The Moderating Effect of Trust on Formal Control Mechanisms in International Alliances

18 Pages Posted: 20 Dec 2018

See all articles by Bernardo Balboni

Bernardo Balboni

Università degli Studi di Trieste; Università degli Studi di Trieste

Gianluca Marchi

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics

Marina Vignola

Università degli studi di Modena e Reggio Emilia (UNIMORE)

Date Written: Winter 2018

Abstract

This study aims to shed light on the controversial debate regarding the substitutive or complementary nature of the relationship between inter‐organizational trust and formal control as governance mechanisms in affecting international alliance performance. We deepen understanding of the trust–formal control interaction by considering the multidimensional nature of formal control – both output and process control – and examining the role of trust as a moderating variable in the relationship between these two distinct kinds of control and alliance performance. We test the research hypotheses on a sample of 138 international alliances involving Italian firms and foreign partners. First, we find that only output control has a significant positive influence on alliance performance and that trust shows a fully significant positive effect on alliance success. Second, we find that trust moderates the effect of formal control on alliance performance by reducing the relevance of output control and increasing that of process control.

Keywords: international alliance, inter‐organizational trust, formal control mechanisms, alliance performance, moderating effect

Suggested Citation

Balboni, Bernardo and Balboni, Bernardo and Marchi, Gianluca and Vignola, Marina, The Moderating Effect of Trust on Formal Control Mechanisms in International Alliances (Winter 2018). European Management Review, Vol. 15, Issue 4, pp. 541-558, 2018, Available at SSRN: https://ssrn.com/abstract=3304151 or http://dx.doi.org/10.1111/emre.12150

Bernardo Balboni (Contact Author)

Università degli Studi di Trieste ( email )

Via Valerio 4/1
Trieste, Trieste 34127
Italy

Università degli Studi di Trieste ( email )

Piazzale Europa 1
Trieste, Trieste 34100
Italy

Gianluca Marchi

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics ( email )

Viale Berengario 51
41100 Modena, Modena 41100
Italy

Marina Vignola

Università degli studi di Modena e Reggio Emilia (UNIMORE) ( email )

Viale A. Allegri 9
Modena, Modena 42121
Italy

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