literature (Costa & Bijlsma-Frankema, 2007; Velez et al., 2008). Vosselman and van der Meer-Kooistra (2009) define trust as “a cognitive state that generates positive expectations of the abilities, intentions and integrity of the other. It is the result of past deliberative behaviour in an ongoing process. In that process, the parties’ search for individual gains is transparently weakened by relational considerations and norms of co-operation (the goal to act appropriately in the transactional relation and not purely as a ‘homo economicus)” (p.275). Velez et al. (2008) analyzed different definitions of trust and considered trust to be “an expectancy that the other party’s word can be relied on; and a belief in the motives of the other party” (p. 970). Klein Woolthuis et al. (2005) have defined trust in a narrow way based on benevolence, entailing “the expectation that a partner will not engage in opportunistic behavior, even in the face of opportunities and incentives for opportunism, irrespective of the ability to monitor or control that party” (p. 816).
10
The research of Mayer et al. (1995) accomplished to develop a model of trust, which lends itself to be used at multiple levels of analysis, according to some scholars they received feedback from (Schoorman et al., 2007). This master thesis research is concerned with analyzing trust on different levels. So within this research the definition of trust as given by Mayer et al. (1995) will be used: “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (p. 712). Much other scholars have lend the definition of Mayer et al. (1995), as also can be seen in the definitions above, making it a credible definition to use. As can be seen in the definition of trust, within trust relationships a trustor is present. This is the person or organization that is the trusting party. On the other side the trustee is present, who takes the role of party to be trusted (Mayer et al., 1995). The propensity to trust of a trustor is the general willingness to trust others, which is seen as a stable within-party factor (Mayer et al., 1995). Personality as well as experiences and culture might be considered antecedents for the propensity of trust (Schoorman et al., 2007). This characteristic of the trustor is seen as being of influence on trust within a relationship, but also characteristics of the trustee matter. A trustee must be seen as trustworthy, which is build up by several factors. Among these factors is ability, sometimes also referred to as competence, defined as that group of skills, competencies, and characteristics that enable a party to have influence within some specific domain. The second factor mentioned in literature is benevolence, which is the extent to which a trustee is believed to want to do good to the trustor, aside from an egocentric profit motive (Mayer et al., 1995). Also integrity is important for building a perception of trustworthiness, the trustor must have the perception that the trustee adheres to a set of principles that the trustor finds acceptable. Being consistent in actions, credible communications from other parties, sense of justice and doing what is said all contribute to integrity (Mayer et al., 1995).
2.3.1 Inter-organizational trust.
In dynamic and changing business environments collaborations across networks of firms are needed to compete in an effective manner. This is highlighted by the trust-commitment theory, which focuses on establishing, developing and maintaining successful relational exchanges (Chen et al., 2014). As mentioned before, often formal contracts are drawn up when engaging in inter-organizational relationships. Bounded rationality however will cause contracts to remain incomplete and hereby the chance for opportunistic behavior to occur will never be fully covered. It is impossible to cover all possible future contingencies within a contract (Dekker, 2004; Laan et al., 2011; Liu et al., 2014; Vosselman & van der Meer-Kooistra, 2009). So dynamics in the environment brings risk into collaboration, which demands for trust to arise (Mayer et al., 1995).
11
Examples of micro sources are hierarchy, dependence and empathy, which thus might lead to thick trust (Klein Woolthuis et al., 2005).
Inter-organizational trust can according to Zaheer et al. (1998) be defined as “the extent of trust placed in the partner organization by the members of a focal organization” (p. 142). It can be seen as collectively held trust towards another organization by the members of an organization. So an organization may be seen as a number of individuals who agree to act as a group, and this group may choose to place trust in certain things (Tomkins, 2001).
In inter-organizational relationships the emphasis is on credibility, the ability to fulfill obligations and commitments; and reputation, the view on the firm based on past performance (Lau & Rowlinson, 2009). Inter-organizational trust smoothes the negotiation processes and reduces the transaction cost involved with the organizational exchange (Zaheer et al., 2009). Other benefits of inter-organizational trust, as Das & Teng (1998) have recognized in prior literature, are causing desirable behaviour, reducing the need and extent of formal contracts as well as facilitating dispute resolution. If a durable relation is to be build parties have to forgo their own self-interest and show that they are committed to the relationship, and want to cooperate (Chen et al., 2014). To voluntary show cooperative behaviour there has to be a proper situation, the parties have to see the common good, the possibility to share benefits or costs and the need. Situations in which voluntary cooperative behaviour is shown are for example the refraining to hurt a partner or solving problems they have caused. Through these situations trust is built, if there is a lack or defect in these situations behaviour can be considered as being strategic and not cooperative (Vosselman & van der Meer-Kooistra, 2009). Confidence in the cooperation is proven to be key in maintaining inter-organizational relationships (Das & Teng, 1998). Relationship commitment as well as trust are key factors in discouraging opportunistic behaviour and long-term benefits (Chen et al., 2014). Relational signals are based on voluntary local decisions, showing commitment for example through knowledge sharing. If the partner receives these relational signals, trust will increase. A normative frame for the relationship has to be build, to provide for some guidelines for ways to act and to do things properly. The existence of strong normative goals within a cooperation will ensure that search for individual gain is weakened by the relational norms (Vosselman & van der Meer-Kooistra, 2009). To build a stable, ongoing relationship, trust must be mutual (Smets et al., 2013). The reciprocal relationship between trust and risk taking – taking risks shows some kind of trust, and trust leads to risk taking – is likely to be a gradual approach to taking more risks over time. Starting with limited investments and wait for the consequences that occur, results in a kind of trial-and-error approach in building inter-organizational trust (Das & Teng, 1998). By showing trust in portions and observing the consequences, trust can be build, provided that a partner deals with the given trust in an appropriate way (Smets et al., 2013). Trusting relationships may motivate partners to share resources and information with each other (Chen et al., 2014).
12
and update their expectations based on the parties’ performance, and by this the level of trust will change. Trust should thus be seen as a dynamic, rather than a static, phenomenon (Chen et al., 2014; Costa & Bijlsma-Frankema, 2007; Inkpen & Curral, 2004; Rousseau et al., 1998).
For inter-organizational relationships to remain existing, the maintenance of interdependency between the partners goals is important (Lau & Rowlinson, 2009). Often this is done by the preparation of a formal contract. It is possible for an inter-organizational relationship to exist at an informal level without formal agreements. This requires a high degree of trust, often personal trust between key persons within the partnering firms (Lau & Rowlinson, 2009). When interpersonal trust exists in an inter-organizational relationship it might be possible that conflict is reduced, because partners talk more freely towards each other and are less inclined to make things more positive than they are (Zaheer et al., 1998).
2.3.2 Interpersonal trust.
The difference between interpersonal and inter-organizational trust is located in the referent and the origin (Ferrin et al., 2007) as well as structure and drivers (Schilke & Cook, 2013). Inter-organizational trust is collectively held and grounded on control mechanism such as open information systems (Lau & Rowlinson, 2009). To build inter-organizational trust there must be some form of risk taking, equity preservation, communication and interfirm adaptation (Das & Teng, 1998). However, interpersonal trust is trust on the individual level, this kind of trust has got a dyadic relationship. The individuals may develop interpersonal trust, or distrust, based on their prior experiences in working together (Lau & Rowlinson, 2009). At the developmental phase of interpersonal trust also the quality, frequency and tenure of the exchange relationship plays a pivotal role. This will make sure that the individuals do not pursue their own goals only, but keep the collective in mind (Lai et al., 2014; Zaheer et al., 1998).
Interpersonal trust can be divided into two components: affective and cognitive. In the affective component individuals make emotional investments in the relationship. They express genuine care, believe in intrinsic virtue en reciprocation of these sentiments. It is ‘trust from the heart’ (Lai et al., 2009). Interpersonal trust thus finds its foundation in emotional components, the emphasis is on integrity, signifying honesty and confidence; and reliability, signifying what can be trusted (Lau & Rowlinson, 2009). The cognitive component stores ‘trust from the head’. We choose ourselves who to trust, in which respects and under what circumstances. These choices are made based on ‘good reasons’, constituted from evidence of trustworthiness (Lai et al., 2014). Ferrin et al. (2007) also mentioned self-perception theory to have a stake on the individual level. This theory holds that individuals use their own past behavior to understand their own attitudes and beliefs about a partner. They also argue that, via the symmetry principle, trust showed by one party towards its partner may influence the level of trust of that partner. This principle holds that propinquity and frequent interactions on their own may be enough to cause partners to develop similar sentiments towards one another (Ferrin et al., 2007).
13
being very important in strategic relationships (Lau & Rowlinson, 2009), of especial importance are interpersonal relationships between key individual in the organizations. The next section will address these key individuals and their relationships.
2.3.3 Boundary spanners.
The individuals that are important in managing relationships within an organization are called boundary spanners (Schilke & Cook, 2013). As their name already suggests, boundary spanners are on the boundary of an organization performing their two primary roles: information processing and external representation. In the information processing role the boundary spanners serve as a bridge between organizations and the external environment. They receive information from the external environment which they have to decode, filter and translate. After that, the right information can be passed towards the relevant user. The most important behaviours in the information processing roles are communication and knowledge sharing, which contribute to the two-way information flow and sharing. In their second role, external representation, boundary spanners facilitate resource sharing, convey perceptions and expectations, and provide coordinated assistance to the external environment. The most important behaviours in this role are cooperation and conflict resolution. With these behaviours organizations are able to connect with each other and achieve mutual goals, with conflicts being resolved as unexpected contingencies appear (Huang et al., 2013).
Boundary spanners take care of communication and monitoring, often as being project managers, department heads or the representatives who are in charge of the relevant relationships. These members usually also are deeper involved within the relationship (Schilke & Cook, 2013). Strong interpersonal ties between the boundary spanners of organizations are likely to affect the business decisions to be made. They might provide a base for connecting and sharing information as well as being a relationship lubricant for effective cooperation and problem solving (Huang et al., 2013). The boundary spanner is the person in the organization that tries to gather clues about the trustworthiness of a potential partner. These clues might come from prior interactions, publicly available information or from institutional categories. When the influence of a boundary spanner in the organization is too low, or when the person is displaced by a new employee the trust development process might stop (Schilke & Cook, 2013). The notion of changing organizational positions is important, but according to Tomkins (2001) there is some continuity of organizational trust intensity to be assumed.
In the research of Huang et al. (2013) the results show that interpersonal ties are important in driving superior performance of organizational relationships. High degrees of mutual trust, satisfaction and commitment are present in organizational relationships with strong interpersonal ties. When personal ties are present between boundary spanners, information processing and external representation are improved. However, they also argue that the direct antecedents of relationship quality are knowledge sharing, conflict resolution and cooperation, not the interpersonal ties themselves (Huang et al., 2013).
2.3.4 Sub-research questions.
14
employees of an organization which are co-located or who span national boundaries. They concluded that frequent contact, reciprocal support and strong and deep relationships help in building this interpersonal trust. Lau & Rowlinson’s (2009) research confirmed that within collaborations trust existed at the two levels – interpersonal and inter-organizational - and found that keeping commitments and demonstrating cooperation are expected from trust. These papers however focus on the factors and properties that are important for the different kinds of trust. To connect the two levels of trust a sub-question is defined:
‘What is the influence of interpersonal trust between boundary spanners on inter-organizational trust in an inter-inter-organizational relationship and vice versa?’
The results of the study by Laan et al. (2011) suggest that it might be possible that inter-organizational trust can be constituted by interpersonal trust. They state that: “for individuals acting on behalf of their organization in a project alliance, good interpersonal relations and trust are key to the development of inter-organizational trust” (p.106). So in this the role of boundary spanners might be important, being the individuals acting on behalf of their organization. Based on their research however they cannot come up with a solid conclusion on this case, they demand for further research about stimulation of virtuous and vicious cycles of trust. Also the work of Lai et al. (2014) shows the importance of boundary spanners, trust between these persons is showed to be a significant predictor of organizational citizenship behaviors. Lau & Rowlinson (2009) conclude that: “partnering does not necessarily display more trust than non-partnering projects, but rather it helps to develop inter-firm trust” (p. 552). So the importance of interpersonal trust in developing inter-organizational trust is shown in literature, but no suggestions are made for the fleshing out of this process. This leads to the sub-question:
‘How can inter-organizational trust be constituted through interpersonal trust between boundary spanners?’
15
In most research, interpersonal trust is dealt with in workplace setting, such as manager-subordinate relationships (Schoorman et al., 2007). These settings often exclude goodwill trust or deal with it to a lesser extent. To fill this gap the following sub-question is formulated:
‘If the interpersonal trust relationship between boundary spanners does not exist in an organizational setting and trust is said to be domain specific, does this interpersonal relationship – based on goodwill trust - have the possibility to be taken towards the domain of the workplace – competence based trust - and thus in this way be extended towards other domains?’
If interpersonal trust is already present between two individuals, and these individuals are planning on developing an inter-organizational relationship, this might have consequences for the use of management controls within this relationship. For example the choice could be not to use control mechanisms because there is enough trust and this trust will be harmed by controls (Das & Teng, 2001; Dekker, 2004; Inkpen & Curral, 2004; Klein Woolthuis et al., 2005), or to use management controls to provide for more transparency (Velez et al., 2008) and as a sign of commitment (Klein Woolthuis et al., 2005). The choice of control mechanism may also lead to differences in the interpersonal trust present, this might be caused by different ways of looking at the purposes of this control mechanisms, as is mentioned by Klein Woolthuis et al. (2005). We might therefore ask:
‘How influences interpersonal trust between boundary spanners the use of management controls within an inter-organizational relationship and vice versa?’
These sub-questions connect the concepts of interpersonal trust, inter-organizational trust and management controls as can be seen in figure 1. This figure provides overview of the concepts involved as well as the sub-research questions formulated.
16
3. Methodology
This section first contains information about the research method used in this thesis and justifies it. The second part will explain the methods that are used for data collection. Finally there will be a description of the case that is studied.
3.1 Research Method
The questions asked in this research, as summarized in figure 1 in the previous section, are dealing with relationships between concepts. The aim is to understand the underlying mechanisms between those concepts. In gathering this information, a gap in an immature literature field is addressed, as is explained in the literature review. Eisenhardt (1989) states that: “development of theory is a central activity in organizational research” (p. 532). This research is done on the basis of the theory development process, because this is a good way to extend and merge an existing, but immature literature field. Eisenhardt (1989) states that case studies are appropriate means in building theory. Within a case study the case is looked at in his real world context (Yin, 2003) and understanding of dynamics in single settings is sought for (Eisenhardt, 1989).
A case study is most relevant if the aim of the research is to explain how some (social) phenomenon works (Yin, 2003). The aim of this thesis is also to understand a social phenomenon, so a case study fits this research. If, like in this research, the social phenomenon has multiple levels of analysis, the case study employs an embedded design. The embedded design enables multiple levels of analysis (Eisenhardt, 1989). The two levels involved in this research are the individual level and the organizational level.
The benefit of using theory development is that processes are adaptable and can be performed in parallel. When analyzing the data important constructs might come up, with flexible data collection the possibility exists to include these constructs in future data collections. In theory building this flexibility can be seen as controlled opportunism (Eisenhardt, 1989). Thereby, flaws in the research could be repaired also, which is good to reach construct validity (Van Aken, Berends & van der Bij, 2012).
3.2 Case Description
The case study took place at a company in the starting up phase in the Netherlands, FODR. This case was chosen based on purposive sampling, because this case provided opportunity to transparently observe the constructs of multiple levels of trust and management controls (Eisenhardt, 1989). According to Silverman and Marvasti (2008), purposive sampling “allows you to choose a case because it illustrates some feature or process in which you are interested” (p. 166). Besides showing trusting relationships on different levels, also the clients and partner organizations are multidisciplinary (de Regt, 2014), increasing generalizability of findings across industries.
17
Netherlands). They will make the lives of their clients easier and more comfortable by relieving their clients from activities they are unable to perform or want to have outsourced. The service they offer will become a very broad one, ranging from walking dogs and arranging holidays towards investing and executing wills. The client will only pay for the services they use, the benefit for them is that they will always have someone as kind of back-up to perform activities they do not like or will not get done in time.
FODR is structured with one head company and there are six private businesses underneath this company (dealing with different aspects of the service offered). Also FODR also has to bond with other companies to serve their clients fully. The company is in the start-up phase, so trusting relationships have to be sought with other companies to be able to fully service their end clients, but also with the end clients themselves. Their main focus for end-clients will be on busy entrepreneurs and wealthy elderly, but they emphasize that they will not reject any possible clients. To be able to start this service of total unburdening, the business people involved will first make use of their own personal network for reaching possible clients and companies to cooperate with (de Voogd, 2014).
3.3 Data Collection Methods
Data triangulation is used, which means that multiple data collection methods are used which might combine qualitative and quantitative data, providing stronger substantiation of constructs and thereby increasing reliability and validity (Van Aken et al., 2012; Eisenhardt, 1989; Saunders, Lewis & Thornhill, 2009; Swanborn, 1996). The different sources of data might complement or correct each other by which shortcomings are solved (Van Aken et al., 2012). A complete picture is developed by using triangulation and mutual validation is obtained (Fielding & Schreier, 2001). Within this research the main source of data comes from semi-structured, in depth interviews. Through these interviews well-founded knowledge about our conversational reality can be gained (Kvale & Brinkmann, 2009). Another source of data exists out of documents, to give credible background information that is needed. The documents for example exist out of marketing plans, presentations, and more. Access to all needed documents was secured, because of family contacts within the company. Possible biases by this personal contact are avoided by exclusion of interviews with this person. The last data source are short questionnaires among trustors, they are used to provide quantitative data about propensity to trust, which might affect findings (Gill, Boies, Finegan & McNally, 2005; Mayer et al., 1995). By using quantitative measures relationships that are not salient might be indicated (Eisenhardt, 1989). Measurements in the questionnaires are based on theory, which benefits the construct validity of this research (Van Aken et al., 2012). The measurements for propensity to trust of the trustors are borrowed from well-known scholars Mayer & Davis (1999), who developed eight questions to measure propensity to trust on a five-point Likert scale of which six are used which were most useful. Additionally, the three most suitable questions of their questions about trust are used. These were adapted to measure the difference in trust outcomes when interpersonal trust is present or absent, in such a sense that respondents did not take their own management in mind but the management of the other company. The survey conducted can be found in Appendix 1.
18
by means of this some standardization can be established (Yin, 2009). By dividing the interviewees in groups, a division is made in interview protocols to collect different kinds of data from the groups that are of interest. The interviewees are divided in three groups, the first containing the trustees, the second trustors with existing interpersonal trust and the last trustors without existing interpersonal trust, as shown in table 1. It is important to represent all roles that are involved (Van Aken et al., 2012), by dividing the interviewees in this three groups all roles are represented, increasing the reliability of the research. As can be deducted from table 1 as well, the interviews are held with a single interviewee at the time (Alvesson, 2011). Within this research face-to-face interviews are used (Alvesson, 2011), because this has the advantage that also nonverbal communication can be observed and trust was built easier (Saunders et al., 2009). Within the interviews former experiences of the interviewees, out of other relationships, were involved, because of FODR being in the very beginning of the start-up phase. Including other relationships gave them the possibility to compare what was happening when interpersonal trust was present and when it was absent.
Name/Role Profession Relationship Duration
Trustee 1 FODR – administrator & financial planner & capital advisor Jurist Interpersonal/ Inter-organizational 1.10.32
Trustee 2 FODR – coach, organizer, trainer & administrator
(Juridical) Trainer
Interpersonal/
Inter-organizational
1.09.53
Trustor IP 1 Jurist Interpersonal 1.23.25
Trustor IP 2 Soil research Interpersonal 1.23.23
Trustor IP 3 Trailer production Interpersonal 1.07.15 Trustor IO 1 Dissemination (papers, leaflets,
etc.)
Inter-organizational
1.12.17 Trustor IO 2 Production manufacturing
Inter-organizational
36.36 Table 1 Interviewees
3.4 Data Analysis
19
20
4. Results
The analysis of the in-depth interviews with Atlas.ti has yielded several results, these are shown in the following section, as well as the results of the short survey filled in by the trustors. The research questions are dealt with one by one, and data is provided which helps to get towards answering them.
4.1 Influence on Inter-organizational Trust
First the sub-question about the influence of interpersonal trust between boundary spanners on inter-organizational trust in an inter-organizational relationship and vice versa, will be addressed. From the interviews it became clear that several factors are important to facilitate the development of inter-organizational trust. Among these factors the often mentioned ones are communication, being open, transparent and honest. If these factors are present and on a good level it seems more easy to develop inter-organizational trust.
4.1.1 Influence of interpersonal trust on inter-organizational trust.
If interpersonal trust is present the interviewees agreed upon each other that the communication lines become shorter. By engaging in inter-organizational relationships, personal relationships can be used as a “wheelbarrow” (Trustor IP 2), it lowers some barriers. Besides this, it also becomes clear that flexibility is increased:
“So you are more inclined to adopt something, to adjust something towards a shared goal, from someone you have a personal bond with than from someone who is a real a third party.” (Trustor IP 1)
“It provides some kind of flexible extension of your own company.” (Trustor IO 2)
Mainly it is argued this flexibility is increased because you are more involved and known with the context of the other party. By means of this conflict might also occur less, the flaws will be recognized and repaired sooner because openness is increased, causing partners to speak up earlier. The interpersonal relationship seems to provide for more frequent contact moments. If problems are detected the partners will be more inclined to proceed in joint problem solving which often results in efficient way of resolution:
“Well, and then you come up with a solution, often together.” (Trustor IP 3)
Data analysis also shows that when boundary spanners have interpersonal contacts they seem to extend, or ‘associate’ (Trustor IP 2) the characteristics of their contact person towards their whole organization, as is said by Trustor IP 1:
21
Or as Trustee 1 puts it when talking about image and extending persons towards their organization: “That is what you get if you see the leader of the company and think: yes. So the identification, the personification of the organization.”
This extension of individual persons to their organizations changes the composition of the communication, it becomes more friendly and informal as well as brings more honesty and openness.
“So I think that the openness that you are looking for in that relationship, which also is the only thing that helps you to get along together, you have that immediately from the interpersonal relationship.” (Trustor IP 2)
So interpersonal trust provides for short communication lines, better and more informal communication, joint conflict resolution and flexibility in the inter-organizational relationship. Individual persons can be used as wheelbarrow, which lowers barriers in inter-organizational relationships and provides openness and transparency.
4.1.2 Influence of inter-organizational trust on interpersonal trust.
The influence of inter-organizational trust on interpersonal trust is less evident. Most of the interviewees try to distinguish their professional lives from their personal lives.
“If my trust is harmed with regard to the professional level, it does not necessarily mean that the personal relationship is broken.” (Trustor IP 1)
By engaging in an inter-organizational relationships you get ‘broader knowledge of the person’ (Trustor IP 1/Trustee 2).
“So it broadens. It is not something you forget acutely at the moment you go to the pub together.” (Trustee 2)
“I think that when you get to know him more as an entrepreneur, get to know about his company, you are going to settle him on that interpersonally a bit more.” (Trustor IP 2) However, often it seems hard to distinguish these different domains from each other, and the professional field is taken into the interpersonal field as is shown for example by Trustor IO 1:
“Well, do you know what is most annoying to me? If your organization makes a mistake on Pietje, and imagine you play golf together and you will be on the golf course with Pietje on Friday. You fírst have to explain him whý it went wrong.”
22
“The personal relationship is strengthened, because you took the right guess with each other.” (Trustor IP 1)
If it goes wrong or is below expectations, and given explanations are inconvenient, the downside, a breach of trust, seems to weigh heavily as is explained by Trustor IO 1:
“He was delivering something with his organization to mine, and that just does not look like it. Even so I look at him for that. I would never say anything about it to him, in a personal atmosphere, but it has been the last time doing business. But the other way around, if it is good, it does not do anything.”
Other trustors indicate results below expectations are able to have a negative impact on the interpersonal trust level. However, these are tried to be kept in the professional field and not to reflect on the interpersonal level.
Individuals try to separate their professional lives from their private lives. However engaging in an inter-organizational relationship, with an interpersonal contact, does enrich and broaden the knowledge about that individual. This seems to be unavoidable and results in the professional field impact on the interpersonal relationship. Trustor IO 1 indicates positive results do not affect the interpersonal relationship, but negative ones do reflect negatively on the interpersonal relationship. On the contrary, other trustors indicate that positive results increase the status of the partner and negative outcomes are tried to be excluded from the interpersonal field. The discussion will provide a possible explanation for this contradiction.
4.1.3. Interaction between interpersonal trust and inter-organizational trust.
The private and professional field do interact with each other, while interviewees indicate to separate them as much as possible. Having interpersonal trust yields several benefits when engaging in inter-organizational relationships. Flexibility is increased and the whole inter-organizational relationship appears to get facilitated. Events in the professional field reflect on the interpersonal field, in such sense that knowledge becomes enriched and broadened.
4.2 Constitution of Inter-organizational Trust
Here, the focus is on the sub-question how inter-organizational trust can be constituted through interpersonal trust between boundary spanners. Throughout the interviews it became clear that interpersonal trust is seen as being very important in composing inter-organizational relationships and inter-organizational trust. As soon as there is an interpersonal relationship present at one of the boundary spanners, they use the trust they gained for themselves within their own organization:
“If I trust you, I make you trustworthy.” (Trustee 2)
23
As can be seen from the former citation the relationship is then going to spread within the organization and then bonds are formed on more levels in the organizations. Trust becomes diffused: “But your own organization is going to bond with the other organization and if it is correct, they are going to found personal bonds with each other. Then you get some sort of oil slick that gets bigger.. So if it goes well, the interpersonal relationship is going to expand itself.” (Trustor IP 1)
Employees get involved by their employers in the personal bonds and often this results in a more informal way of communication between the two companies from the start on. For example it is said that:
“It becomes more closely related, because we take the people with us.” (Trustor IO 1)
“You bring the person in, acquaint him with key people in your company and let them have a chat.” (Trustor IO 2)
Employers are also in the position to make use of the formal power they get by their position in the hierarchy, to diffuse the interpersonal bond throughout the company. But it seems that often it is more based on the trust their employees have in them.
“At the moment someone high in the organization hierarchy says it is trustworthy, they accept it sooner. If they trust you, then you get some kind of step in-between. You are trustworthy in the organization, you indicate someone else is trustworthy, then the people are inclined to trust that person sooner.” (Trustor IO 2)
“If I am to be trusted, then people will also trust that the people I work with are to be trusted.” (Trustee 2)
Most of the time there is no real plan to establish inter-organizational trust. However, it might be possible that out of client demands you are forced to get in touch with another party, just to fulfill the clients wishes. If this is the case, interviewees are more likely to take a leading position, but every company still needs an individual analysis and approach. This is also not likely to happen when an interpersonal trust relationship is already present. Then the process seems to be smoother and more efficient, and the factor of granting is very important. Again the flexibility seems to be higher.
24
4.3 Domain Specifity
In light of the third sub-question we asked whether the interpersonal relationship between boundary spanners has the possibility to be taken towards the domain of the workplace, while it does not exist in an organizational setting. If talking about interpersonal relationships the interviewees indicated the emotional components to be of much more meaning than competences.
“And with me it does not matter whether he is a painter, plasterer or that he is a director of a company employing two hundred man.” (Trustor IP 2)
“Feeling is first. Which should be directly proven by competences.” (Trustor IP 1)
As can be seen from the last citation, competences are also taking part in interpersonal relationships, however this is not key, especially not in interpersonal contacts coming out of leisure time. If interpersonal relationships came from previously business contacts, competences have a bigger stake. Interpersonal contacts from leisure time are composited of emotional components more than interpersonal business contacts are. These last relationships tend to stay more limited towards business.
“If it is from a previous business relationship, you already communicate on business level. Then the relationship is already delimited business wise. While if you know someone from, well hockey or some kind like that, you start on a more social ground.” (Trustee 2)
When interviewees were talking about inter-organizational relationships on the contrary, the competences were of more importance than emotional components, as is said by Trustor IO 1:
“I would rather have someone I can personally deal with somewhat less, but who arranges it perfectly for me businesswise.”
Interviewees also pointed towards the fact that someone has employees in their organizations, and however they are inclined to subscribe the characteristics of their contact person towards them, their characteristics and competences are not necessarily the same. So it might be that someone has got no influence on some things, because employees got to deal with the business on the lower levels. It is not only about the competences of the person himself, but about the competences in his organization should to be fine.
“But also at that point I am awake, because if I have a notary I can get along with very well, who already puts corporation structures to paper very well for dozens of years, it does not mean that his employees who work it all out, are just as good.” (Trustee 1)
Interviewees indicate it is not easy to lift a personal relationship towards an inter-organizational relationship. A business demarcation has to be sought for and caution has to be taken with the possibility of the interpersonal bond being affected by the business field. Especially because influences might come from other persons in the organization, and not from the contact person himself.
25
“So where it maybe in the first instance it was on more superficially or friendly base, is now coming a business component within it.” (Trustor IP 1)
But this often seems to happen unconsciously as Trustee 2 indicates by saying:
“It is not that you are thinking about it constantly, but is knowledge, information you gained. It is caught in your brain.”
From the former it can be seen that on the interpersonal level, emotional components are indicated as being very important. On the inter-organizational level however, competences are more important than the emotional components. On the inter-organizational level more people are involved in the relationship, so it is about the competences of the whole organization. If an interpersonal relationship is started based on emotions or feelings, a demarcation for the professional field has to be established and the domains will exchange information with each other.
4.4 Management Controls
The fourth sub-question deals with the influence of interpersonal trust on the use of management controls within an inter-organizational relationship and vice versa. Management controls take care of quality, objectivity, transparency and staying sharp according to the interviewees. Interviewees agree upon the fact that management controls are very important and should not always be interpreted negatively:
“At the moment you check on someone, you also see the stuff he does very well.” (Trustor IO 1)
4.4.1 Influence of interpersonal trust on management controls.
Often there are some formal controls built into the process. When this is the case, the controls are not left out. However, it seems that in the case of interpersonal trust being present, management controls are used with more flexibility, or even slackness according to some interviewees:
“But they are made some wider, or interpreted broader than intended, through the personal contacts. So they are more flexible and volatile in that sense. Again the rubber band with more stretch.” (Trustor IP 1)
“I think you monitor less tight.. you interpret, or appreciate, the output in another way.” (Trustor IP 2)
Data analysis also showed a difference in the tone of the management controls when an interpersonal trust relationship is present. For example it is said that:
“Much more informal. Yes it is, at the moment something is going on you grab your telephone immediately.. If it is just about a business relationship, then there is the quarterly conversation, or weekly conversation, whatever.” (Trustor IO 1)
26
From the interviews it became clear that often there is pressure from the lower levels in the organization to keep everything clear and objective and that the employees themselves deal with the inter-organizational relationship in a more formal way:
“Things are going bottom-up, at least that is what they do in my company, to get agreements really on paper.” (Trustor IP 1)
“You just notice that employees keep it, generally speaking, a bit more formal.” (Trustor IO 2)
But also the boundary spanners themselves indicate that they want to keep things clear within their company, securing it with clear controls. They want to make sure the relationship is objective for their employees:
“Also for others in my organization I have to describe just thát relationship clear, that it is open, that it is transparent.” (Trustee 1)
Data analysis also shows a difference between offerings. Interviewees who provide a service with a high level of own interpretation, or which emotionally affects people, appear to look to management controls as being more important if you know someone personally.
“The biggest pitfall of course is ah, everybody knows each other. And if something goes wrong thén, the suffering is incalculable. So that when you have to have it additional well-controlled.” (Trustee 2)
Interviewees who are providing a solid product or services which involve minor personal attachment, on the other hand seem to look at management controls as being less important if a personal trust relationship is present.
“In the familiarization phase, there you need some management monitoring.. in the beginning it is a bit more, in the course of time it fades away a bit.” (Trustor IO 2)
“You build something that has a solid mass, and on that base it is correct or it is bad. There is not really something in between.” (Trustor IP 3)
The above shows that interpersonal trust causes management controls to have more stretch in interpretation and implementation. The communication of the results also seems to become more informal. However from lower levels in the organization often pressure is exercised to keep things clear, and thus keep formal controls. If high personal attachment is involved, management controls seem to get more important and act as safeguard for the interpersonal relationship. In contrast to products or services with low personal attachment, where the importance of management controls decreases because more trust is present.
4.4.2 Influence of management controls on interpersonal trust.
27
“If the management controls show result, then it also has a personal influence, you address it with each other.” (Trustor IP 2)
“What they display, that might sometimes be of influence in the personal ambiance, or the interpersonal trust, but I have to say most of the times it goes well.” (Trustor IO 2)
There is also a possibility to get a feeling of mistrust by the use of management controls. As long as management controls are agreed upon at the beginning, often they are not seen as being a sign of mistrust. However if this is not the case and the other company, in which an interpersonal bond is present, starts to use management controls on you, this might harm the trust relationship on the individual level as well:
“That sometimes is the problem, if they start doing it after three years. Why are going to check on me suddenly? Don’t you trust me?” (Trustor IO 1)
Thus the use of management controls might affect the interpersonal trust relationship, depending on the results that are shown by them. Introducing management control during an inter-organizational relationship which were not agreed upon at the start, could cause feelings of mistrust which also reflect on the individual level.
4.4.3 Interaction between interpersonal trust and management controls.
Overall management controls become more flexible when interpersonal trust is present and their results do reflect on the interpersonal relationship based on the results they show. Offering services with high personal attachment seem to increase the need for management controls, while offering products or services with low personal attachment decreases the need for management controls when interpersonal trust is present.
4.5 Influence on Nexus
To complete the picture we address the main research question: ‘How does the existence of
interpersonal trust influence the relation between inter-organizational trust and management control practices?’ Inter-organizational trust in inter-organizational relationships will bring benefits for your company as is said by:
“Efficiency and better, more optimal servicing of your client in total.” (Trustor IP 1) Also management controls have a big stake in inter-organizational relationships:
“The objectivity always has to be able to carry the subjectivity.” (Trustee 1)
The interviewees agreed upon management controls and inter-organizational trust as being dynamically related towards each other. The results already show interpersonal trust to be of importance for the interpretation of the two distinct components. If interpersonal trust is brought into a relationship, respondents pointed out that:
