How Contracts Influence Trust and Distrust

Journal of Management, Forthcoming

54 Pages Posted: 6 Oct 2014

Date Written: October 5, 2014

Abstract

Despite the scholarly interest in contracts and trust governing interorganizational relationships, our understanding of how contracts influence trust remains limited by the way in which the interaction between the two constructs is conceptualized. By bringing together recent advances in the literature on interorganizational governance, I consider (1) the controlling and the coordinating dimensions of formal contracts, (2) trust and distrust as two distinct constructs, and (3) both the calculative and noncalculative aspects behind the development of trust and distrust. Drawing upon information-processing theory, I develop a series of propositions about how each contractual dimension influences the development of trust and distrust by inducing specific information processing and decision-making mechanisms. My theoretical analysis leads me to discuss the trade-offs inherent in governance choices and I discuss the implications of my propositions for the literature on interorganizational governance mechanisms.

Keywords: Contract, Trust, Distrust, Information Processing, Control, Coordination, Calculative and Non-calculative Judgments, Inter-organizational Relationships

Suggested Citation

Lumineau, Fabrice, How Contracts Influence Trust and Distrust (October 5, 2014). Journal of Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2505663

Fabrice Lumineau (Contact Author)

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47906
United States

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