The relationship of intra-organizational trust to intra-organizational transaction costs and organizational performance

Open-book management (OBM) represents an approach to running a company in which employees are empowered with decision-making ability. Advocates of this philosophy suggest that the competitive advantage of OBM companies as compared with conventional businesses lies in their ability to teach employees to be businesspeople as opposed to hired hands.; Although this philosophy has received enthusiastic support within the professional community, it continues to lack theoretical and empirical support. This study explores the relationship of OBM to intra-organizational trust, intra-organizational transaction costs and organizational performance within the context of trust and Oliver Williamson's transaction cost economics.; Survey research represents the general research design that this study has adopted in order to investigate the hypothesized relationships. Fast-growing and/or employee-centered privately-held companies (or subsidiaries of privately-held companies) within the United States represent the population of interest. From this population, 302 companies or subsidiaries were selected.; A four-part survey instrument was sent to the controller or closest equivalent officer identified for each of these 302 firms. An initial mailing, in combination with two follow-up mailings to companies that had not previously responded generated a response rate of 19.54% (59 usable surveys divided by 302 surveys mailed).; This study's data analysis stage began with a statistical evaluation of the reliability of the trust instrument that was used to measure intra-organizational trust. The testing process proceeded with the performance of both parametric and nonparametric tests in order to evaluate the hypothesized relationships.; The results from this testing process provide statistical support for the existence of (1) a positive relationship between a company's degree of OBM adoption and its level of intra-organizational trust and (2) an inverse relationship between a company's degree of OBM adoption and employee turnover (one measure of organizational performance). This study does not find statistical support for the other hypothesized relationships.