Abstract
The purpose of this study was to explore the roles that changes in formal and informal controls play in the evolution of trust over the lifecycle of a successful joint venture. While leaders often form joint ventures to manage risk and uncertainty and gain a competitive advantage in the market place, forming a joint venture presents a new set of risk and uncertainty to be managed with partner organizations. Because trust generally does not previously exist among organizations that form a joint venture, leaders may use formal and informal controls to shape attitudes and behaviors towards desired goals and outcomes (Gulati & Nickerson, 2008). In this study, I sought to better understand how the uses of controls change and how trust evolved over the lifecycle of a successful joint venture.
To gain this knowledge, I conducted an interpretive case study of a joint venture formed by three health care organizations in the Midwest United States. Results from interviews with executive administrators, department administrators, and physicians of all three parties resulted in identification of the following formal and informal controls.
Formal controls: financial reward system, organizational structure, and selection and placement of people
Informal controls: compelling vision/mission, relationships, and buy-in/support
These controls had both a positive and negative impact on the evolution of trust over the lifecycle of the joint venture. Leaders made adjustments to formal controls over the lifecycle that resulted in an overall positive impact on trust. While trust changed as relationships changed, trust did not change as the compelling vision/mission and buy-in/support remained strong and steady over the lifecycle of the joint venture.