Revisiting the Debate: Assessing the Impact of Trust, Control and Understanding on Interorganizational Performance

SMG Research Seminar with Paul Vlaar (Rotterdam School of Mangagement).

ABSTRACT

Literature on interorganizational collaboration emphasizes trust and control as important determinants of collaborative performance. Although authors joining the ensuing debate have recurrently touched upon understanding as a precursor and consequence of both constructs, this construct has received little explicit attention in literature on interorganizational relationships. We therefore investigate how focal organizations’ understandings of their partners and the alliances in which they are engaged influence interorganizational performance. Our analysis of unique survey data on 76 international joint ventures, indicates that the influence of trust and control on interorganizational performance becomes insignificant when the construct of understanding – deriving from compatibility between partners, negotiation processes and information processing – is introduced in the analysis.

At the same time, incorporating understanding in the equation more than doubles the model’s explanatory power. These findings provide preliminary empirical support for the significance of understanding in interorganizational collaboration. They urge researchers and practitioners to pay more attention to processes by which managers in interorganizational relationships advance their understandings, such as partner selection, negotiation and continuous information processing, urging them to revisit the debate on trust and control in interorganizational relationships.