Title: Formal and relational mechanisms of network governance and their relationship with trust: substitutes or complementary in Brazilian real estate transactions?

Authors: Adriano Augusto Costa Carnauba; João Maurício Gama Boaventura; Cristina Espinheira Costa Pereira; Ana Cláudia Azevedo; Emanuela Todeva

Addresses: Brazil's Developments Bank (BNDES), Environmental Division, Rua Juiz Goulart Monteiro, 07, Niterói, Rio de Janeiro/RJ – 24230-370, Brazil ' School of Economics, Business and Accounting – FEA, Department of Business, University of Sao Paulo – USP, Avenida Professor Luciano Gualberto, 908, Butantã – Sao Paulo/SP – 05508-010, Brazil ' Master's Program of Business Administration, Paulista University – UNIP, Rua Dr Bacelar, 1212, Vila Clementino – Sao Paulo/SP – 04026-002, Brazil ' School of Economics, Business and Accounting – FEA, Department of Business, University of São Paulo – USP, Avenida Professor Luciano Gualberto, 908, Butantã – Sao Paulo/SP – 05508-010, Brazil ' Faculty of Education, Humanities and Social Science, Department of Management, Law and Society, St. Mary's University, Waldegrave Rd., Strawberry Hill, Twickenham, TW1 4SX, UK

Abstract: The objective of this study was to investigate whether formal and relational mechanisms of network governance act as substitutes or are complementary in their relationship with trust in the intermediation activity of real estate transactions. We conducted a quantitative study to test the hypotheses. We collected data via a survey and the context was Brazilian real estate business networks. We used a non-parametric approach to investigate the associations among the key variables indicated in the theory. The results confirm the hypothesis that formal and relational mechanisms of network governance act as complementary and reject the possibility of substitution between them. Both mechanisms are important to build trust-based relationships between actors and formal governance mechanisms have a significant positive relationship with inter-organisational trust, while relational mechanisms are positively associated with interpersonal trust. This study not only contributes to the discussion on governance mechanisms and their relationship with trust, but also broadens this debate by considering trust at different levels and in more complex structures where these relationships are still barely explored, such as is the case of business networks.

Keywords: network; mechanisms of governance; trust; inter-organisational relationships; real estate network; Brazil.

DOI: 10.1504/IJNVO.2020.106493

International Journal of Networking and Virtual Organisations, 2020 Vol.22 No.3, pp.246 - 271

Received: 08 Aug 2018
Accepted: 25 Sep 2018
Published online: 09 Apr 2020 *

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