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Title: Management control of Inter Organizational Relationships, an analysis of how management control systems and trust affect one another during the evolutionary phases of an IOR in the IT market in the Netherlands
Authors: Groot de, PG
Keywords: Management Control
Inter Organization Relationship
Information Technology
Issue Date: 7-May-2014
Publisher: Open Universiteit Nederland
Abstract: Thesis Abstract One factor that is a certainty in the world of business is change. Companies constantly need to deal with change in order to perform and stay ahead of their competitors. One of the requirements to ensure they meet their targets is to start partnerships with other companies that share a common goal. This thesis researches the way these partnerships work, evolve and, in particular, focuses on the way trust (competence, goodwill and contractual trust) and control (outcome, action and personal cultural controls) affect one another during the evolution of the relationship. The thesis initially provides a review of the current academic literature regarding the subject of trust and control during the evolutionary phases of an Inter Organizational Relationship. This revision leads to my conclusion that there is no clear consensus that trust and control work as complements (or substitutes). Where one article states that trust and control work as complements, the other suggests the contrary. Additionally very little has been researched about this subject when keeping the evolution (contact/contract phase, execution phase and outcome phase) of the relationship in mind. By conducting two case studies of partnerships in the Information Technology sector in the Netherlands, I have tried to compare my findings to the literature and try to add new insights into the academics debate. Although both case studies differed in the way trust and control worked, it seemed as if the performance of the relationship was a very important factor in the way trust and control worked. In addition to the performance, dependence, network and the level of detail in the contractual agreements were also factors that influenced the way trust and control worked in the partnership. Where network plays an important role in finding a suitable partner in the contact/contract phase, it is the dependence that determines which partners has more control over the other. The performance and level of detail in the contractual agreements decide when an in or decrease of trust and control is required. Both partnerships required a high level of competence trust in the contact contract phase of the relationship. The level of trust, however, didn’t seem to affect control as the level of MCS was dependent on the complexity and importance of the results of the relationship. In the execution phase of the relationship in the GA Partnership it was clear that an increase of control had an initial negative impact of the level of trust. This was followed by an increase of trust (as soon as the results improved) which subsequently resulted into a decrease of control. The main factor seemed to be the performance of the relationship. If the results deteriorated it caused a decrease of trust and increase of control and vice versa. This development seemed to continue in the outcome phase of the relationship. In the case studies it seemed as if trust and control worked as supplements in the LB partnership and substitutes in the GA partnership. Since the contractual agreements were much more detailed in the LB partnership in combination with the fact that both companies were more equally dependent on the relationship and the performance overall seemed satisfactory it resulted into far fewer fluctuations in trust and control when compared to the GA partnership. Keywords: “Management Control”, “Trust”, “Inter Organization Relationship”, “Partnerships”, “Risk”, “Information Technology”, “MCS”
Appears in Collections:MSc Management Science

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