The protection of the trustor through the use of control mechanisms and its performance implications

Abstract

PurposeThe article seeks to explain the impact of the adoption of control mechanisms by a manufacturer as a safeguard against the betrayal of trust, which could consequently have performance implications for its relationship with its supplier.Design/methodology/approachThis study was conducted within the context of the relationship between a manufacturer and its major supplier and the framework was tested by survey data collected from 174 manufacturers. LISREL was used in the testing of the hypotheses.FindingsThis study reflects that a manufacturer may reduce the risk associated with trusting its suppliers by either monitoring them directly or adopting the norm of information sharing. Alternatively, it could seek to reduce risk by adopting both types of control mechanism simultaneously. Conversely, the results of this study indicate that control mechanisms, when used individually, are not effective in increasing supplier performance. However, when used in combination as plural control mechanisms, increased supplier performance can be attained.Practical implicationsA high level of trust placed in an exchange partner does not necessarily ensure greater success of the relationship. What this means is that firms cannot take performance for granted where trust plays a key role within the professional relationship. Therefore, firms still need to put mechanisms in place to ensure that, in the event of betrayal, their assets are protected. Among the different types of control mechanisms, the plural control mechanism results in enhanced supplier performance.Research limitations/implicationsThis study uses factual performance data but does not use perceptual performance measures. The ideal way to measure channel performance is to measure both perceptual and factual performance data to increase reliability.Originality/valueThere has been little research on control mechanisms that guarantee the protection of the trustor. This study clarifies which control mechanisms manufacturers rely on to protect themselves from breach of trust, and investigates the effects of control mechanisms on supplier performance when used as a safeguard against the betrayal of trust.