Integrated Information Systems and Alliance Partner Trust

This study examines the relation between technology-enabled information system integration (ISI), a mechanism for information sharing in an alliance, and partner trust in the context of how the system's information is used for control and coordination purposes. Prior research suggests both increasing and decreasing effects of ISI on trust and provides few insights regarding the mechanisms by which integrated information systems affect trust. In this study, we develop and empirically test a model of the relation between ISI and trust that includes two types of managerial information use - control and coordination - as mediating variables. Using a survey of 116 chief financial officers of U. S. public companies involved in strategic alliances, we find that ISI inhibits trust only to the extent that the information from these systems is used for control purposes. When information is used for coordination, trust between the transacting parties increases. Further, we predict and find that the number of prior interactions with the partner is associated with a reduction in the use of ISI for both coordination and control purposes. This suggests that ISI provides a form of informal coordination and serves as a substitute control mechanism. Finally, we predict and find that when alliance partners form an alliance with a reciprocity motive - that is, to pursue common or mutually beneficial goals or interests - the negative effect of information control use on trust weakens. Our study results in validating a more complete model of the effects of ISI and control systems choices on alliance partner trust, including what control systems choices must be made in light of both economic and psychological factors.