Relational Signalling in Governance Mechanisms and Trust Building

Authors

  • kah seng Diong Putra Business School
  • Soon Yau Foong Putra Business School
  • Murali Sambasivan Taylor's University

DOI:

https://doi.org/10.17576/AJAG-2018-09-05

Keywords:

Relational signalling, trust, inter-organizational collaboration, formal contract, management control system, knowledge exchange, innovation.

Abstract

“Thick” trust is required for the exchange of tacit knowledge in inter-organizational innovation collaborations. Management accounting researchers suggest that when the governance mechanisms can provide sufficient mitigations to the relational risks, trusting relationship among the collaborating partners can be developed. However, the question that remained unanswered is why some collaborative relationships with proper governance structure do not lead to the establishment of trust. This study seeks to identify the relational signals in the formal governance mechanisms which could foster development of “thick” trust that is crucial for effective knowledge exchange. Based on resource-based view (RBV), transaction cost economics theory (TCE), and relational signalling theory, this study proposes a conceptual framework that identifies the relational signalling elements in formal governance mechanisms that could foster “thick” trust among partners. The study contributes to the literature by distinguishing specific elements from conventional formal governance mechanisms as relational signalling elements for effective development of trust among collaborating partners. 

Author Biographies

kah seng Diong, Putra Business School

PhD candidate at PBS

Soon Yau Foong, Putra Business School

Professor of Accounting and Director of the Thesis-Based Programmes at PBS

Murali Sambasivan, Taylor's University

Professor at Taylor's University

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Published

2018-05-07

Issue

Vol. 9 (2018)

Section

Articles

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