Trust as Governance Tool in Hybrid Organizations: A Case Study for the Dance Industry in the Netherlands

Abstract

The organization of Electronic Dance Music (EDM) events requires much flexibility, due to the need to be able to quickly respond to new market trends. It induces high specificity in organizing these events. Our case study for the Netherlands, which is the world's market leader in hosting these events, shows that hybrid forms of cooperation between producers facilitate this flexibility and adaptability. From the perspective of transaction cost economics this article focuses on the role of trust as governance tool of hybrid organizations. Trust between the collaborating event agencies has a reciprocal effect on perception of risk, therefore decreasing the need for comprehensive contractual governance or hierarchical control. We show that different types of trust can be sufficient as governance mechanism. The EDM event industry is a community-like creative sector in which calculative drivers such as repeated interaction and the importance of behavioural reputation add to trustworthiness between partners. In addition, social drivers such as a shared artistic vision lead to incentives to behave according to ex ante agreements in the design and creation of new, ground-breaking music sensations. From that perspective, we identify the factors that enhance the development of trustworthiness between partners in a hybrid organization.