Revisiting the Interplay of Trust and Contracts: The Roles of Technological Turbulence and Dependence Disadvantage

Kedi Wang; Boofeng Huo; Min Tian; Andy Yeung

doi:10.1016/j.pursup.2024.100895

Revisiting the Interplay of Trust and Contracts: The Roles of Technological Turbulence and Dependence Disadvantage

Kedi Wang
, Boofeng Huo
, Min Tian
, Andy Yeung

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

294 Downloads (Pure)

Abstract

Drawing on information processing theory, this study revisits the interplay between trust and contracts by comprehensively examining the impact of the interaction of different types of trust (i.e., ability trust and goodwill trust) and contracts (i.e., control contract and coordination contract) under different uncertainties (i.e., technology turbulence and dependence disadvantage) on supplier opportunism. We build a moderated moderation model to test the
proposed hypotheses using a combined dataset of a survey of 200 Chinese manufacturers and secondary data. The results show that coordination contract weakens the effectiveness of ability trust but strengthens the effectiveness of goodwill trust. When firms face a high level of technological turbulence, both types of contracts weaken the effectiveness of ability trust in curbing opportunism, while under a high level of dependence disadvantage, contracts weaken ability trust but reinforce goodwill trust in curbing opportunism. Our results are found to be robust after being verified by a variety of statistical specifications and estimations. The results provide nuanced insights for both the literature and practice.

Original language	English
Article number	100895
Journal	Journal of Purchasing and Supply Management
Early online date	15 Jan 2024
DOIs	https://doi.org/10.1016/j.pursup.2024.100895
Publication status	Published online - 15 Jan 2024

Bibliographical note

Publisher Copyright:
© 2024 Elsevier Ltd

Data Availability Statement

The data that has been used is confidential

Funding

This research was supported by National Natural Science Foundation of China ( #72091214 , #71821002 ), Natural Science Foundation of Shandong Province ( #ZR2023QG125 ). We would like to express our gratitude to the editors and the reviewers for the effort they gave in reviewing the paper. The feedbacks provided were very useful in improving the work.

Funders	Funder number
National Natural Science Foundation of China	72091214, 71821002
National Natural Science Foundation of China
2023QG125

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

Trust
Contracts
Technological turbulence
Dependence disadvantage
Opportunism

Access to Document

10.1016/j.pursup.2024.100895

Revisiting the interplay of trust and contractsAuthor Accepted Manuscript, 1.47 MBLicence: CC BY-NC-ND

Cite this

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abstract = "Drawing on information processing theory, this study revisits the interplay between trust and contracts by comprehensively examining the impact of the interaction of different types of trust (i.e., ability trust and goodwill trust) and contracts (i.e., control contract and coordination contract) under different uncertainties (i.e., technology turbulence and dependence disadvantage) on supplier opportunism. We build a moderated moderation model to test the proposed hypotheses using a combined dataset of a survey of 200 Chinese manufacturers and secondary data. The results show that coordination contract weakens the effectiveness of ability trust but strengthens the effectiveness of goodwill trust. When firms face a high level of technological turbulence, both types of contracts weaken the effectiveness of ability trust in curbing opportunism, while under a high level of dependence disadvantage, contracts weaken ability trust but reinforce goodwill trust in curbing opportunism. Our results are found to be robust after being verified by a variety of statistical specifications and estimations. The results provide nuanced insights for both the literature and practice.",

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AU - Huo, Boofeng

AU - Tian, Min

AU - Yeung, Andy

PY - 2024/1/15

Y1 - 2024/1/15

N2 - Drawing on information processing theory, this study revisits the interplay between trust and contracts by comprehensively examining the impact of the interaction of different types of trust (i.e., ability trust and goodwill trust) and contracts (i.e., control contract and coordination contract) under different uncertainties (i.e., technology turbulence and dependence disadvantage) on supplier opportunism. We build a moderated moderation model to test the proposed hypotheses using a combined dataset of a survey of 200 Chinese manufacturers and secondary data. The results show that coordination contract weakens the effectiveness of ability trust but strengthens the effectiveness of goodwill trust. When firms face a high level of technological turbulence, both types of contracts weaken the effectiveness of ability trust in curbing opportunism, while under a high level of dependence disadvantage, contracts weaken ability trust but reinforce goodwill trust in curbing opportunism. Our results are found to be robust after being verified by a variety of statistical specifications and estimations. The results provide nuanced insights for both the literature and practice.

AB - Drawing on information processing theory, this study revisits the interplay between trust and contracts by comprehensively examining the impact of the interaction of different types of trust (i.e., ability trust and goodwill trust) and contracts (i.e., control contract and coordination contract) under different uncertainties (i.e., technology turbulence and dependence disadvantage) on supplier opportunism. We build a moderated moderation model to test the proposed hypotheses using a combined dataset of a survey of 200 Chinese manufacturers and secondary data. The results show that coordination contract weakens the effectiveness of ability trust but strengthens the effectiveness of goodwill trust. When firms face a high level of technological turbulence, both types of contracts weaken the effectiveness of ability trust in curbing opportunism, while under a high level of dependence disadvantage, contracts weaken ability trust but reinforce goodwill trust in curbing opportunism. Our results are found to be robust after being verified by a variety of statistical specifications and estimations. The results provide nuanced insights for both the literature and practice.

KW - Trust

KW - Contracts

KW - Technological turbulence

KW - Dependence disadvantage

KW - Opportunism

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Revisiting the Interplay of Trust and Contracts: The Roles of Technological Turbulence and Dependence Disadvantage

Abstract

Bibliographical note

Data Availability Statement

Funding

UN SDGs

Keywords

Access to Document

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