The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty

Longwei Wang, Jeff Hoi Yan Yeung, Min Zhang

Research output: Contribution to journalArticlepeer-review

148 Citations (Scopus)

Abstract

Research into two important control mechanisms for managing the supply chain relationship – contracts and trust – is on the rise. However, our understanding of how they influence innovation in a firm remains rather unclear. Thus, the primary objective of this study is to examine the individual and interactive effects of contracts and trust on firms' innovation performance and the contingent effects of environmentaluncertainty on those relationships in China. The empirical results from a survey of Chinese manufacturing firms indicate that there is a positive relationship between trust and firms' innovation performance, an inverted U-shaped relationship between the use of contracts and firms' innovation performance, and that contracts and trust are substitutes. Moreover, we find that environmentaluncertainty enhances the effects of trust, but does not influence the impact of contracts on innovation performance.
Original languageEnglish
Pages (from-to)114-122
Number of pages9
JournalInternational Journal of Production Economics
Volume134
Issue number1
DOIs
Publication statusPublished - 2011

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