The Effect of Control Systems on Teams and Alliances: Trust and Cooperation in the New Collaborative Environment

The Effect of Control Systems on Teams and Alliances: Trust and Cooperation in the New Collaborative Environment
Author(s): Towry, Kristy L. and Coletti, Angela L. and Sedatole, Karen L.
Year: 2003
Paper Number: GBS-ACC-2003-001
Goizueta Department: Accounting

Abstract

Because of conflicting incentives among participants, inter-firm (e.g., strategic alliances and joint ventures) and intra-firm (e.g., work teams) collaborations present a significant control challenge to managerial accountants. On the one hand, formal controls such as sanctioning and monitoring systems improve cooperation by reducing the incentives for opportunistic behavior. On the other hand, prior research finds that the mere presence of a control system affects how decision-makers mentally frame the situation, causing them to view the collaborative setting as inherently non-cooperative, and teammates and partners as inherently untrustworthy. In this paper, we conduct two experiments to explore the effects of control on trust and cooperation in collaborative settings. Using the social psychological foundations of attribution theory, we posit and provide evidence that a strong control system, by providing a mechanism for feedback, can actually enhance the level of trust among collaborators. Further, we show that this increased trust has a positive effect on the level of cooperation among collaborators.