Governance structures and trust: a study of real estate networks

J.M.G Boaventura,E Todeva,A.A.C Carnaúba,E Armando,A.C Azevedo

doi:10.3920/jcns2015.0008

J.M.G Boaventura, E Todeva + Show 3 more

Open Access

https://doi.org/10.3920/jcns2015.0008

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Abstract

Abstract The present study aimed at verifying how different modes of governance structure are linked to different levels of inter-organisational trust. Its theoretical grounding involves Transaction Cost Theory, which studies governance of inter-organisational arrangements and research on trust in the business field. A descriptive and quantitative approach has been adopted to describe the relation between trust amongst business network participants and the mode of governance adopted by the surveyed networks. Hence, a detailed questionnaire has been employed, which was answered by 35 real estate agency managers, whose participation was directly linked to 11 business networks. By using Spearman methods of identification of non-parametric correlation and correspondence analysis, it was possible to verify that certain modes of governance structure associate with different levels of trust. Considering the scarcity of quantitative research on the theme, this paper contributes to the field by presenting results which point out that collectively-managed governance of regional cooperation networks is linked to high levels of trust; whereas governance of dispersed networks with the presence of a lead company are linked to low levels of trust. Medium levels of trust were observed in networks governed by an administrative organisation. Considering the practical aspect of administration in networks, one can conclude that the process of governance structure in such inter-organisational arrangements should include deliberations about the influence of the adopted mode of governance on trust amongst participants. The paper does not allow generalizations of its conclusions beyond its chosen sample.

Highlights

The interest in business networks has increased due to a growing number of companies which have been organised in networks as an alternative in their search for competitiveness (Idris, 2013; Jones et al, 1997)
This paper aims at verifying how different modes of governance structure are linked to different levels of interorganisational trust
The analysis of observed results made it possible to answer the question of the proposed questionnaire, displaying the existence of significant association between modes of governance structure adopted by the surveyed networks and levels of trust evidenced by participants

Summary

Introduction

The interest in business networks has increased due to a growing number of companies which have been organised in networks as an alternative in their search for competitiveness (Idris, 2013; Jones et al, 1997) Their rise in the last few decades has resulted from advancements in information technology, amongst other factors, which have allowed new and more flexible organisational structures (Nohria, 1992). Analysing governance and management of networks is a way to understand how such arrangements function, and how some conditions in their organisation may influence the attained results (Provan and Kenis, 2008) It may be possible for networks without formalised coordination to reach positive results, their full potential will only be realised through the application of governance mechanisms which allow strategic co-alignment and coordination between individual efforts and network investments (Zaccarelli et al, 2008)

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Conclusion