Managerial Social Capital Prospect : Control and Trust and its Organizational Interdependence

This study examines the effects of interdependent control and trust on the development of a firm’s social capital. Empirical evidence from a survey of 280 Sino-foreign firms confirms that the importance of control and trust strengthens social capital and performance. Within the Chinese context, control concentrates the power necessary to substantiate formal governance institutions across multiple levels in organizations whilst trust is essential to ensure the quality of networks and inter-organizational relationships. Our results suggest that contractual control is necessary to safeguard collaborative outputs, but, on its own, does not ensure continuing inter-organizational exchange. It is the interdependence of control (i.e. targeting and formalization) and trust that influence durable inter-organisational relationships. These results highlight the interdependence of control and trust to social capital study and provide important insights for practitioners.