The Notion of Trust and Control

The literature on the trust-control nexus has demonstrated that trust and control are complex and ambiguous concepts. As pointed by Ana Christina Costa and Katinka Bijlsma-Frankema (Costa and Bijlsma-Frankema 2007, p. 17) trust and control refer to 'highly complex forms of social relationships and processes, whose definitions have been inherently elusive and often challenged by scholars' and therefore 'it is not surprising that varied, and sometimes divergent, conceptualizations of trust and control are found in the literature' (Costa and Bijlsma-Frankema 2007, p. 394).

Accordingly, there is lack of a shared definition of the notion of trust. This variety of definitions of trust is documented by Sandro Castaldo (2007) who found 72 different definitions of trust proposed since 1960. Nevertheless, most scholars agree that trust involve positive expectations regarding the actions of others and the willingness to be vulnerable to the actions of others, as stated in the widely accepted definition of trust by R. Mayer et.al. (1995, p. 712) defining trust as the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.

Expectations refer typically to the belief in the trustees' ability, benevolence and integrity to fulfil the commitments to trustors (Mayer, Davis et al. 1995). The importance of the willingness to be vulnerable suggests that trust is related to risk taking, as we will return to below. The definition assumes that risk and interdependence are necessary conditions for trust. Trust would not be needed if actions could be undertaken with complete certainty and without risk. Trust is needed when there are interdependence between actors, i.e. that the interests of one party cannot be achieved without reliance upon another.

Several distinctions between different forms of trust have been proposed. Assuming that interpersonal trust has both cognitive and affective foundations Daniel McAllister (1995) has proposed a distinction between affect- and cognition-based trust. Trust is cognition-based since we choose whom we will trust in which respects and under what circumstances. Trust is also affective based since we develop emotional bonds towards other individuals over time. McAllister points that for working relationships, some level of cognition-based trust may be necessary for affect-based trust to develop.

Roy Lewicky and Barbara Bunker (1996) operate with three forms of trust: calculus-based, knowledge-based trust and identification-based trust. Calculus-based trust is not only grounded in vulnerability but also in the benefits to be gained from the process of relationship development over time.

Denise Rousseau, Sim Sitkin, Ronald Burt and Colin Camerer (Rousseau, Sitkin et al. 1998) proposed a two-stage model distinguishing between calculus-based trust and relational trust. Relational trust is derived from repeated interactions between trustor and trustee in which caring, concern, and emotional attachment have developed. Relational trust involves a broad array of resource exchange and entails a greater level of faith in the intentions of the other party. It is further argued that 'there is a tendency for repeated interactions to create expanded resources, including shared information, status and concern' (Rousseau, Sitkin et al. 1998, p. 400) giving rise to psychological identity. The authors explicitly links relational trust to the notions of 'affective trust' (McAllister 1995) and 'identity-based trust' (Lewicki and Bunker 1996) arguing that 'identity-based trust is relational trust at its broadest' (Rousseau, Sitkin et al. 1998, p. 400).

In this paper I apply the definition of trust presented by Mayer et. al. (1995) above. In the context of discussing the relation between trust and control it is particularly interesting that trust is defined as expectations of a particular action taken by the trustee, irrespective of the ability to monitor or control the trustee. This definition then opens for the possibility of trust and control as being independent without ruling out the possibility of trust and control as having partial interdependence. What may be open for further investigation is whether there may be different degrees of interdependence between control and the different forms of trust presented above.

The notion of control has been viewed as a process that regulates behaviours of organizational members in favour of the achievement of organizational goals (Costa and Bijlsma-Frankema 2007). Two basic approaches to control is suggested in the literature: external measurement-based control and internal values-based control (Eisenhardt 1985). Further, the measurement approach may either focus on the behaviour of employees (behaviour control) or on the outcome of those behaviours (outcome control). From this perspective we end up with three control strategies, two are performance evaluation strategies (behaviour and outcome based) and one which is a social based strategy (social control/ 'clan control').

The two performance based strategies is also called formal modes of control, while the social control strategies may also be referred to as informal or normative control. This distinction gives rise to two ideal types of control. External measurement-based control is achieved through actors' regulation of their behaviour in exchange for expected rewards or the avoidance of sanctions. Normative control, on the other hand, is achieved through the negotiation of meaning. Control in this last sense is at a deeper level, involving actors' preferences and not merely their expectations (Maguire, Phillips et al. 2001).

If formal control was sufficient to control organizations, the issue of trust and control would not be of great relevance. The interest in considering trust as an alternative or as a supplement to control derives from the appearance of several limitations of control in organisations.

Katinka Bijlsma-Frankema and Ana Cristina Costa (2005) point to several reasons for the hollowing out of the basis of formal control. First, due to the speeding up of markets, continuous change, flexibilization and virtualization of organizational forms, work relationships have become looser and more distant.

Second, within organizations lateral relationships and collaboration have become increasingly important, in contrast to hierarchical relationships that used to frame work relations. Network forms of organizations and inter-organizational alliances are examples of this. Due to diminished possibilities and/or capabilities to control these forms of cooperation, trust becomes very important in lubricating cooperation.

A third reason why formal control is harder to establish is the inherently difficulty in enforcing contracts in cooperative relationships. It may be difficult to establish and enforce contracts in cooperation involving different law systems. More generally in cases of high-tech partnerships where knowledge is of strategic value any legal resolution of conflict will often be too late or in vain. In relations between firms, similar developments have made control more problematic. Formal contracts may be hard to specify because of the increasingly intangible nature of resources and the high pace of technological development.

If formal control has become less effective in governing organizational relationships, it is interesting whether trust can be conceived as an alternative governance mechanism or if trust can help in overcoming some of the problems faced by formal control.

Trust, like control, involves alignment of mutual expectations. This alignment can be based on explicit interaction between actors, or it can be more implicitly rooted in social control, as Das and Teng (2001) argue, referring to the notion of clan control as social control. If embeddedness in shared cultures is lacking, the parties have to invest in relationship building.

Trust, like control, requires interaction and sometimes monitoring. The meaning given to monitoring can be rather different in the context of trust relations where it may take the form of showing interest and concern. However, monitoring can also be perceived as a lack of trust between partners. It is then expected that trust is more effective that formal control in support of extra-role behaviours of actors and their commitment to shared goals.

Unlike control, trust is not based on the explicit threat of enforcement of an agreement. Social control, nevertheless, implies the implicit threat of social sanctioning, but social sanctioning is only possible if the parties are embedded in a network of social relations and if reputation mechanisms can support exclusion or other social sanctions.

As shown above, based on the recent discussions on the notion of trust and control the two concepts may be independent, as one existing without the existence of the other. On the other hand, there are also indications of the possibility that there is some degree of interdependence between the two concepts. In the following section we will look closer into how this ambiguity has been reflected in the theoretical debate on the relation between trust and control.

The Interrelation between Trust and Control

The relation between trust and control has been analysed recently in several studies (Das and Teng 1998; Bachmann 2001, p. 394; Bachmann, Knights et al. 2001; Das and Teng 2001; Gallivan 2001; Grey and Carsten 2001; Knights, Noble et al. 2001; Reed 2001; Fryxell, Dooley et al. 2002; Mills and Ungson 2003; Cardinal, Sitkin et al. 2004; Bijlsma-Frankema and Costa 2005; Möllering 2005; Long and Sitkin 2006; Schneider 2006; Ferrin, Bligh et al. 2007; Khodyakov 2007; de Man and Roijakkers 2009) and three special issues have recently been dedicated to this theme in Organization (No. 2, 2001), in International Sociology (No. 3, 2005), and in Group & Organization Management (No. 4, 2007). In this section I present the two alternative interpretations of the relation between trust and control found in the literature: the substitution perspective and the complementary perspective.

The substitution perspective on trust and control hold that trust and control inversely related so that the presence of trust reduces the need for control and vice versa (Bradach and Eccles 1989; Sitkin and Roth 1993; Dekker 2004). Trust and control are considered to be alternative strategies for arriving at stable organizational orders (Costa and Bijlsma-Frankema 2007). Support for the substitution perspective has been found in empirical studies. Ann Costa (2003) found that trust in work teams is positively related to cooperative behaviours and negatively to monitoring colleagues, indicating that trust may work as a substitute for control. Nevertheless, until now there is no consistent empirical evidence that trust and formal control indeed substitute for each other.

The complementary perspective on trust and control hold that trust and control can be mutually reinforcing and both may contribute to the level of cooperation in a relationship (Costa and Bijlsma-Frankema 2007). Trust and control complement each other allowing organizations to achieve greater exchange performance that either governance choice can provide in isolation (Poppo and Zenger 2002).

Attempting to advance the discussion Das and Teng (2001) suggest that the trust-control relationships vary depending on the type of trust and control involved. Trust and control is either complementary or substitutive depending on the type of control. Formal control is undermining trust, indicating that trust and control are substitutes. Social control, on the other hand, is complementing trust. Trust and control are, according to Das and Teng, 'two separate routes to risk reduction … [which] can and should be combined in specific ways for best risk management results' (Das and Teng 2001, p. 276) because simultaneous reliance on trust and control contributes to the effectiveness of both governance strategies.

Following up on this perspective Klein Woolthuis et. al. (Klein Woolthuis, Hillebrand et al. 2005) found that trust and control are both substitutes and complements. More trust allows for less control, but often trust and control go together. Trying to integrate the debate on trust, control and risk, de Man and Roijakkers (2009) suggest to distinguish between situations according to the level of relational and performance risk.

Control is expected to be relevant in situations with high relational risk when there is uncertainty about partner's intentions. On the other hand, trust is needed to deal with performance risk. The more volatile the environment, the more difficult it is to use a control approach and the more trust-based mechanism will be needed. Summarizing the relevance of both trust and control, deMan and Roijakkers (2009, p. 78) point that we may expect 'control to be a more valid option in a stable environment with low performance risk, whereas trust is required in a turbulent environment with high performance risk'.

Building on this reasoning, in the low/low risk quadrant it is suggested that trust and control are substitutes, since low relational risk makes it possible to use trust, while low performance risk makes it possible to use control. Investing in both seems unnecessary and costly. In the high/high risk quadrant, on the other hand, we find that trust and control must be combined in a complex governance structure because of the demanding environment of both high relational and performance risk.

Summarising, following de Man and Roijakkers, we may say that the relation between trust and control is contingent on the type of risk. The complement/substitute debate raises important issues such as we may proceed to understand the dynamic interrelations between trust and control. In the following section an explicit process perspective on both trust and control is introduced as an important step towards understanding the dynamic interrelations between trust and control.

Towards a Process Perspective on Trust and Control

As we saw above, the complementary/substitute debate on trust and control call for a closer look at the dynamic interrelations of trust and control. In this section I argue that taking an explicit process perspective on both trust and control is necessary for understanding the dynamic interrelations between trust and control. First, I explore how an explicit process perspective on trust and control has been introduced. Then I explore the implications of an explicit process perspective on balancing trust and control.

While earlier studies, implicitly or explicitly, have assumed that trust and control are relatively stable entities recent studies have increasingly applied a process perspective on trust and control and on their dynamic interrelations (Cardinal, Sitkin et al. 2004; Long and Sitkin 2006).

The process perspective on trust have recently been promoted by trust researchers, such as Bart Nooteboom and Guido Möllering (Nooteboom 2003; Möllering 2006; Nooteboom 2006) pointing to trust as something that develops gradually. Möllering points to the importance of studying actual "trust experiences" and the respondents' idiosyncratic experiences and interpretations. Khodyakov (2007) more explicitly directs attention towards an endogenous process perspective on trust arguing that trust(-ing) is a process performed constantly by the actor.

Elaborating further on a process perspective on trust Alex Wright and Ina Ehnert (2010, p. 116) argue that "[s]eeing trust as part of the temporal flow of social activity constructs it as an unfolding narrative, we never quite 'trust' in any final sense but are always in a process of 'trusting'." In order to make the process perspective on trust more explicit Wright and Ehnert suggest replacing the word 'trust' with the terms 'trusting' or 'trust-in-the-making' Möllering (2006, p. 102) , which better represent it as a process, that is an emerging, ongoing, social accomplishment.

In recent years the process perspective has likewise been applied to the study of organizational control (Bijlsma-Frankema and Koopman 2004; Cardinal, Sitkin et al. 2004; Khodyakov 2007; Vlaar, Van den Bosch et al. 2007). While past studies have looked at the stable use of controls in mature organizations, Cardinal et. al. (2004) trace the creation and evolution of control mechanisms over the first 10 years of a start-up company with the intention to theorize what might drive changes in control use. Summarizing earlier research on the evolution of control Cardinal et. al. (2004, p. 412) concludes that 'our lack of understanding of control creation and evolution is significant'. The study explains the dynamic unfolding of control systems in the particular start-up company and this study leads Cardinal et. al. to conclude that control should be seen as 'dynamic, multifaceted, and emergent phenomenon'(Cardinal, Sitkin et al. 2004, p. 412) .

When taking an explicit process perspective on trust and control it is also necessary to approach the question of their interrelation from a process perspective. Several studies point to the importance of the starting levels of trust and control. Adobor (2005) argues that trust creation may be viewed as a process of sensemaking in which small cues are enlarged through the incremental accumulation of evidence. An actor's initial trust expectations thus become important because under conditions of uncertainty expectations provide a measure of certainty.

Others have generalised this perspective to the interrelations between trust and control. Vlaar et. al. (2007) take an explicit process perspective by asking how trust and formalization evolve in inter-organizational relationships. They suggest that the degrees to which managers trust and distrust partners may condition the development of these relationships in later stages of collaboration due to vicious or virtuous cycles of development. Thus, the starting conditions characterizing inter-organizational relations have "disproportionate" effects on the development of the relationships in later stages of collaboration because of the impact of trust and distrust on formal coordination and control, on inter-organizational performance and on the interpretations managers attribute to the behaviour of their partners.

Dmitry Khodyakov (Khodyakov 2007) present an interesting case study of trust-control relationships in a conductorless orchestra, Orpheus, giving us an opportunity to see how trust, control and self-control are intertwined in organisational practices. Although there is no hierarchical control, Orpheus uses various control strategies. One is a system of rotation of leader roles so that all experience being a leader and a follower. A second, and very important, control strategy is self-control. In addition to be well prepared individually, the lack of a conductor put a stress on all members to adjust in a very flexible way to each other during a concert, because technical problems such as balance and tempo achievement are harder to solve without a conductor.

In addition the orchestra has appointed the founding member of the orchestra, Julian Felix, to become their executive director in order to make the orchestra more efficient. More generally the musicians have created a specific way of managing the orchestra. They elect three rotating representatives, "artistic directors", to work with the managing director, who is also an Orpheus musician, and the executive director, who supervises the administrative team taking care of scheduling, personnel and budgetary issues. Other elected musicians serve on the board of directors that is accountable for the stability and financial well-being of the orchestra.

Khodyakov (Khodyakov 2007, p. 17) summarises the history of the trust and control relationships in Orpheus, stressing that

Although trust was independent from behavioral control in the early years of Orpheus, it became intertwined with control after core groups were implemented. This example shows that trust and control do not automatically become a duality. Instead, each organization goes through a process of institutionalizing trust-control duality, which may move from either primarily control-based or trust-based governance mechanisms to a realization of benefits of a trust-control mixture.

This study point to the benefits of taking an explicit process perspective on the relationships between trust and control showing that the particular trust-control mixture is the outcome of a development process in which earlier experiences with a particular combination of trust and control, lead to modifications of both behaviour and of the use of additional forms of trust and of control.

Process Perspective on Balancing Trust and Control

Last, the implications of an explicit process perspective on the question of balancing trust and control is explored.

A few attempts have been made to present explicit process-oriented models of how managers may balance trust and control. Long and Sitkin (2006, p. 87) argue that perspectives emerging from the organizational literature show that 'managers integrate and balance their attempts to promote organizational trust with their efforts to apply organizational controls'. Long and Sitkin draw on the definition of balance proposed by Sutcliffe et. al. (2000) stating that balance can be defined as 'the need to actively consider both types of process and to determine what an appropriate balance should be, contingent on situational conditions' (Sutcliffe, Sitkin et al. 2000, p. 321). Following this definition managers is seen to achieve a trust-control balance when they obtain a state where their superior-subordinate relations exhibit a harmonious integration of trust-building and task control activities.

Long and Sitkin distinguish three types of balancing processes that managers use to achieve a balance between trust-building and task control activities:

• antithetical balancing processes in which trust and control function as substitutes, i.e. choosing more of one option one must necessarily choose less of other options ;

• synergistic balancing processes in which trust and control function as complements, i.e. the choice of one option makes it easier and/or more effective to also pursue specific, additional action options; and

• orthogonal balancing processes in which trust and control are unrelated, i.e. the choice of one option is independent of the choice of the other action.

Combining these three balancing processes managerial trust and control actions have a greater range of potential configurations than considered in past work on trust and control. This model shows the dynamic nature of organizational trust and control development as ongoing processes. By conceptualizing the relation between trust and control in process-based terms (Cardinal, Sitkin et al. 2004; Long and Sitkin 2006), instead of in mechanistic terms, we get a much finer understanding of the complex ways trust and control is intertwined in organizational practices.

As shown by the analysis of balancing trust and control by Long and Sitkin discussed above, taking an explicit process perspective on balancing trust and control implies that trust and control may be seen as simultaneously both complementing and supplementing each other, i.e. certain types of trust and of control may interrelate by complementing each other while certain types of trust and control may interrelate by supplementing each other.

Summary and discussion

The review of recent research on the interrelations of trust and control reveals an ambiguity concerning whether trust and control are conceptualized as complements or as supplementing each other, or, alternatively, are unrelated. The review of the literature demonstrates a major change in the conceptualization of trust and control and the relation between them. While trust and control earlier has been conceptualized as two relatively static and isolated concepts, more recent research tends to conceptualize trust and control as two interactive processes. Though trust probably never has been seen as a static phenomenon, since trust may grow or disappear, recent trust research promotes an explicit process perspective.

Taking an explicit process perspective on the interrelation between trust and control has important implications for how managers reflect on and act on the challenges of balancing of trust and control in organizations.

The static perspective on trust and control implies that finding a balance between trust and control is a once for all decision. In contrast, a process perspective implies that balancing trust and control is an ongoing process of balancing and rebalancing. The implication for management is that the problem of balancing trust and control becomes an issue that deserve ongoing attention.

By demonstrating the importance of the process perspective on the trust and control interrelation, the paper points to a promising perspective for researching the trust-control nexus. While a few studies, as illustrated above, already have shown the value of the process perspective on balancing trust and control, more detailed case studies are needed in order to explore trust and control as process phenomena, and most importantly, to explore the dynamics of the interrelation of trust and control.

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