IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v134y2011i1p114-122.html
   My bibliography  Save this article

The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty

Author

Listed:
  • Wang, Longwei
  • Yeung, Jeff Hoi Yan
  • Zhang, Min

Abstract

Research into two important control mechanisms for managing the supply chain relationship - contracts and trust - is on the rise. However, our understanding of how they influence innovation in a firm remains rather unclear. Thus, the primary objective of this study is to examine the individual and interactive effects of contracts and trust on firms' innovation performance and the contingent effects of environmental uncertainty on those relationships in China. The empirical results from a survey of Chinese manufacturing firms indicate that there is a positive relationship between trust and firms' innovation performance, an inverted U-shaped relationship between the use of contracts and firms' innovation performance, and that contracts and trust are substitutes. Moreover, we find that environmental uncertainty enhances the effects of trust, but does not influence the impact of contracts on innovation performance.

Suggested Citation

  • Wang, Longwei & Yeung, Jeff Hoi Yan & Zhang, Min, 2011. "The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 114-122, November.
    • Handle: RePEc:eee:proeco:v:134:y:2011:i:1:p:114-122
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527311002714
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Laaksonen, Toni & Jarimo, Toni & Kulmala, Harri I., 2009. "Cooperative strategies in customer-supplier relationships: The role of interfirm trust," International Journal of Production Economics, Elsevier, vol. 120(1), pages 79-87, July.
    2. Marjorie A Lyles & Jane E Salk, 1996. "Knowledge Acquisition from Foreign Parents in International Joint Ventures: An Empirical Examination in the Hungarian Context," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(4), pages 877-903, December.
    3. Deborah Dougherty, 1992. "Interpretive Barriers to Successful Product Innovation in Large Firms," Organization Science, INFORMS, vol. 3(2), pages 179-202, May.
    4. Andrew C. Inkpen & Steven C. Currall, 2004. "The Coevolution of Trust, Control, and Learning in Joint Ventures," Organization Science, INFORMS, vol. 15(5), pages 586-599, October.
    5. Julie Juan Li & Laura Poppo & Kevin Zheng Zhou, 2010. "Relational mechanisms, formal contracts, and local knowledge acquisition by international subsidiaries," Strategic Management Journal, Wiley Blackwell, vol. 31(4), pages 349-370, April.
    6. Narasimhan, Ram & Nair, Anand, 2005. "The antecedent role of quality, information sharing and supply chain proximity on strategic alliance formation and performance," International Journal of Production Economics, Elsevier, vol. 96(3), pages 301-313, June.
    7. Su, Qiang & Shi, Jing-hua & Lai, Sheng-jie, 2008. "Study on supply chain management of Chinese firms from the institutional view," International Journal of Production Economics, Elsevier, vol. 115(2), pages 362-373, October.
    8. Ragatz, Gary L. & Handfield, Robert B. & Petersen, Kenneth J., 2002. "Benefits associated with supplier integration into new product development under conditions of technology uncertainty," Journal of Business Research, Elsevier, vol. 55(5), pages 389-400, May.
    9. Yeung, Jeff Hoi Yan & Selen, Willem & Zhang, Min & Huo, Baofeng, 2009. "The effects of trust and coercive power on supplier integration," International Journal of Production Economics, Elsevier, vol. 120(1), pages 66-78, July.
    10. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    11. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(2), pages 235-254, June.
    12. Nassimbeni, Guido & Sartor, Marco, 2007. "Sourcing in China: a typology," International Journal of Production Economics, Elsevier, vol. 107(2), pages 333-349, June.
    13. Cao, Mei & Zhang, Qingyu, 2010. "Supply chain collaborative advantage: A firm's perspective," International Journal of Production Economics, Elsevier, vol. 128(1), pages 358-367, November.
    14. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    15. Gerald E. Fryxell & Robert S. Dooley & Maria Vryza, 2002. "After The Ink Dries: The Interaction Of Trust And Control In Us‐Based International Joint Ventures," Journal of Management Studies, Wiley Blackwell, vol. 39(6), pages 865-886, September.
    16. Panayides, Photis M. & Venus Lun, Y.H., 2009. "The impact of trust on innovativeness and supply chain performance," International Journal of Production Economics, Elsevier, vol. 122(1), pages 35-46, November.
    17. Yadong Luo, 2007. "Are joint venture partners more opportunistic in a more volatile environment?," Strategic Management Journal, Wiley Blackwell, vol. 28(1), pages 39-60, January.
    18. Kim B. Clark, 1989. "Project Scope and Project Performance: The Effect of Parts Strategy and Supplier Involvement on Product Development," Management Science, INFORMS, vol. 35(10), pages 1247-1263, October.
    19. Rauniar, Rupak & Doll, William & Rawski, Greg & Hong, Paul, 2008. "Shared knowledge and product design glitches in integrated product development," International Journal of Production Economics, Elsevier, vol. 114(2), pages 723-736, August.
    20. Masaaki Kotabe & Xavier Martin & Hiroshi Domoto, 2003. "Gaining from vertical partnerships: knowledge transfer, relationship duration, and supplier performance improvement in the U.S. and Japanese automotive industries," Strategic Management Journal, Wiley Blackwell, vol. 24(4), pages 293-316, April.
    21. Chong, Alain Yee-Loong & Ooi, Keng-Boon & Sohal, Amrik, 2009. "The relationship between supply chain factors and adoption of e-Collaboration tools: An empirical examination," International Journal of Production Economics, Elsevier, vol. 122(1), pages 150-160, November.
    22. Tjosvold, Dean & Law, Kenneth S. & Sun, Haifa, 2006. "Effectiveness of Chinese Teams: The Role of Conflict Types and Conflict Management Approaches," Management and Organization Review, Cambridge University Press, vol. 2(2), pages 231-252, July.
    23. Kevin Zheng Zhou & Laura Poppo, 2010. "Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(5), pages 861-881, June.
    24. Prashant Kale & Harbir Singh & Howard Perlmutter, 2000. "Learning and protection of proprietary assets in strategic alliances: building relational capital," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 217-237, March.
    25. Jaeyong Song & Paul Almeida & Geraldine Wu, 2003. "Learning--by--Hiring: When Is Mobility More Likely to Facilitate Interfirm Knowledge Transfer?," Management Science, INFORMS, vol. 49(4), pages 351-365, April.
    26. Liu, Yi & Li, Yuan & Wei, Zelong, 2009. "How organizational flexibility affects new product development in an uncertain environment: Evidence from China," International Journal of Production Economics, Elsevier, vol. 120(1), pages 18-29, July.
    27. Dean Tjosvold & Kenneth S. Law & Haifa Sun, 2006. "Effectiveness of Chinese Teams: The Role of Conflict Types and Conflict Management Approaches," Management and Organization Review, The International Association for Chinese Management Research, vol. 2(2), pages 231-252, July.
    28. Daniel Z. Levin & Rob Cross, 2004. "The Strength of Weak Ties You Can Trust: The Mediating Role of Trust in Effective Knowledge Transfer," Management Science, INFORMS, vol. 50(11), pages 1477-1490, November.
    29. Marjorie A Lyles & Jane E Salk, 1996. "Knowledge Acquisition from Foreign Parents in International Joint Ventures: An Empirical Examination in the Hungarian Context," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(5), pages 877-903, December.
    30. Peter J. Lane & Jane E. Salk & Marjorie A. Lyles, 2001. "Absorptive capacity, learning, and performance in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1139-1161, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kolloge, Konstantin, 2009. "Die Messung des Kooperationserfolges in der empirischen Forschung: Ergebnisse einer Literaturstudie," Arbeitspapiere 76, University of Münster, Institute for Cooperatives.
    2. Siachou, Evangelia & Vrontis, Demetris & Trichina, Eleni, 2021. "Can traditional organizations be digitally transformed by themselves? The moderating role of absorptive capacity and strategic interdependence," Journal of Business Research, Elsevier, vol. 124(C), pages 408-421.
    3. Liu, C.-L.E., 2012. "An investigation of relationship learning in cross-border buyer–supplier relationships: The role of trust," International Business Review, Elsevier, vol. 21(3), pages 311-327.
    4. Liu, Chia-Ling (Eunice) & Ghauri, Pervez N. & Sinkovics, Rudolf R., 2010. "Understanding the impact of relational capital and organizational learning on alliance outcomes," Journal of World Business, Elsevier, vol. 45(3), pages 237-249, July.
    5. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    6. Yadong Luo, 2007. "Private control and collective control in international joint ventures," Management International Review, Springer, vol. 47(4), pages 531-566, October.
    7. Park, Byung Il & Choi, Jiyul, 2014. "Control mechanisms of MNEs and absorption of foreign technology in cross-border acquisitions," International Business Review, Elsevier, vol. 23(1), pages 130-144.
    8. He, Qile & Ghobadian, Abby & Gallear, David, 2013. "Knowledge acquisition in supply chain partnerships: The role of power," International Journal of Production Economics, Elsevier, vol. 141(2), pages 605-618.
    9. Pak, Yong Suhk & Ra, Wonchan & Park, Young-Ryeol, 2009. "Understanding IJV performance in a learning and conflict mediated context," International Business Review, Elsevier, vol. 18(5), pages 470-480, October.
    10. Vijayasarathy, Leo R., 2010. "Supply integration: An investigation of its multi-dimensionality and relational antecedents," International Journal of Production Economics, Elsevier, vol. 124(2), pages 489-505, April.
    11. Michael Nippa & Jeffrey J Reuer, 2019. "On the future of international joint venture research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 555-597, June.
    12. Maryam Philsoophian & Peyman Akhavan & Morteza Abbasi, 2021. "Strategic Alliance for Resilience in Supply Chain: A Bibliometric Analysis," Sustainability, MDPI, vol. 13(22), pages 1-25, November.
    13. Weber, Clarissa E. & Maurer, Indre, 2023. "Knowledge acquisition from host-country partners: The interplay of trust and legal safeguards," Journal of World Business, Elsevier, vol. 58(2).
    14. Taco H. Reus & Daniel Rottig, 2009. "Meta-analyses of International Joint Venture Performance Determinants," Management International Review, Springer, vol. 49(5), pages 607-640, October.
    15. Chen, Pao-Lien & Tan, Danchi & Jean, Ruey-Jer “Bryan”, 2016. "Foreign knowledge acquisition through inter-firm collaboration and recruitment: Implications for domestic growth of emerging market firms," International Business Review, Elsevier, vol. 25(1), pages 221-232.
    16. Jin, Jason Lu & Wang, Liwen, 2021. "Resource complementarity, partner differences, and international joint venture performance," Journal of Business Research, Elsevier, vol. 130(C), pages 232-246.
    17. Isidor, Rodrigo & Schwens, Christian & Hornung, Frank & Kabst, Ruediger, 2015. "The impact of structural and attitudinal antecedents on the instability of international joint ventures: The mediating role of asymmetrical changes in commitment," International Business Review, Elsevier, vol. 24(2), pages 298-310.
    18. Deng, Chun-Ping & Mao, Ji-Ye & Wang, Guo-Shun, 2013. "An empirical study on the source of vendors’ relational performance in offshore information systems outsourcing," International Journal of Information Management, Elsevier, vol. 33(1), pages 10-19.
    19. Marius G. Gehrisch & Stefan Süß, 2023. "Organizational behavior in international strategic alliances and the relation to performance – a literature review and avenues for future research," Management Review Quarterly, Springer, vol. 73(3), pages 1045-1107, September.
    20. Ali, Tahir & Khalid, Saba & Shahzad, Khuram & Larimo, Jorma, 2021. "Managing international joint ventures to improve performance: The role of structural and social mechanisms," International Business Review, Elsevier, vol. 30(3).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:134:y:2011:i:1:p:114-122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.