Knowledge that Transforms

Most scholarly work on trust recognizes its importance as part of a nonmarket form of governance in exchanges between firms. However, trust is only one such governance device that can be used; other devices such as reputation, bargaining power, and contracts can also be used to govern exchanges. This article empirically examines the relationships between trust, reputation, bargaining power, and contracts as governance devices in agreements between smaller entrepreneurial firms and larger, more established firms. The findings suggest that while the role of trust is an important one, it may be more effective when combined with other governance devices.

This article describes the detailed process of redesigning and implementing the human resources (HR) function at Lafarge. The article argues that a well‐articulated and integrated approach of (1) recruitment, selection, and induction, (2) retraining and redeployment, (3) a performance appraisal system, (4) a compensation and reward mechanism, and (5) rightsizing and (6) integration is required to be aligned with the overall business strategy of the organization. It also reinforces that the foundation of a value‐added HR function is a business strategy that relies on people as a source of competitive advantage. Key challenges for Lafarge in the future include (1) maintaining the change momentum, (2) fast and effective integration of acquired companies and transfer of “best practices,” and (3) attracting and retaining a diverse workforce through their internationalization program.