Interorganizational Trust, Governance Choice, and Exchange Performance

Abstract

This paper looks at when and how preexisting interorganizational trust influences the choice of governance and in turn the performance of exchange relationships. We theorize that preexisting interorganizational trust complements the choice of governance mode (make, ally, or buy) and also promotes substitution effects on governance mode choice while impacting exchange performance. We evaluate hypotheses using a novel three-stage switching regression model and a sample of 222 component-sourcing arrangements of two assemblers in the automobile industry. Analysis of our data broadly supports our hypotheses. High levels of preexisting interorganizational trust increased the probability that a less formal, and thus less costly, mode of governance was chosen over a more formal one. This finding suggests a substitution effect of interorganizational trust on governance mode choice that in turn shapes exchange performance. We also found a complementary effect of trust on performance: Regardless of the governance mode chosen for an exchange, trust enhanced exchange performance. Additional evidence of the complementary effect of trust on performance was that trust somewhat reduced interorganizational conflict.

Evolving ICT and governance in organizational networks - Conceptual and theoretical foundations

“…Trust among participating organizations pertains to both informal relationships and formal governance mechanisms, such as service level agreements, contracts and benchmarks. Interorganizational trust influences the type of governance, which in turn influence the performance of exchange relationship (Gulati and Nickerson (2008)). Three kinds of trust are salient in these social relationships.…”

Development of Relational Capability in Technology-based Companies in the Information and Communication Technology Sector

“…[9] explain that the coordination of a partnership can be divided into two tasks: inter organizational coordination and coordination of the partnership portfolio. While the inter-organization refers to the coordination of individual partnerships [10], the partnership portfolio coordination deals with the integration of all strategic partnerships of an organization [11].…”

Capital social em rede organizacional: uma análise de suas dimensões explicativas

“…O conceito de confiança tem contribuído para o desenvolvimento de conceitos transversais à ciência administrativa, que podem explicar, em parte, a complexidade da interação entre as organizações e a forma pela qual o capital social dela derivado encontra-se ancorado nas estruturas sociais (Brunie, 2009;Kaasa, 2009;Chow & Chan, 2008;Gulati & Nickerson, 2008;Houghton et al, 2009;Theingi et al, 2008;Batt, 2008;Leana & Pil, 2006;Sorama et al, 2004;Smith & Lohrke, 2008;Burt, 2001;Adler & Kwon, 2002). Trata-se de um fenômeno complexo que confere às relações entre organizações um caráter relacional, possibilitando a cooperação, a troca de experiências, a fidelidade, o uso compartilhado de recursos e a comunicação, entre outros aspectos relacionais que são determinantes na construção da dinâmica e integração social da rede (Goel et al, 2005).…”

“…Para Gulati & Nickerson (2008), este construto explica, em parte, as relações interorganizacionais, portanto, a dimensão relacional do capital social (De Wever et al, 2005). A confiança tem sido apontada ora como antecedente, ora como consequência do capital social, ou seja, o capital social gera confiança que, por sua vez, gera capital social.…”

“…Nesta ótica, a confiança seria resultado da ação coletiva bem sucedida. De um lado, a confiança implica respeito mútuo e reciprocidade e, por outro, ela sugere certo grau de vulnerabilidade e risco (Gulati & Nickerson, 2008;Björk & Virtanen, 2005). Ao refletirem sobre a noção de confiança, Lyons & Mehta (1997) destacam as noções de "confiança socialmente orientada" e "confiança autointeressada".…”