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Trust and formal contracts in interorganizational relationships - substitutes and complements

Author

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  • Thomas Mellewigt

    (Freie Universität Berlin, Institute for Management, Berlin, Germany)

  • Anoop Madhok
  • Antoinette Weibel

    (University of Zurich, Institute of Organization and Administrative Science, Zürich, Switzerland)

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.

Suggested Citation

  • Thomas Mellewigt & Anoop Madhok & Antoinette Weibel, 2007. "Trust and formal contracts in interorganizational relationships - substitutes and complements," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 833-847.
  • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:8:p:833-847
    DOI: 10.1002/mde.1321
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    References listed on IDEAS

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    Cited by:

    1. Malhotra, Deepak & Lumineau, Fabrice, 2011. "Trust and collaboration in the aftermath of conflict: the effects of contract structure," MPRA Paper 38358, University Library of Munich, Germany.
    2. Derek J. Harmon & Peter H. Kim & Kyle J. Mayer, 2015. "Breaking the letter vs. spirit of the law: How the interpretation of contract violations affects trust and the management of relationships," Strategic Management Journal, Wiley Blackwell, vol. 36(4), pages 497-517, April.
    3. Meuleman, Miguel & Jääskeläinen, Mikko & Maula, Markku V.J. & Wright, Mike, 2017. "Venturing into the unknown with strangers: Substitutes of relational embeddedness in cross-border partner selection in venture capital syndicates," Journal of Business Venturing, Elsevier, vol. 32(2), pages 131-144.
    4. repec:kap:ejlwec:v:44:y:2017:i:3:d:10.1007_s10657-015-9497-9 is not listed on IDEAS
    5. Tatiana Iwai, 2016. "The Interaction of Formal and Informal Contracts in the Decision of Cooperation of the Agents," Brazilian Business Review, Fucape Business School, vol. 13(1), pages 47-68, January.
    6. Laura Poppo & Kevin Zheng Zhou, 2014. "Managing contracts for fairness in buyer–supplier exchanges," Strategic Management Journal, Wiley Blackwell, vol. 35(10), pages 1508-1527, October.
    7. Africa Ariño & Jeffrey J. Reuer & Kyle J. Mayer & Juan Jané, 2014. "Contracts, Negotiation, and Learning: An Examination of Termination Provisions," Journal of Management Studies, Wiley Blackwell, vol. 51(3), pages 379-405, May.
    8. Ceci, Federica & Iubatti, Daniela, 2012. "Personal relationships and innovation diffusion in SME networks: A content analysis approach," Research Policy, Elsevier, vol. 41(3), pages 565-579.
    9. repec:bpj:erjour:v:3:y:2013:i:1:p:62-83:n:2 is not listed on IDEAS
    10. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande, 2015. "The impacts of trust and contracts on opportunism in the 3PL industry: The moderating role of demand uncertainty," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 160-170.
    11. Kirsten Martin, 2016. "Do Privacy Notices Matter? Comparing the Impact of Violating Formal Privacy Notices and Informal Privacy Norms on Consumer Trust Online," The Journal of Legal Studies, University of Chicago Press, vol. 45(S2), pages 191-215.

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