Formal Control, Trust and Trustworthiness (179-181)

1 Formal Control, Trust and Trustworthiness

1.1 Introduction

To what extent and under what conditions can managers’ guide employees’ behavior by relying on both formal control and trust? This question has been raised only recently. For years managers were assumed to direct subordinates effectively by means of standard setting, monitoring and rewarding (Pfeffer 1997). Later researchers suggested that managers’ efforts to build trust promote organizational effectiveness (Adler 2001, McEvily/Perrone/Zaheer 2003, Walgenbach 2000). Additionally, it was assumed that a mixed regime of managerial governance based on trust and formal control was inconceivable, as formal control was thought to be at odds with a trusting environment (Das/Teng 1998: 501).

A number of authors suggested that formal control lowers the intentions of the trustee to act in the interests of the trustor (for example Gouldner 1954, Argyris 1964, McGregor 1960, Enzle/Anderson 1993), that is, formal control negatively influences the trustworthiness of the trustee. The aim of this study is to examine whether formal control, depending on its characteristics, can also have a positive effect on trustworthiness. Formal control may strengthen the intentions of the trustee to act in the interests of the trustor and thereby contribute, in conjunction with trust, to organizational effectiveness.

Neither the literature on the behavioral effects of formal control nor the growing empirical literature on the relationship of formal control and trust provides a coherent picture of how formal control and trustworthiness relate to each other (Bachmann/Knights/Sydow 2001, Bijlsma/Costa 2005). Thus, insights were sought from a different field – from self-determination theory. Selfdetermination theory specifies how contextual conditions in the workplace such as characteristics of formal control relate to value internalization (Deci/Ryan 1985, Deci/Ryan 2000). Value internalization, i.e. the degree to which subordinates have identified and accepted managers’ values, bridges the hitherto unrelated research streams of self-determination theory and the literature on control and trustworthiness.

The degree of value internalization is equated with the strength of the subordinates’ intentions to act in the interests of the supervisor and the organization. Strong value internalization promotes reliable trustworthy behaviors. Therefore characteristics of formal control which strengthen value internalization will also positively affect trustworthiness. This article is structured as follows: First, the concepts of formal control, trust, trustworthiness and value internalization are introduced. Second, a frame work for analyzing the interplay of contextual conditions and trustworthiness based on self-determination theory is presented.

Third, the framework is then applied to organizing empirical findings on the interplay of formal control and trustworthiness in various research streams. These empirical studies are drawn from such diverse fields as participation research, crowding-out theory, marketing theory, trust theory and theory of organizational support. Linking the thus far unrelated studies to this framework results in a set of propositions that bind these findings into a more theoretically consistent representation which can be tested in the future.