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Management control systems, trust and risk in inter-organisational relationships: The case of Francisco González de la Sierra and its partner Rivas y Cantallops (1847–1864)
Abstract
This article is intended: (1) to provide evidence about the practices in the nineteenth century of inter-organisational relationships when parties accepted sharing performance risks; and (2) to contribute to reducing the gap about the trust–control system dynamic interaction and its effect on risk through empirically analysing a non-contemporary setting. Our study analyses the ongoing relationship of a small commercial company with its main partner during the period 1847–1864, and examines the formal systems used by the company to monitor and coordinate its partner's activity and the evolution of inter-firm trust throughout the whole life cycle of this relationship.
... At the end of the eighteenth century, Cadiz was still the main Spanish commercial port, being the central hub of the overseas businesses. Traders from all over the world settled in Cadiz, by joining the Trade Association of the city 3 (Consulado de Comercio de Cádiz), these traders showing being at the forefront of the commercial practices (Capelo, 2007;Capelo, Araújo and Álvarez-Dardet, 2015). Liberalization measures introduced by the government from 1766 onwards facilitated that traders had access for the first time to municipal positions, increasing their influence over local government, until then occupied by people who accredited the due social recognition (Bustos, 2017). ...
This paper aims to extend the knowledge about how ad hoc accounting and accountability practices arose and were used in the past to face a situation of crisis in the context of local government. With this purpose, it addresses a health public problem in a specific context, the yellow fever epidemic in Cadiz in 1800. The specific characteristics of the setting, where acquaintance with accounting was usual, allow setting the following specific objectives: (1) to explain the genesis of the accountability systems and the accounting itself used for local government management of the epidemic and (2) to explore the versatility and plasticity that accounting background provides to the records produced in this context.
To accomplish them, primary sources as well as publications of the time have been considered. The evidence obtained shows that both an accountability system and a basic bookkeeping system influenced by the local accounting and medical background arose in the local context. Moreover, the findings suggest that the generalized accounting background promoted the self-serving use and interpretation of the records by local government, local Church, trade association and medical profession. The value that local society attributed to accounting books was important in this sense.
Social network analysis (SNA) offers a powerful set of tools to grasp the systems of credit in which economic actors were involved in the early modern period. It can be applied to transactions recorded in account books. This chapter focuses on Levi Hollingsworth who was one of the many Philadelphia merchants that helped connecting American rural consumers to the Atlantic world of goods, through a massive circulation of credit in the end of the eighteenth century. This paper starts with basic considerations about the shape of a merchant network of credit based on transactions drawn from account books. In the second part, I discuss the fact that the position actors held in a merchant network had decisive implications regarding the credit a merchant like Hollingsworth gave them access to. The involvement in a complex commercial structure was a resource in the early modern period. In the third part, I discuss the differentiated use of means of payment to back credit flows. I show that the position in the network affected tendencies to use one means of payment over the other. I discuss how social networks could affect economic behavior, especially showing how trust facilitated credit flows.
A conceptual challenge in exploring the role of trust in interorganizational exchange is translating an inherently individual-level concept-trust-to the organizational-level outcome of performance. We define interpersonal and interorganizational trust as distinct constructs and draw on theories of interorganizational relations to derive a model of exchange performance. Specifically, we investigate the role of trust in interfirm exchange at two levels of analysis and assess its effects on negotiation costs, conflict, and ultimately performance. Propositions were tested with data from a sample of 107 buyer-supplier interfirm relationships in the electrical equipment manufacturing industry using a structural equation model. The results indicate that interpersonal and interorganizational trust are related but distinct constructs, and play different roles in affecting negotiation processes and exchange performance. Further, the hypotheses linking trust to performance receive some support, although the precise nature of the link is somewhat different than initially proposed. Overall, the results show that trust in interorganizational exchange relations clearly matters.
This article examines the developmental process of cooperative interorganizational relationships (IORs) that entail transaction-specific investments in deals that cannot be fully specified or controlled by the parties in advance of their execution. A process framework is introduced that focuses on formal, legal, and informal social-psychological processes by which organizational parties jointly negotiate, commit to, and execute their relationship in ways that achieve efficient and equitable outcomes and internal solutions to conflicts when they arise. The framework is elaborated with a set of propositions that explain how and why cooperative IORs emerge, evolve. and dissolve. The propositions have academic implications for enriching interorganizational relationships, transaction cost economics. agency theories, and practical implications for managing the relationship journey.
In transaction cost economics, foist has been treated as redundant or even misleading. This study tested the effects of governance and trust the risk perceived by agents of firms in alliances. Two dimensions of relational risk were assessed: the probability that something will go wrong and the size of the loss incurred when it does. Hypotheses, tested with survey data on the customer relations of ten suppliers of electrical/electronic components, were well corroborated, with trust-related variables as well as others found to have significant effects.
In this article, the authors discuss the evolution of trust, distrust, and formal coordination and control in interorganizational relationships. They suggest that the degrees to which managers trust and distrust their partners during initial stages of cooperation leave strong imprints on the development of these relationships in later stages of collaboration. This derives from the impact of trust and distrust on (a) formal coordination and control, (b) interorganizational performance, and (c) the interpretations that managers attribute to the behavior of their partners. Collectively, the authors' arguments give rise to a conceptual framework that 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, the article contributes to a more comprehensive and refined understanding of the evolution of interorganizational cooperation.
Relationship marketing-establishing, developing, and maintaining successful relational exchanges-constitutes a major shift in marketing theory and practice. After conceptualizing relationship marketing and discussing its ten forms, the authors (1) theorize that successful relationship marketing requires relationship commitment and trust, (2) model relationship commitment and trust as key mediating variables, (3) test this key mediating variable model using data from automobile tire retailers, and (4) compare their model with a rival that does not allow relationship commitment and trust to function as mediating variables. Given the favorable test results for the key mediating variable model, suggestions for further explicating and testing it are offered.
Alliances and similar cooperative efforts are receiving increased attention in the strategic management literature. These relationships differ in significant ways from those governed by markets or hierarchies, and pose very different issues for researchers and managers. In this paper we address alternative forms of governance in cases where multiple organizations repeatedly cooperate. We explore their characteristics and follow this with a discussion of criteria which we believe bear on the choice of governance: risk and reliance on trust. We offer propositions on relationships between these criteria and the choice of governance mechanisms. In the concluding section of the paper we explore the implications of our analysis for managers and scholars.
There has been very little explicit theoretical and empirical research on the concept of management control systems (MCS) as a package despite the existence of the idea in management accounting literature for decades. In this editorial we discuss a range of ways researchers have defined MCS and the problems this has created. We provide a new typology for MCS structured around five groups: planning, cybernetic, reward and compensation, administrative and cultural controls. The typology is based on the distinction between decision-making and control and addresses those controls managers use to direct employee behaviour. We discuss the conclusions of the articles included within this special issue and provide ideas for further research.
In this paper we test the hypothesis that boundary spanning is a differentiated function that is not necessarily performed by one person, as assumed in much previous research. Using longitudinal network data collected during labor negotiations, we found that some individuals on the bargaining teams (representatives) broker ties toward their opponents, while others (gatekeepers) broker ties from their opponents; and some broker task-oriented ties (measured by flows of advice), while others broker socioemotional ties (measured by flows of trust). Differentiation of trust and advice brokerage roles was strong throughout the negotiations, while differentiation of representative and gatekeeper roles became more distinct as the contract deadline (and increased potential for role conflict) neared. This analytic distinction suggests that role conflict must be examined differently, both conceptually and methodologically, and widens the range of options available for managing potential role confllcts.
When designing an alliance governance structure, managers have to choose between approaches based on control or on trust. This article proposes a framework to help managers decide which of the two is appropriate in a particular situation. The debate in the literature on control and trust centres on two issues: first, on the question of whether control and trust are substitutes or complements, and second on the links between control, trust and risk. This article connects these two debates. Our framework proposes that whether control and trust are substitutes or complements depends on the level and type of risk an alliance faces. We argue that in high risk situations companies use complex combinations of control and trust in a complementary way, rather than loose relationships as suggested by current thinking. In low risk situations we expect control and trust to be substitutes. In line with current contributions, we find that intermediate levels of risk require alliance governance to be based either exclusively on trust or exclusively on control, depending on the type of risk the alliance faces. These principles are illustrated by a detailed analysis of the governance structure of alliances in the financial, consumer goods, retail, construction and agriculture sectors.
Our task is to adopt a multidisciplinary view
of trust within and between firms, in an effort to
synthesize and give insight into a fundamental
construct of organizational science. We seek to
identify the shared understandings of trust
across disciplines, while recognizing that the
divergent meanings scholars bring to the study
of trust also can add value.
With its unique range of case studies, real life examples and comprehensive coverage of the latest management control-related tools and techniques, Management Control Systems is the ideal guide to this complex and multidimensional subject for upper level undergraduates, postgraduates and practising professionals.
Table of Contents: Chapter 1)Introduction Chapter 2)The nature of costs Chapter 3)Opportunity cost of capital and capital budgeting Chapter 4)Organizational architecture Chapter 5)Responsibility accounting and transfer pricing Chapter 6)Budgeting Chapter 7)Cost allocation: Theory Chapter 8)Cost allocation: Practices Chapter 9)Absorption cost system Chapter 10)Criticisms of absorption cost systems: Incentives to overproduce Chapter 11)Criticisms of absorption cost systems: Inaccurate product costs Chapter 12)Standard costs: Direct labor and materials Chapter 13)Overhead and marketing variances Chapter 14) Management accounting in a changing environment
The revised edition updates this classic text on international economic relations since the mid-19th century with the historical research of the last decade. As in the first edition one of the principal aims is to explain how nations in the world economy became increasingly bound together by trade, by the migration of people and capital, and by the transfer of ideas. A second aim is to account for how and when these links transmitted economic growth or international booms and slumps, and to account for the successes and failures of exchange rate and trade regimes in moderating interdependence.
U.S. shipping to Bordeaux, France, once minimal, increased dramatically after 1793, the year that marked the beginning of the French Wars. The conflicts compelled merchants to adopt new patterns of trade, as the policies of the belligerent parties increasingly determined the evolution of neutral shipping. Merchants on both sides of the Atlantic strove for closer connections across political boundaries and tried to bypass the difficulties created by warfare. This examination of U.S. commerce with Bordeaux explores the impact of war on transatlantic trade and analyzes the strategies adopted by merchants of that period to minimize the impact of new risks. These merchants tended to rely on personal acquaintances, and they traveled frequently across the Atlantic in order to build and fortify relations of trust. Turning to older, established modes of doing business enabled them to respond rapidly to changes that occurred in the international situation and to anticipate the sudden shifts in policy that were inevitable in times of war.
In this paper a process and control model is developed for the analysis and design of inter-firm relations, in which both opportunism and trust play a role. Its aim is to develop a tool for the analysis, diagnosis and design of inter-firm partnerships. It takes into account the value of the partner, relative to alternatives, and the risk of the relation. Risk depends on the incentives that the partner may have towards opportunism, his opportunities for opportunism and his 'propensity' towards opportunism. The latter is related to trust. A partner's incentives towards opportunism depend on the uniqueness of the value that he offers, on one's own switching costs and on the partner's dependence on the relation. The underlying theory employs both transaction cost economics and social exchange theory. On the basis of the model, values and risks can be balanced in different ways: there are adversarial strategies that jeopardize value, and cooperative strategies that build value. The model can be used to explore viable sequences of strategies of governance, depending on different conditions. As an illustration, it is used for an analysis of ways to initiate a relation.
The aims of this paper are to, first, explain how managers’ perceptions of trust in partners and alliance risk, at the start-up phase of an alliance, may influence the choice of governance structure and control mechanisms, and second, to study how processes and activities may enhance levels of trust between partners, mitigate risk and complement formal controls to form an effective control package. A case study of a collaborative alliance in the construction industry is drawn on to examine these relationships and processes. The alliance was characterised by high asset specificity, high environmental and behavioural uncertainty, and high transaction frequency. Activities that were undertaken in the period leading up the formation of the alliance (the pre-alliance phase) and during the interim alliance, led to an increase in goodwill trust and reduced managers’ perceptions of both relational and performance risk. Alliance governance structures, as well as behaviour controls, output controls and social controls, and processes that led to the development of trust and mitigation of risk, formed part of the control package.
Jardine Matheson & Company, a Hong Kong conglomerate founded in 1832, has survived political upheaval and global and regional economic crises, transforming itself several times. From their begin- nings in the commission business, William Jardine and James Mathe- son developed a reputation for sound financial management that furthered their trading relationships and supported their firm's expansion from agency house to managing agent to investment house between 1832 and 1885. Fundamental to Jardine Mathe- son's success was the strategic decision to eschew speculation and to concentrate on building a pattern of relationships within and outside the business that would foster the flow of information, the knowledge with which to interpret it, the ability to influence others, and a reputation for probity that would attract and retain trading partners. Through the mid-twentieth century, all trade with the Pacific went through brokers like Jardine Matheson, the biggest and best known of the region's trading companies. Such firms provided a single source for the shipping, insuring, warehousing, marketing, and sell-
Maintaining robust cooperation in interfirm strategic alliances poses special problems. Such relationships have received growing attention in recent research grounded in game theory, which has suggested that some alliance structures are inherently more likely than others to be associated with high opportunity to cheat, high behavioral uncertainty, and poor stability, longevity, and performance. The present study merged these theoretical insights with the logic of transaction cost economics in a general model of alliance structuring and tested it with data from ill interfirm alliances. Findings generally supported the model and hypotheses, suggesting the need for a greater focus on game theoretic structural dimensions and institutional responses to perceived opportunism in the study of voluntary interfirm cooperation.
This study examines why firms choose different governance structures across their alliances. We focus on the coordination costs in alliances that arise from interdependence of tasks across organizational boundaries and the related complexity of ongoing activities to be completed jointly or individually. We use a typology of alliance governance structures that differentiates structures by the magnitude of hierarchical controls to test hypotheses predicting alternative contractual choices. We use empirical data on alliance announcements in three worldwide industries over a 20-year period to assess which factors explain the choice of alliance types. The findings suggest that the magnitude of hierarchical controls in contractual relationships such as alliances is influenced by the anticipated coordination costs and by expected appropriation concerns.(. )
Purpose
The purpose of this paper is to show that conceptualizing trust and control as interactively related processes, as opposed to more static conceptualizations of the two concepts and the relations between them, adds importantly towards understanding the challenges involved in balancing of trust and control in organizations.
Design/methodology/approach
The paper examines recent literature on the conceptualization of the relation between trust and control in and between organizations.
Findings
The literature review shows that trust and control has been conceptualized as either substituting or complementing each other. Further, it is found that the complementary/substitution debate calls for an explicit conceptualization of the relation between trust and control as an interactive process, in contrast to earlier conceptualizations of trust and control as two relatively static and isolated concepts.
Practical implications
While the static perspective on trust and control made the problem of finding a balance between trust and control a once and for all decision the process perspective introduced here implies that balancing trust and control is an ongoing process of balancing and rebalancing. The implication for management is that the problem of balancing trust and control becomes an issue that deserve ongoing attention.
Originality/value
The paper adds to the discussion on the relation between trust and control by showing that the process perspective reframes the problem of balancing trust and control. More generally, by demonstrating the importance of the process perspective on the trust and control interrelation, the paper calls for the wider use of a process perspective for researching the trust‐control nexus.
Scholars in various disciplines have considered the causes, nature, and effects of trust. Prior approaches to studying trust are considered, including characteristics of the trustor, the trustee, and the role of risk. A definition of trust and a model of its antecedents and outcomes are presented, which integrate research from multiple disciplines and differentiate trust from similar constructs. Several research propositions based on the model are presented.
After a century of clear decadence, the enthronement of the French House of Bourbon in the first years of the 18th century marked the beginning of a new period of relative economic prosperity. In the field of trade, the 18th century was characterized by the confirmation and foundation of merchants' organizations in numerous Spanish towns whose governmental license was accompanied in all cases with the granting of a special commercial jurisdiction over merchants' activities in their respective zones. This special jurisdiction was to be exercised, in some cases, by Tribunals of Commerce incorporated into merchants' organizations themselves and, in other cases, by a delegation of the Central Council for Commerce and Money. The granting of this special jurisdiction led merchants' organizations to issue commercial regulations to rule the activities of merchants belonging to their respective zones. All these regulations contain a section devoted to the keeping of account books, composing a formidable collection of accounting rules that regulated accounting in Spain up to the promulgation of the first Spanish Commercial Code in 1829. Due to Bilbao's important role in foreign trade and its relations with foreign merchants, specially with the French ones, the Tribunal of Commerce of Bilbao was the first to issue such an Ordinance in 1737. As generally recognized, it was inspired and strongly influenced by the French Ordonnance du Commerce of 1673. By contrast, the accounting chapters show no specific influence of the Ordonnance, although the French influence on the Spanish accounting thought and practice of that time is in general undeniable. Within a contextual and theoretical framework, this paper is devoted to the study of the accounting regulations of this Ordinance, a subject that has remained completely un explored so far, as well as to compare them with the ones included in Colbert's Ordonnance de Commerce.
Jeremy Baskes examines the networks of information that connected merchants in Cadiz, Spain with their agents and fellow traders located throughout the Atlantic world and beyond. Major Spanish merchants were also international traders; they acquired luxury goods in northern Europe to send to America, and they re-exported their colonial imports to commercial centers throughout Europe and beyond. Valuable was the data on prices or supplies that he received from distant markets, such as in January 1786 when he learned from his London informants that cochineal was fetching 13/9 to 14 shillings, indigo 9/6 to 10/6, and that hides from Buenos Aires were in very short supply. While each of the Atlantic world empires jealously guarded its national commercial interests from foreign interlopers by erecting mercantilist, protectionist trade policies, markets were nonetheless integrated. Traders sought to obtain the most recent information to permit them to operate with the least uncertainty possible.
Competitiveness in global industries increasingly requires the ability to develop trusting relationships. This requires organizations, and the individuals they are comprised of, to be both trustworthy and trusting. An important question is whether societal culture influences the tendency of individuals and organizations to trust. Based largely on Yamagishi's (1994, 1998a, b) theories explaining trust, commitment, and in-group bias in collectivist cultures, this study examines potential differences in levels of trust between individualist and collectivist cultures. Survey data was collected from 1,282 mid-level managers from large banks in Japan, Korea, Hong Kong, Taiwan, China, Malaysia, and the United States. We first study differences in how individuals from individualist and collectivist societies trust ingroups versus out-groups. This provides an important foundation for hypotheses regarding differences in individual propensities to trust and two measures of organizational trust: internal trust (trust within the organization) and external trust (an organization's trust for suppliers, customers, etc.). Findings show higher levels of propensity to trust and organizational external trust in the United States than in Asia.
Ethnographic methods are applied to this investigation of the links between language and business culture found in letters exchanged in the 1880s, 1900s, 1930s, and 1940s among members of a long-lived family-owned business. The letters are contained in three sets of correspondence between three different generations of Bateses, who were merchants, shipowners, and private bankers based in Liverpool. The aim is to develop a different perspective from which to consider communicating processes, business culture, social mobility, and the socialization of managers. The study invites consideration of the appropriateness of accepted behavioral assumptions attributed to economic actors and the significance of judgment and instinct in decision-making.
Because of conflicting incentives among participants, collaborations (e.g., strategic alliances, joint ventures, and work teams) present a significant control challenge to managerial accountants. On the one hand, formal controls such as sanctioning and monitoring systems improve cooperation by reducing the incentives for opportunistic behavior. On the other hand, prior research finds that the mere presence of a control system causes decision makers to view the collaborative setting as non-cooperative, and other collaborators as untrustworthy. In this paper, we conduct two experiments in which participants act as business collaborators. Through these experiments, we examine the effects of control on trust and cooperation in collaborative settings. Specifically, we posit and provide evidence that a strong control system can enhance the level of trust among collaborators. The mediating role of control-induced cooperation provides the mechanism by which control systems can increase trust in collaborative environments. Furthermore, we show that this increased trust has a positive effect on the subsequent level of cooperation among collaborators. Taken together, the results suggest an increasing marginal benefit of control system strength arising from the trust that control-induced cooperation engenders. The implication is that firms will choose to implement a stronger control system than previous research would seem to suggest.
This paper examines the choice between equity and non-equity forms of inter-firm alliances from an ‘integrated risk’ perspective, which combines relational risk and performance risk in inter-firm alliances. Relational risk relates to co-operation among alliance partners, while performance risk has to do with the hazards of not achieving the performance objectives of an alliance, given co-operation. We suggest that equity alliance is adopted to control relational risk, while non-equity alliance is aimed at minimizing performance risk. Existing studies on the choice of alliance configurations are examined from the proposed risk perspective, and a number of key propositions are advanced for empirical testing and further development of the perspective.
This article studies the dominant role played by large family firms in the internationalisation of the Spanish economy. Based on new empirical evidence from circa 150 historical and internationalised family firms, the article integrates concepts and theories from recent literature on internationalisation, international entrepreneurship, sociology, and family business. The main argument is that in Spain, as in other European, South American and Asian countries, the integration of most of the leading family firms in the global market has been the outcome of a long learning process strongly influenced by the country's natural and human resources, institutional framework, and regional patterns of economic development and business cultures. In contrast with other countries, however, foreign capital and technology and collective action at regional, national and international levels play a far more important role in the internationalisation of large family firms.
Taking business decisions in large corporations requires the establishment of a competent network to channel information, permit the delegation of routine decisions, and assure the whole process is undertaken in the strictest confidence. Recent theories on social networks and the carrying out of the entrepreneurial function tackle these questions and constitute a new perspective for examining business cases. From this viewpoint, the present article seeks to analyse the entrepreneurial network established in Spain by the House of Rothschild between 1835 and 1931. It was a perfectly structured network that differentiated between agents, clientele, partners, and correspondents in a web of firms and institutions that allowed the Rothschilds to exercise their industrial and financial hegemony and consolidate themselves as the country's largest investor in the financial, industrial, railway and mining sectors throughout the stated period.
This article traces the similar paths and common characteristics of British and Greek tramp-shipping companies over the last 130 years through a comparative and international perspective. Despite the tendency of companies to adopt corporate and managerial forms, British and Greek tramp-shipping firms remained first and foremost family firms. The strength and the viability of these firms were networks, on a local, national and international level - networks whose cohesion was based on trust and a particular business culture that was developed in the maritime regions whence they came, centred on family firms involved in international business.
This article is a first attempt to explore the relationship between training and entrepreneurship in Spanish family firms. It examines changes and continuities over time, and relates the evolution of the training practices of Spanish family firms to the technical and economic conditions of the first and second industrial revolutions. The article demonstrates the interaction betweeen technical and educational ideas, the creative adaptation to the entrepreneurial needs of regions and economic sectors, and institutional conditions. It is organised in three main sections. The first briefly introduces new institutional and sociological theories applied to the study of the formation of business groups. The second summarises existing literature and research that deals with knowledge transference and business training in Spanish family firms, and provides a general survey of informal and formal business education in eighteenth to twentieth-century Spain. The third presents case studies of changing training practices in big and old family firms, and relates this evidence with theoretical and institutional insights.
This article studies some aspects of the internationalization strategy of family SMEs. After examining the various problems facing family SMEs as regards internationalization, in terms of lack of resources, some mechanisms are discussed to counteract their negative effect. Using a wide sample of Spanish SMEs, we confirm the existence of a negative relationship between family ownership and internationalization, measured by export activities. We also analyze the role of generational changeovers and stable relationships with other firms through shareholding or agreements aimed to promote international expansion. These mechanisms are set out to provide family SMEs with the necessary resources that have proved to be key factors in a successful internationalization process.
Merchants to Multinationals examines the evolution of multinational trading companies from the eighteenth century to the present day. During the Industrial Revolution, British merchants established overseas branches which became major trade intermediaries and subsequently engaged in foreign direct investment. Complex multinational business groups emerged controlling large investments in natural resources, processing, and services in Asia, Latin America, and Africa. While theories of the firm predict the demise over time of merchant firms, this book identifies the continued resilience of British trading companies despite the changing political and business environments of the twentieth century. Like Japanese trading companies, they 're-invented' themselves in successive generations. The competences of the trading companies resided in their information-gathering, relationship-building, human resource, and corporate governance systems. This book provides a new dimension to the literature on international business through the focus on multinational service firms and its evolutionary approach based on confidential business records. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0199249997/toc.html
This book examines the evolution of multinational trading companies from the eighteenth century to the present day. During the Industrial Revolution, British merchants established overseas branches which became major trade intermediaries and subsequently engaged in foreign direct investment. Complex multinational business groups emerged controlling large investments in natural resources, processing, and services in Asia, Latin America, and Africa. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0199249997/toc.html
In today's knowledge-based global competitive climate, both large and small firms attempt to leverage external knowledge by collaborating with companies with complementary knowledge and resources. Academics and practitioners agree that in the global network era knowledge has become a key resource for continuous innovation and competitiveness. The issues of trust, social capital and the management of intellectual property have also attracted more attention in terms of knowledge creation. However, trust, intellectual property and contracts are seldom discussed simultaneously. This paper focuses on the roles of trust and contracts in asymmetric R&D collaboration. We begin by reviewing the state-of-the-art literature on these roles in interfirm collaboration, and continue by examining the potential for balancing trust and contracting in a case study in which a small firm collaborates with a large, global machinery and equipment supplier. We conclude that an understanding of the roles and dynamics of contracts and trust is critical for R&D collaboration. Contracts as such cannot guarantee successful collaboration, but the contracting process may be used purposefully to increase mutual understanding and learning, and to build up trust. We also offer some managerial recommendations on how to balance trust and contracting in asymmetric R&D collaboration.
Outsourcing is a form of strategic alliance that has increased in popularity over the past decade. However, there has been limited research that studies the design of management control systems (MCS) and the role of trust in such inter-firm relationships. This paper draws on a model by van der Meer-Kooistra and Vosselman [Acc. Organ. Society 25 (2001) 51] to examine how control mechanisms and trust are used to achieve control in a single case study of an electricity company and its outsourced IT operations. An analysis of the characteristics of the transaction, environment and parties, indicated that the control strategy adopted appeared to be a trust based pattern of control, rather than a market based or bureaucratic based pattern. Control was achieved through outcome controls and social controls developing over time, and through the development of trust, particularly goodwill trust. This paper adds to the growing knowledge of the design of control systems and trust in outsourcing relationships.
This study examines the determinants of inter-organizational trust by using survey data from
just over 1000 suppliers in the automotive industry. We define trust and derive a model of its
determinants from transaction cost economics, game theory and sociological exchange theory.
Regression analysis results indicate that determinants of trust are different from determinants of
opportunism. US-Japanese differences are found in three respects: (i) the way trust is
conceptualised by suppliers is richer in Japan than in the US; (ii) the level of trust is higher in
Japan than in the US; and (iii) the factors facilitating trust and those attenuating opportunism
differ in the US and Japan.
The last decade has been characterised by the increased development of cross-company relationships, alliances and more complex business networks. This paper examines fundamental concepts that relate to the needs for information, including accounting information, in these interactive structures. It considers, initially, some consequences for accounting when planning and control is to be exercised across organisational boundaries, but the main thrust of the paper is to focus on the fact that all relationships depend to some extent on trust. The interaction between trust and information in personal relationships is explored to serve as a template against which to consider whether the information needs of inter-organisational relationships are similar. Having examined information needs of business relationships in general, the analysis is developed to consider the needs of different forms of corporate alliances and then wider business networks. This paper is an attempt to create a debate on new questions that seem to be fundamental to the design of information and accounting systems. It is not claimed to have provided definitive answers, but it is proposed that the lack of a well-developed theory of the interaction between trust and information has been a fundamental gap in our knowledge.
This paper presents a framework of the control of inter-organizational relationships. Building on transaction cost economics and organizational theory, two control problems are identified that arise when firms engage in inter-organizational relationships: the management of appropriation concerns and the coordination of tasks. The control mechanisms used to manage these control problems and their interrelationships with informal (trust-based) mechanisms are discussed. The explanatory power of the framework is assessed by a case study of a strategic alliance between a buyer and a supplier of railway safety equipment.
Trust and control are inextricably interlinked with risk in strategic alliances. Hence, to understand how partner firms can effectively reduce and manage this risk, we need to examine the inter-relationships between trust, control, and risk. In this article, we propose a comprehensive and integrated framework of the three constructs in the context of strategic alliances, contending that trust and control are the two principal antecedents of risk. First, we suggest that the three constructs are each comprised of certain key dimensions. Risk can be considered separately as relational risk and performance risk. The two dimensions of trust are identified as goodwill trust and competence trust, and control is differentiated in terms of the three modes of behaviour control, output control, and social control. Second, we discuss systematically the various linkages between the different types of trust, control, and risk in alliances. Third, we suggest several risk reduction approaches - minimizing relational risk through goodwill trust, behaviour control, and social control, while minimizing performance risk through competence trust, output control, and social control. Fourth, we discuss a number of trust-building techniques and control mechanisms to reduce risk in different types of strategic alliances. Finally, we develop propositions for empirical testing of the integrated framework and offer brief comments on future research directions and managerial implications.
Strategic alliances have been recognized as arenas with potential for opportunistic behavior by partners. Hence, a firm needs to have an adequate level of confidence in its partner's cooperative behavior. In this article we examine the notion of confidence in partner cooperation in alliances and suggest that it comes from two distinct sources: trust and control. We make the argument that trust and control are parallel concepts and that their relationship is of a supplementary character in generating confidence. In addition, we suggest that control mechanisms have an impact on trust level and that the trust level moderates the effect of control mechanisms in determining the control level. Finally, we discuss various ways to build trust within strategic alliances and important alliance control mechanisms.
Incluye bibliografía e índice
Sumario: El aumento de la problación, una falsa pista -- Deuda exterior, capitales extranjeros y ferrocarriles -- La desamortización del suelo -- La desamortización del subsuelo -- El problema carbonífero -- Las dificultades de la siderurgia -- La industria algodonera catalana
Tesis--Madrid. Bibliography: p. 541-563.