Controls, Trust, and Reciprocity

This study investigates the effects of formal controls on trust and reciprocity within organizations. Prior research finds a positive effect of controls on trust-based cooperative behavior in settings where people work together and may benefit from each other’s behavior. Other work suggests that this result could be driven by control-induced reciprocity rather than control-induced trust. If this is the case, then controls may have less of a positive effect, or no effect, in relationships that do not involve direct interaction. We test the extent to which controls improve trust and reciprocity by comparing the effect of controls in a setting where people do not work together directly, but where behaviors can be observed (in other words, a setting where reciprocity is less likely to influence behavior), to a setting where people work together and can benefit from each other’s work. We find that controls increase cooperative behavior in both settings, but that controls increase this behavior significantly more in the setting where participants work together and can benefit from each other’s work (i.e., where reciprocity is more likely to occur). This suggests that both trust and reciprocity are enhanced by controls, and that controls will enhance cooperative behavior more in more interactive settings.