IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v170y2015ipap160-170.html
   My bibliography  Save this article

The impacts of trust and contracts on opportunism in the 3PL industry: The moderating role of demand uncertainty

Author

Listed:
  • Huo, Baofeng
  • Ye, Yuxiao
  • Zhao, Xiande

Abstract

Logistics outsourcing has become an important strategy for companies seeking to gain a competitive advantage. However, opportunistic behavior often arises in the process of outsourcing, and such behavior can damage the collaborative relationships between third-party logistics (3PL) providers and users. By applying the lenses of transaction cost economics, social exchange theory and contingency theory, this study investigates how transactional (i.e., contracts) and relational safeguards (i.e., trust) curb opportunism under demand uncertainty. The data were collected from 247 manufacturing and service industries in China. The results show that trust and detailed contracts mitigate opportunism directly, but contract application aggravates the hazards of opportunism. In addition, demand uncertainty moderates the relationship between contract application and opportunism. Trust, however, both enhances contract application and enables detailed contracts. Therefore, trust indirectly enhances opportunism through contract application and indirectly reduces opportunism through detailed contracts. This study provides theoretical contributions and managerial insights for 3PL relationship management.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:proeco:v:170:y:2015:i:pa:p:160-170
    DOI: 10.1016/j.ijpe.2015.09.018
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527315003461
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2015.09.018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Malhotra, Deepak & Lumineau, Fabrice, 2011. "Trust and collaboration in the aftermath of conflict: the effects of contract structure," MPRA Paper 38358, University Library of Munich, Germany.
    2. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    3. Kevin Zheng Zhou & Laura Poppo & Zhilin Yang, 2008. "Relational ties or customized contracts? An examination of alternative governance choices in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 526-534, April.
    4. Ian R. Macneil, 1980. "Power, Contract, and the Economic Model," Journal of Economic Issues, Taylor & Francis Journals, vol. 14(4), pages 909-923, December.
    5. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    6. Kevin Zheng Zhou & Laura Poppo, 2010. "Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(5), pages 861-881, June.
    7. N. Venkatraman & John E. Prescott, 1990. "Environment‐strategy coalignment: An empirical test of its performance implications," Strategic Management Journal, Wiley Blackwell, vol. 11(1), pages 1-23, January.
    8. Luo, Yadong, 2006. "Opportunism in Inter-firm Exchanges in Emerging Markets[1]," Management and Organization Review, Cambridge University Press, vol. 2(1), pages 121-147, March.
    9. Kevin Zheng Zhou & Dean Xu, 2012. "How foreign firms curtail local supplier opportunism in China: Detailed contracts, centralized control, and relational governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(7), pages 677-692, September.
    10. Robert J. Bennett & Paul J. A. Robson, 2004. "The role of trust and contract in the supply of business advice," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(4), pages 471-488, July.
    11. D. Vandaele & D. Rangarajan & P. Gemmel & A. Lievens, 2007. "How to Govern Business Services Exchanges: Contractual and Relational Issues," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/446, Ghent University, Faculty of Economics and Business Administration.
    12. Jérôme Barthélemy & Bertrand V. Quélin, 2006. "Complexity of Outsourcing Contracts and Ex Post Transaction Costs: An Empirical Investigation," Journal of Management Studies, Wiley Blackwell, vol. 43(8), pages 1775-1797, December.
    13. Klein, Benjamin, 1996. "Why Hold-Ups Occur: The Self-Enforcing Range of Contractual Relationships," Economic Inquiry, Western Economic Association International, vol. 34(3), pages 444-463, July.
    14. William M. Dugger, 1996. "The Mechanisms of Governance," Journal of Economic Issues, Taylor & Francis Journals, vol. 30(4), pages 1212-1216, December.
    15. Akbar Zaheer & N. Venkatraman, 1995. "Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange," Strategic Management Journal, Wiley Blackwell, vol. 16(5), pages 373-392.
    16. Ranjay Gulati & Jack A. Nickerson, 2008. "Interorganizational Trust, Governance Choice, and Exchange Performance," Organization Science, INFORMS, vol. 19(5), pages 688-708, October.
    17. Wang, Longwei & Yeung, Jeff Hoi Yan & Zhang, Min, 2011. "The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 114-122, November.
    18. Fang Wu & Rudolf R Sinkovics & S Tamer Cavusgil & Anthony S Roath, 2007. "Overcoming export manufacturers’ dilemma in international expansion," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(2), pages 283-302, March.
    19. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-198, December.
    20. Thomas Mellewigt & Anoop Madhok & Antoinette Weibel, 2007. "Trust and formal contracts in interorganizational relationships - substitutes and complements," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 833-847.
    21. MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-837, September.
    22. Marasco, Alessandra, 2008. "Third-party logistics: A literature review," International Journal of Production Economics, Elsevier, vol. 113(1), pages 127-147, May.
    23. 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.
    24. Bhattacharya, Ananya & Singh, Prakash J. & Nand, Alka Ashwini, 2015. "Antecedents of buyer opportunistic behavior in outsourcing relationships," International Journal of Production Economics, Elsevier, vol. 166(C), pages 258-268.
    25. Laura Poppo & Kevin Zheng Zhou, 2014. "Managing contracts for fairness in buyer–supplier exchanges," Strategic Management Journal, Wiley Blackwell, vol. 35(10), pages 1508-1527, October.
    26. Chen, Yongmin, 2000. "Promises, Trust, and Contracts," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 209-232, April.
    27. Yadong Luo, 2007. "Are joint venture partners more opportunistic in a more volatile environment?," Strategic Management Journal, Wiley Blackwell, vol. 28(1), pages 39-60, January.
    28. Parkhe, Arvind, 1998. "Understanding trust in international alliances," Journal of World Business, Elsevier, vol. 33(3), pages 219-240, October.
    29. Capaldo, Antonio & Giannoccaro, Ilaria, 2015. "How does trust affect performance in the supply chain? The moderating role of interdependence," International Journal of Production Economics, Elsevier, vol. 166(C), pages 36-49.
    30. Schoenherr, Tobias & Narayanan, Sriram & Narasimhan, Ram, 2015. "Trust formation in outsourcing relationships: A social exchange theoretic perspective," International Journal of Production Economics, Elsevier, vol. 169(C), pages 401-412.
    31. Yigang Pan & David K Tse, 2000. "The Hierarchical Model of Market Entry Modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(4), pages 535-554, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Orji, Ifeyinwa Juliet & Kusi-Sarpong, Simonov & Huang, Shuangfa & Vazquez-Brust, Diego, 2020. "Evaluating the factors that influence blockchain adoption in the freight logistics industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    3. Nikolchenko, Natalia & Lebedeva, Anastasia, 2017. "Integrative Approach to Supply Chain Collaboration in Distribution Networks: Impact on Firm Performance," Conference Papers 10462, Graduate School of Management, St. Petersburg State University.
    4. Wang, Kedi & Huo, Baofeng & Tian, Min, 2021. "How to protect specific investments from opportunism: A moderated mediation model of customer integration and transformational leadership," International Journal of Production Economics, Elsevier, vol. 232(C).
    5. Evangelos Gkanatsas & Harold Krikke, 2020. "Towards a Pro-Silience Framework: A Literature Review on Quantitative Modelling of Resilient 3PL Supply Chain Network Designs," Sustainability, MDPI, vol. 12(10), pages 1-25, May.
    6. Fraccascia, Luca & Yazan, Devrim Murat & Albino, Vito & Zijm, Henk, 2020. "The role of redundancy in industrial symbiotic business development: A theoretical framework explored by agent-based simulation," International Journal of Production Economics, Elsevier, vol. 221(C).
    7. Hou, Yunzhang & Wang, Xiaoling & Wu, Yenchun Jim & He, Peixu, 2018. "How does the trust affect the topology of supply chain network and its resilience? An agent-based approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 116(C), pages 229-241.
    8. Petrosyan, Leon A. (ed.) & Zenkevich, Nikolay A. (ed.), 2017. "Contributions to Game Theory and Management (GTM2016), vol. X," Conference Papers 10427, Graduate School of Management, St. Petersburg State University.
    9. Yuan, Yang & Feng, Bo & Lai, Fujun & Collins, Brian J., 2018. "The role of trust, commitment, and learning orientation on logistic service effectiveness," Journal of Business Research, Elsevier, vol. 93(C), pages 37-50.
    10. Devrim Murat Yazan & Vahid Yazdanpanah & Luca Fraccascia, 2020. "Learning strategic cooperative behavior in industrial symbiosis: A game‐theoretic approach integrated with agent‐based simulation," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2078-2091, July.
    11. Zhu, Wenwen & Ng, Stephen C.H. & Wang, Zhiqiang & Zhao, Xiande, 2017. "The role of outsourcing management process in improving the effectiveness of logistics outsourcing," International Journal of Production Economics, Elsevier, vol. 188(C), pages 29-40.
    12. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande & Wei, Jiang & Hua, Zhongsheng, 2018. "Environmental uncertainty, specific assets, and opportunism in 3PL relationships: A transaction cost economics perspective," International Journal of Production Economics, Elsevier, vol. 203(C), pages 154-163.
    13. Yeo Amy Chu May & Lai Marcus Ee Ken, 2020. "The Influence of B2B Relationship Quality on Opportunism and Firm Performance," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 11(3), pages 59-87, December.
    14. Zhang, Lihan & Gao, Yan & Lu, Wenxue & Guo, Wenqian, 2023. "The influence of conflict event strength on interorganizational cooperation: Moderating roles of contractual complexity and trust," Journal of Business Research, Elsevier, vol. 159(C).
    15. Haoyang Song & Jianhua Hou & Shiqi Tang, 2021. "From Contractual Flexibility to Contractor’s Cooperative Behavior in Construction Projects: The Multiple Mediation Effects of Ongoing Trust and Justice Perception," Sustainability, MDPI, vol. 13(24), pages 1-21, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Fang, F., 2019. "When performance shortfall arises, contract or trust? A multi-method study of the impact of contractual and relational governances on performance in public – private partnerships," Other publications TiSEM 473840ee-6945-4a93-9326-5, Tilburg University, School of Economics and Management.
    3. Wang, Lei & Zhang, Chun & Jiang, Fuming, 2019. "Matching governance mechanisms with transaction-specific investment types and supplier roles: An empirical study of cross-border outsourcing relationships," International Business Review, Elsevier, vol. 28(2), pages 316-327.
    4. Pei-Li Yu, 2019. "Interfirm coopetition, trust, and opportunism: a mediated moderation model," Review of Managerial Science, Springer, vol. 13(5), pages 1069-1092, November.
    5. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande & Wei, Jiang & Hua, Zhongsheng, 2018. "Environmental uncertainty, specific assets, and opportunism in 3PL relationships: A transaction cost economics perspective," International Journal of Production Economics, Elsevier, vol. 203(C), pages 154-163.
    6. Joanita Kataike & Xavier Gellynck, 2018. "22 Years of Governance Structures and Performance: What Has Been Achieved in Agrifood Chains and Beyond? A Review," Agriculture, MDPI, vol. 8(4), pages 1-32, March.
    7. 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.
    8. George Hendrikse & Patrick Hippmann & Josef Windsperger, 2015. "Trust, transaction costs and contractual incompleteness in franchising," Small Business Economics, Springer, vol. 44(4), pages 867-888, April.
    9. Vanesa Solís-Rodríguez & Manuel González-Díaz, 2019. "Prior interactions and contractual completeness in Spanish franchising," Small Business Economics, Springer, vol. 53(3), pages 795-812, October.
    10. 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.
    11. Dayashankar Maurya & Amit Srivastava, 2022. "Controlling Partner Opportunism in Cross-Sectoral Alliance: Dynamics of Governance Flexibility," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(1), pages 15-28, December.
    12. Selma Kadic-Maglajlic & Claude Obadia & Irena Vida & Matthew J. Robson, 2023. "Moral Categorization of Opportunists in Cross-Border Interfirm Relationships," Journal of Business Ethics, Springer, vol. 188(2), pages 221-238, November.
    13. Liwen Wang, 2023. "The interplay of contracts and trust: untangling between- and within-dyad effects," Post-Print hal-03944358, HAL.
    14. Vanesa Solís-Rodríguez & Manuel González-Díaz, 2017. "Differences in contract design between successful and less successful franchises," European Journal of Law and Economics, Springer, vol. 44(3), pages 483-502, December.
    15. 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.
    16. Tao Zhang, 2019. "How Do Information Technology Resources Facilitate Relational and Contractual Governance in Green Supply Chain Management?," Sustainability, MDPI, vol. 11(13), pages 1-17, July.
    17. López-Bayón, Susana & González-Díaz, Manuel, 2010. "Indefinite contract duration: Evidence from electronics subcontracting," International Review of Law and Economics, Elsevier, vol. 30(2), pages 145-159, June.
    18. Chu, Zhaofang & Wang, Qiang & Lai, Fujun & Collins, Brian J., 2019. "Managing interdependence: Using Guanxi to cope with supply chain dependency," Journal of Business Research, Elsevier, vol. 103(C), pages 620-631.
    19. 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.
    20. repec:wsi:acsxxx:v:21:y:2019:i:08:n:s1363919619500130 is not listed on IDEAS
    21. Kang, Min-Ping & Mahoney, Joseph T. & Tan, Danchi, 2007. "Why Firms Make Unilateral Investments Specific to Other Firms: The Case of OEM Suppliers," Working Papers 07-0110, University of Illinois at Urbana-Champaign, College of Business.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:170:y:2015:i:pa:p:160-170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.