How formal performance evaluation affects trust between superior and subordinate managers

Abstract

An important question in the control literature concerns the role of interpersonal trust in the design and functioning of formal control systems for collaborative settings. In this paper, we argue that subordinate¿s trust in the superior depends on the formality of the performance evaluation procedure and that this relationship is mediated by managerial perceptions of justice and feedback. The findings confirm our predictions. Furthermore, we find that formality matters more for trust formation for those managers that are in functions with less contractible outputs.