The Influence of Control Choice and Partner’s Prior Transactional Experience on Partner’s Trust and Cooperativeness in New Collaborations

Abstract

This study examines the effects on interfirm collaboration of management control systems providing information of varying precision when precision is a firm choice that may be interpreted by a transaction partner though a lens of prior experience. We use experimental methods to study whether the cooperativeness of prior collaboration experience affects a partner’s perception of another firm’s control choices with consequences for the partner’s goodwill trust in and collaboration with the firm. We distinguish between partners’ perception of the decision to adopt precise controls as an effort to (i) limit partner autonomy or (ii) reduce information asymmetry about partner actions. We predict that the partner’s prior collaboration experience determines which role is salient, with negative experiences favoring the former and positive experiences favoring the latter interpretation. We find that a partner with a cooperative prior experience is more cooperative in the new collaboration. Moreover, prior experience frames the partner’s perception of the new collaborator’s control choices. A partner with an uncooperative experience sees precise controls as an effort to limit autonomy and reciprocates with lower goodwill trust. In contrast, a partner with a cooperative experience sees precise controls as enabling collaboration through better information and reciprocates with higher goodwill trust. We do not find a moderating effect of partner’s prior experience on the association between control precision and partner cooperativeness. Instead, we find a moderated mediation effect where the mediating effect of the partner’s goodwill trust on the association between control precision and partner cooperation depends on the cooperativeness of the partner’s prior experience