Managerial Trust-Building Through the Use of Legitimating Formal and Informal Control Mechanisms

Abstract

This article examines formal and informal decision criteria used by organizational decision-makers when making potentially controversial, legitimacy-relating decisions that could damage trust. Two experimental studies found consistent patterns of persistent use of formal controls and reduced use of informal controls under higher levels of perceived threat to trust. Institutional theory is consistent with the proposition that increased use of legitimated control uniformly enhances trust. In contrast, this article posits and finds support for an attenuated legalistic institutional proposition that increased use of even legitimated control can predictably foster, or undermine, trust - but such predictions can be made only if we systematically distinguish formal and informal control. Results suggest institutional pressures manifest at the individual level provide a complementary focus to macro-organizational institutionalization.

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