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Opportunism in Inter-firm Exchanges in Emerging Markets

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Listed:
  • Yadong Luo

    (University of Miami)

Abstract

This article develops a theoretical model of opportunism in inter-organizational exchanges in emerging markets. I decompose opportunism into 'strong form' (contractual norm violation) and 'weak form' (relational norm violation), and suggest that strong form tends to be more observable, measurable and remediable than weak form and its adverse effect on cooperation tends to be stronger but less enduring than weak form. I address how external uncertainty, a multidimensional concept that includes market volatility, legal unprotectability, information unverifiability and regulatory variability, along with internal uncertainty that reflects dyadic tensions such as goal disparity, resource misfit, cultural dissimilarity and bargaining asymmetry, together affect exchange members' opportunism. This is followed by further discussions on conditions under which firms will opt for strong form or weak form opportunism in the face of such external and internal uncertainties. I suggest that suppressing forces against opportunism necessitates not only economic ordering, such as contractual mechanisms and structural mechanisms, but also social ordering, such as relational mechanisms and justice mechanisms. I expect that economic ordering is more effective in resisting strong form opportunism while social ordering is more forceful in curtailing weak form opportunism.

Suggested Citation

  • Yadong Luo, 2006. "Opportunism in Inter-firm Exchanges in Emerging Markets," Management and Organization Review, International Association of Chinese Management Research, vol. 2(1), pages 121-147, March.
  • Handle: RePEc:cmr:mor101:v:1:y:2006:i:1:p:121-147
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    Citations

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    Cited by:

    1. George Peng & Paul Beamish, 2014. "The effect of host country long term orientation on subsidiary ownership and survival," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 423-453, June.
    2. Domènec Melé, 2009. "The Practice of Networking: An Ethical Approach," Journal of Business Ethics, Springer, vol. 90(4), pages 487-503, December.
    3. Huo, Baofeng & Fu, Dijia & Zhao, Xiande & Zhu, Jingwen, 2016. "Curbing opportunism in logistics outsourcing relationships: The role of relational norms and contract," International Journal of Production Economics, Elsevier, vol. 182(C), pages 293-303.
    4. Jianjun Zhang & Hao Ma, 2009. "Adoption of professional management in Chinese family business: A multilevel analysis of impetuses and impediments," Asia Pacific Journal of Management, Springer, vol. 26(1), pages 119-139, March.
    5. Huo, Baofeng & Wang, Zhiqiang & Tian, Yu, 2016. "The impact of justice on collaborative and opportunistic behaviors in supply chain relationships," International Journal of Production Economics, Elsevier, vol. 177(C), pages 12-23.
    6. Ayşe Elif Şengün & Çetin Önder, 2011. "The Conditional Impact of Competence Trust on Inter-Firm Learning in a Collectivist SME Context," Industry and Innovation, Taylor & Francis Journals, vol. 18(8), pages 791-812, November.
    7. Zhe Zhang & Ming Jia & Difang Wan, 2012. "When does a partner’s reputation impact cooperation effects in partnerships?," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 547-571, September.
    8. Yadong Luo & Yi Liu & Jiaqi Xue, 2009. "Relationship Investment and Channel Performance: An Analysis of Mediating Forces," Journal of Management Studies, Wiley Blackwell, vol. 46(7), pages 1113-1137, November.
    9. Jae-Seung Han & Sang-Yong Lee, 2013. "The impact of technology transfer contract on a firm’s market value in Korea," The Journal of Technology Transfer, Springer, vol. 38(5), pages 651-674, October.
    10. Ju, Min & Murray, Janet Y. & Kotabe, Masaaki & Gao, Gerald Yong, 2011. "Reducing distributor opportunism in the export market: Effects of monitoring mechanisms, norm-based information exchange, and market orientation," Journal of World Business, Elsevier, vol. 46(4), pages 487-496, October.
    11. Lumineau, Fabrice & Henderson, James, 2012. "The influence of relational experience and contractual governance on the negotiation strategy in buyer-supplier disputes," MPRA Paper 38510, University Library of Munich, Germany.
    12. Luo, Yadong & Liu, Yi & Yang, Qian & Maksimov, Vladislav & Hou, Jigang, 2015. "Improving performance and reducing cost in buyer–supplier relationships: The role of justice in curtailing opportunism," Journal of Business Research, Elsevier, vol. 68(3), pages 607-615.
    13. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande, 2015. "The impacts of trust and contracts on opportunism in the 3PL industry: The moderating role of demand uncertainty," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 160-170.
    14. Kaynak, Ramazan & Sert, Tuba & Sert, Gurkan & Akyuz, Bulent, 2015. "Supply chain unethical behaviors and continuity of relationship: Using the PLS approach for testing moderation effects of inter-organizational justice," International Journal of Production Economics, Elsevier, vol. 162(C), pages 83-91.
    15. Xue, Jinjie & Yuan, Hongping & Shi, Benshan, 2016. "Investigating partners' opportunistic behavior in joint ventures in China: The role of transaction costs and relational exchanges," Journal of Business Research, Elsevier, vol. 69(12), pages 6067-6078.
    16. Amankwah-Amoah, Joseph & Debrah, Yaw & Nuertey, Dorcas, 2018. "Institutional Legitimacy, Cross-Border Trade and Institutional Voids: Insights from the Cocoa Industry in Ghana," MPRA Paper 84393, University Library of Munich, Germany.

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    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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