Framing Sticks As Carrots: An Experimental Investigation Of Control And Trust In Agency Relationships

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Executive Summary

Although organizations use formal control systems to promote cooperation and minimize self-serving opportunistic activities, formal control is often interpreted by the controlled party as a signal of mistrust, thereby leading to an unintended erosion of the trust environment (an important informal control mechanism). However, prior studies documenting the negative effects of formal controls on trust provide an incomplete picture because they focus on negatively framed controls; that is, penalty controls in the form of punishment or sanctions. In this paper, the author challenges the view that controls erode trust.

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