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Trust and collaboration in the aftermath of conflict: the effects of contract structure


  • Malhotra, Deepak
  • Lumineau, Fabrice


Leveraging a longitudinal dataset concerning 102 inter-firm disputes, we evaluate the effects of contract structure on trust and on the likelihood of continued collaboration. We theoretically refine and empirically extend prior research by (a) distinguishing between control and coordination functions of contracts, (b) separating goodwill-based and competence-based trust, and (c) evaluating the effects of contract structure on relational outcomes in the context of disputes. We find that control provisions increase competence-based trust, but reduce goodwill-based trust, resulting in a net decrease in the likelihood of continued collaboration. Coordination provisions increase competence-based trust, leading to an increased likelihood of continued collaboration.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:38358

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    References listed on IDEAS

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    8. Vlaar, P.W.L. & van den Bosch, F.A.J. & Volberda, H.W., 2006. "On the Evolution of Trust, Distrust, and Formal Coordination and Control in Interorganizational Relationships: Towards an Integrative Framework," ERIM Report Series Research in Management ERS-2006-035-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
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    Cited by:

    1. 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.
    2. Reuer, Jeffrey & Devarakonda, S.V., 2016. "Mechanisms of hybrid governance : Administrative committees in non-equity alliances," Other publications TiSEM 063d9ccc-59c8-4e76-a77d-8, Tilburg University, School of Economics and Management.
    3. Fabrice Lumineau & Joanne E. Oxley, 2012. "Let's Work It Out (or We'll See You in Court): Litigation and Private Dispute Resolution in Vertical Exchange Relationships," Organization Science, INFORMS, vol. 23(3), pages 820-834, June.
    4. repec:bla:jscmgt:v:53:y:2017:i:2:p:61-87 is not listed on IDEAS
    5. Fabrice Lumineau & Bertrand Quélin, 2012. "An empirical investigation of interorganizational opportunism and contracting mechanisms," Post-Print hal-00668599, HAL.
    6. Lumineau, Fabrice & Frechet, Marc & Puthod, Dominique, 2011. "An organizational learning perspective on contract design," MPRA Paper 38360, University Library of Munich, Germany.
    7. George Hendrikse & Patrick Hippmann & Josef Windsperger, 2015. "Trust, transaction costs and contractual incompleteness in franchising," Small Business Economics, Springer, vol. 44(4), pages 867-888, April.
    8. Elodie Gardet & Romain Gandia, 2014. "L'influence du type de conflit sur les modalités de résolution de conflits au sein de réseaux d'innovation," Post-Print hal-01599675, HAL.
    9. Lumineau, Fabrice & Henderson, James, 2012. "The influence of relational experience and contractual governance on the negotiation strategy in buyer-supplier disputes," MPRA Paper 38510, University Library of Munich, Germany.
    10. Maimunah Ismail & Sayang Syamira Sobri & Nurul Afiqah Zulkifly & Siti Raba'ah Hamzah & Eriko Yamato, 2016. "Knowledge Transfer Between Expatriates And Host Country Nationals: Contribution Of Individual And Social Capital Factors," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 7(2).
    11. repec:kap:mktlet:v:28:y:2017:i:2:d:10.1007_s11002-016-9414-1 is not listed on IDEAS
    12. Laura Poppo & Kevin Zheng Zhou & Julie J. Li, 2016. "When can you trust “trust”? Calculative trust, relational trust, and supplier performance," Strategic Management Journal, Wiley Blackwell, vol. 37(4), pages 724-741, April.
    13. Anna Wziatek-Stasko, 2015. "Effective Factors in Enhancing Managers’ Job Motivation: Cross-Cultural Context," MIC 2015: Managing Sustainable Growth; Proceedings of the Joint International Conference, Portorož, Slovenia, 28–30 May 2015, University of Primorska, Faculty of Management Koper.
    14. Fabrice Lumineau & Marc Fréchet & Dominique Puthod, 2011. "An organizational learning perspective of the contracting process," Post-Print halshs-01019320, HAL.
    15. Oliver Schilke & Karen S. Cook, 2015. "Sources of alliance partner trustworthiness: Integrating calculative and relational perspectives," Strategic Management Journal, Wiley Blackwell, vol. 36(2), pages 276-297, February.
    16. repec:bla:stratm:v:38:y:2017:i:8:p:1646-1667 is not listed on IDEAS
    17. 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.
    18. 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.
    19. Spencer Elizabeth Crawford, 2015. "Revising the Role of Contract in Development Cooperation," The Law and Development Review, De Gruyter, vol. 8(1), pages 147-186, June.
    20. repec:eee:socmed:v:190:y:2017:i:c:p:1-10 is not listed on IDEAS
    21. Dejun Kong, 2013. "Intercultural Experience as an Impediment of Trust: Examining the Impact of Intercultural Experience and Social Trust Culture on Institutional Trust in Government," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(3), pages 847-858, September.

    More about this item


    Trust; Contract; Conflict;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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