Accounting, contracts and trust in supply relationships

Purpose - The paper investigates the operation of the trust-formal control dynamic in collaborative supply relationships. Design/methodology/approach - A case study of an Australian metal manufacturer (IronBiz) and its collaborative supply relationships is conducted. Findings - Relationships between formal controls (comprising accounting controls and contracts) and trust are developed based on the empirical observations from the case study conducted and prior literature. Research limitations/implications - The main limitations of the paper include: an empirical examination of the buyer organisation only in dyadic supply relationships; the limited generalisability associated with the methodology and field site chosen. Originality/value - In contrast to the continued popularity of collaborative arrangements as a form of organisation, gaps in the literature still exist as to the dynamics of trust creation and the relationship between trust and formal controls. This paper focuses on the trust-formal control dynamic, with an emphasis on how trust is generated and sustained in supply relationships and the role of formal controls in this process