Management control and trust in virtual settings: A case study of a virtual new product development team

Publication Type:
Journal Article
Citation:
Management Accounting Research, 2017, 37 pp. 12 - 29
Issue Date:
2017-12-01
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© 2017 Elsevier Ltd In this case study, we draw on theory relating to the trust-control nexus to investigate how formal Management Control Systems (MCS) and inter-personal trust relate in Virtual Teams (VTs), and examine the implications of this interplay for VT outcomes. Taking a virtual new product development team as our research site, we evidence the reciprocal influences between trust and formal MCS in a virtual setting. We show that in addition to formal MCS helping uphold inter-personal trust, trust enables the adoption and workability of incomplete formal MCS, hence expanding and shaping the set of control alternatives that are available to a VT. We further extend prior theory by providing evidence of synergies between inter-personal trust and formal MCS that span both the decision-facilitating and decision-influencing MCS roles, indicating that the combination of trust and formal MCS enhances the informational and motivational effects of controls, as well as the motivational effects of trust, on VT outcomes. Overall, this study adds to the accounting literature by shedding light on how formal MCS help manage highly interdependent tasks in dispersed contexts where inter-personal trust is present.
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