Formal Control, Trust and Trustworthiness.

To what extent and under what conditions can managers΄ guide employees΄ behavior by relying on both formal control and trust? This question has been raised only recently. For years managers were assumed to direct subordinates effectively by means of standard setting, monitoring and rewarding (Pfeffer 1997). Later researchers suggested that managers΄ efforts to build trust promote organizational effectiveness (Adler 2001; McEvily/Perrone/Zaheer 2003; Walgenbach 2000). Additionally, it was assumed that a mixed regime of managerial governance based on trust and formal control was inconceivable, as formal control was thought to be ˵at odds with a trusting environment″ (Das/Teng 1998: 501). A number of authors suggested that formal control lowers the intentions of the trustee to act in the interests of the trustor (for example Gouldner 1954; Argyris 1964; McGregor 1960; Enzle/Anderson 1993); that is, formal control negatively influences the trustworthiness of the trustee. The aim of this study is to examine whether formal control, depending on its characteristics, can also have a positive effect on trustworthiness. Formal control may strengthen the intentions of the trustee to act in the interests of the trustor and thereby contribute, in conjunction with trust, to organizational effectiveness. [ABSTRACT FROM AUTHOR]