Do suppliers' formal controls damage distributors' trust?

Do suppliers' formal controls damage distributors' trust? Extensive studies on this question show mixed results. This article develops a theoretical model that (a) takes into account the use of formal controls for both decision control and decision management; (b) employs perceptual measures from the controlled party's point of view; (c) proposes that the control-trust association is contingent upon the character (coercive vs. enabling) of different control tools; and (d) focuses on a mature relationship. This model was empirically tested with survey data from 107 distributors, trying to capture the moderator effect of two control tools on the association between formal control uses and trust development. With this approach, the results seem to show that decision-control and decision-management uses simultaneously substitute for and complement distributors' trust, and that their effects are partly moderated by the coercive or enabling character of the specific control tool used to manage the relationship.

Research highlights► We study the effect of the twofold formal control use on distributors’ trust. ► We test moderator effects between latent but non-unidimensional factors. ► Formal control uses simultaneously substitute for and complement distributors' trust. ► Control effects are partly moderated by the specific character of each control tool.