Relationship Between Trust and Monitoring—An Experimental Study of Principal-Agent Relationship

Natarajan, R C (2009) Relationship Between Trust and Monitoring—An Experimental Study of Principal-Agent Relationship. Indore Management Journal [IIM-Indore], 1 (3). pp. 1-33.

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Principal-agent relationship, which is characterised by the absence of legitimate power, necessitates monitoring and control by the principal to align the activities of the agent to the collective goals. However, complete monitoring of the agent is impossible and expensive. Certain amount of trust is inevitable. This research postulated negative relationship between goodwill trust and control-based monitoring on the one hand and between competence trust and need-based monitoring on the other. The research work used laboratory experiment capturing data from a sample set comprising executives as well as postgraduate management students, both through questionnaires and through a simulation. The study found support to the postulated negative relationships between trust and intended monitoring. However, actual monitoring manifested through allocation of time found rare support for the postulates. The uniqueness of this research lies in its formally examining certain a priori beliefs about trust and control as well as questioning them. Importantly, it lends support to the argument that reported intended behaviour and actual behaviour are not the same in trust-control contexts.

Item Type: Article
Uncontrolled Keywords: Principal-Agent Relationship;Trust;Goodwill Trust;Competence Trust;Monitoring;Control-based Monitoring; Need-based Monitoring;Laboratory Study;Experimental Research.
Subjects: Marketing > Customer Relationship
Divisions: Marketing Management
Depositing User: Mr. Ramesh Kamath
Date Deposited: 26 Oct 2018 10:43
Last Modified: 26 Oct 2018 10:43

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