Influence of Control Precision and Prior Collaboration Experience on Trust and Cooperation in Inter-Organizational Relationships

Forthcoming at The Accounting Review

49 Pages Posted: 20 Dec 2021

See all articles by Shannon W. Anderson

Shannon W. Anderson

University of California, Davis - Graduate School of Management

Mandy M. Cheng

UNSW Sydney

Yee Shih Phua

UNSW Sydney

Date Written: December 16, 2021

Abstract

We investigate whether prior collaboration experience affects a focal partner’s response to the precision of monitoring controls adopted by a new partner, with consequences for their goodwill trust in, and subsequent cooperation with, the new partner. We expect the partner to interpret their new partner’s adoption of precise monitoring controls as either an effort to limit their autonomy or to reduce information asymmetry. The partner’s experience with past partners is posited to determine which interpretation is salient, with negative (positive) experiences favoring the former (latter). We find that partners with an uncooperative (cooperative) experience exhibit lower (higher) goodwill trust in the new partner when controls are more precise. Further, prior experience moderates the indirect relation between the precision of monitoring controls and partner cooperation acting through goodwill trust. The results demonstrate the importance of prior experiences in the design of interfirm controls for current partner relationships.

Keywords: management control, monitoring, autonomy, reciprocity, inter-organizational relationships, experiment.

JEL Classification: M41

Suggested Citation

Anderson, Shannon W. and Cheng, Mandy M. and Phua, Yee Shih, Influence of Control Precision and Prior Collaboration Experience on Trust and Cooperation in Inter-Organizational Relationships (December 16, 2021). Forthcoming at The Accounting Review , Available at SSRN: https://ssrn.com/abstract=3987556

Shannon W. Anderson

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Mandy M. Cheng

UNSW Sydney ( email )

School of Accounting, Auditing and Taxation
UNSW Business School
Sydney, NSW 2052
Australia
(612) 9385.6343 (Phone)

Yee Shih Phua (Contact Author)

UNSW Sydney ( email )

School of Accounting, Auditing and Taxation
UNSW Business School
Sydney, NSW 2052
Australia
612 93855812 (Phone)

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