Trust, control and knowledge transfer in small business networks

Maurizio Massaro,Matthias Fink,Andrea Moro,Ewald Aschauer

doi:10.1007/s11846-017-0247-y

Abstract

The ability to transfer knowledge effectively in the networks of small and medium-sized firms (SMEs) is paramount for supporting firm competitiveness. Our research is the first one that explores the joint effect of trust and control mechanisms on knowledge transfer in the case of networks of SMEs. We use a multiple case study approach based on six Italian networks of SMEs. We analyse the joint impact of different ethical based trustworthiness factors—namely benevolence and integrity—and the levers of control (LOCs)—namely, belief, boundary, diagnostic and interactive LOCs—on knowledge transfer between SMEs in networks. We find that trust substitutes for the implementation of boundary, diagnostic, and belief tools, while it works jointly with interactive tools in order to support knowledge transfer. These insights not only provide a rich foundation for follow-up research, but also inform SME managers about how to increase the effectiveness and efficiency of knowledge transfer with their network partners.

Highlights

When, in 1268, the Doge of Venice, Ranieri Zeno, died, he left 132 carte di commenda with a value of almost 20,000 Venetian lire, representing 60% of his total financial wealth, which was anything but small
In line with previous works on trust, our findings suggest an interesting set of implications that firms can face when they rely on values and exploit the trust they have in their business partners: firms can reduce the costs linked to the implementation of control tools; they can increase the amount of information that is transferred; they can increase the pace at which information and knowledge is transferred
The findings suggest that belief, diagnostic and boundary control systems are antithetical to trust with respect to supporting knowledge transfer, while interactive control tools work synergistically with trust in supporting knowledge transfer

Summary

Introduction

In 1268, the Doge of Venice, Ranieri Zeno, died, he left 132 carte di commenda with a value of almost 20,000 Venetian lire, representing 60% of his total financial wealth, which was anything but small. In medieval Venice (and Europe), the carte di commenda were the tool used by traders to collect money from wealthy people in order to set up a trade. The trader would use the money he was entrusted with to buy products in Europe, with the intention of selling them in the Middle East. The profit from the trade was split between the trader and the wealthy financiers according to the proportions set out in the carta di commenda. The key aspect of such contracts was that the wealthy financier had no real or effective control over the trader or the trade: the ‘‘partnership’’ was based on trust that the trader would behave properly in buying and selling the products and would disclose with honesty the profit made on such trades (Cipolla 2002)

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