Garrett, Jace, Controls, Trustworthiness, and Trust in Group Settings (July 13, 2015). Available for download at SSRN: http://ssrn.com/abstract=2646317

“This study investigates the effect of group-level versus individual-level controls on employee effort and coworker trust. Prior research is limited to controls in one-on-one settings (i.e., one individual imposing a control on another). In contrast, controls in the workplace are often imposed at the department, or organizational level, where they are less clearly a signal of mistrust. Consistent with prior research, I find that a restrictive individual-level control has a negative effect on employee effort. Contrary to expectations, I find that the control also has a negative effect on employee effort when the control is imposed at the group level. However, I find that the effect of the control on coworker trust differs according to whether it is imposed at the individual or group level. Specifically, imposing the individual-level control has a significantly negative effect on coworker trust, while imposing the group-level control does not. Both the individual- and group-level control have a more negative effect for more trustworthy employees, in terms of both employee effort and coworker trust. In additional analyses, I find that managers base the decision to impose the individual-level control on the individual employees’ trustworthiness, but the decision to impose the group-level control is based on the presence of a “bad apple” in the group and on the expected benefit of imposing the control. Finally, I find that by selectively imposing the control only on the least trustworthy employees, managers can mitigate the cost of control and still protect themselves against the greatest threats of employee opportunism.”