The Cognitive and Behavioral Impact of Promotion and Prevention Contracts on Trust in Repeated Exchanges

Abstract

Although contracts certainly facilitate exchange, scholars debate whether contracts and trust are complements or substitutes. Recent theoretical work suggests that contract frames influence the relationship between contracts and trust. We test and extend this theorizing by examining the effects of prevention and promotion contract frames on trust and some potential cognitive and emotional mechanisms responsible for them. We also explore how unexpected negative events affect trust developed under different contract frames. Experiment 1 found that promotion contracts fostered stronger attributions of benevolence than prevention contracts, but emotional experiences of the exchanges did not differ. Additionally, trusting intentions were higher following positive exchange experience under promotion than prevention contracts. Experiment 2 found that people were more willing to engage in trusting behavior following positive exchange experience under promotion than prevention contracts. However, violations of exchange expectations were more damaging to trust developed under promotion than prevention contracts. Together, the studies indicate that contract frames and whether exchange experiences are positive or negative affect the relationship between contracts and trust, likely because contract frames influence attributions of benevolence.

Culture and Patterns of Reciprocity: The Role of Exchange Type, Regulatory Focus, and Emotions

“…These feelings allow them to seek more opportunities to strengthen their social interactions (Schug et al, 2010). Thus, individuals’ promotion focus in North American settings (Lee et al, 2000) is more likely to be associated with promotion-focused rather than prevention-focused emotions (Friedman & Förster, 2008; Gorman et al, 2012; Weber & Bauman, 2019).…”

Knowledge sharing in project-based supply networks

“…Third, scenario-based experiments allow for standardizing situational factors and randomization of treatments across subjects, leading to high external validity (Rungtusanatham et al, 2011). In recent years, experiments have gained momentum within management and OSCM research (Eckerd et al, 2021;Vanpoucke and Ellis, 2019;Weber and Bauman, 2019), and have been widely used to study the effect of a range of network-level (Brands and Mehra, 2019), and interorganizational (Chen et al, 2016) factors on individuals' motivation and behavior.…”

“…In recent years, experiments have gained momentum within management and OSCM research (Eckerd et al. , 2021; Vanpoucke and Ellis, 2019; Weber and Bauman, 2019), and have been widely used to study the effect of a range of network-level (Brands and Mehra, 2019), and inter-organizational (Chen et al. , 2016) factors on individuals' motivation and behavior.…”

Performance feedback and organizational learning: the role of regulatory focus

“…We contend that a firm's implementation of strategic change is driven by organizational cognition and, in particular, by its regulatory focus (Gamache et al , 2015; Higgins, 1997, 1998; Jiang et al , 2019; Rhee and Fiss, 2014; Weber and Bauman, 2019) . Although this theory originated as an individual-level construct, it is increasingly being applied to teams and organizations (Brockner et al , 2004; Gamache et al , 2015; Johnson et al , 2015).…”

“…Promotion and prevention framing are also the subject of a growing number of organization studies (e.g. Cacioppo et al , 1997; Higgins, 1997; Weber and Bauman, 2019; Weber and Mayer, 2011), based mainly on the Carnegie School's tenet that how we frame a problem guides our search and matching processes, which causes significant variation in individuals' risk-taking behavior. Indeed, a firm's performance is not viewed as a success until its members subjectively interpret and make sense of the event as positive.…”