Trust and formal contracts in interorganizational relationships - substitutes and complements

Thomas Mellewigt, Anoop Madhok and Antoinette Weibel
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Thomas Mellewigt: Freie Universität Berlin, Institute for Management, Berlin, Germany, Postal: Freie Universität Berlin, Institute for Management, Berlin, Germany
Antoinette Weibel: University of Zurich, Institute of Organization and Administrative Science, Zürich, Switzerland, Postal: University of Zurich, Institute of Organization and Administrative Science, Zürich, Switzerland

Managerial and Decision Economics, 2007, vol. 28, issue 8, pages 833-847

Abstract: We hypothesize that trust is a moderator of the direct relationship between control and coordination concerns and contractual complexity. Our results suggest that high trust weakens the positive relationship between control concerns and contractual complexity and reinforces the positive relationship between coordination concerns and contractual complexity. By highlighting the dual role of contracts (i.e. a controlling and coordinating function) and the moderating role of trust in this regard, our paper provides a new focus to the current discussion on the relationship between trust and contracts (i.e. substitutes or complements) that may help reconcile some divergent perspectives in the literature. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2007
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