Institutions, controls, and Inter-organizational Trust

A critical challenge facing organizations today is the management of inter-organizational relationships. Unlike extant literature about this topic that considers trust as a monolithic concept the thesis uses a more nuanced approach that encompasses the different dimensions of trust as well as the link between them and relates these dimensions to the structural and institutional context of the relationship. It is argued that the decision to trust is not only calculative but also has a social orientation towards other actors and towards society as a whole. The empirical research consists of three studies presented in chapters two, three and four and uses data collected through two cross-sectional surveys. This thesis contributes to the extant literature in two ways. First, it studies how the interaction of different governance mechanisms influences performance. Results show that a combination of behaviour-based or output-based contract control mechanisms, social control and relational trust can be used to manage buyer-supplier relationships. Second, it enhances our understanding of how trust, an important type of governance, develops between inter-firm collaboration partners. The analyses in the thesis indicate that calculus-based trust is necessary to produce identification-based trust and that voluntary relational signaling both moderates and mediates the relationship between the two types of trust. Next, the results suggest that both the direct effect of institutional trust and its interaction with reliance on contracts have a positive association with calculus-based trust. Overall, this thesis contributes to the management accounting and control literature by providing insight into the causal processes that drive the relationships between the different trust, control and contract related concepts.