Suppressing partner opportunism in emerging markets: Contextualizing institutional forces in supply chain management

Abstract

Drawing on the literature of supply chain opportunism and institutional theory, this study examines the confluence of institutional and efficiency views to assess how institutional forces restrain the impact of exchange hazards (i.e., transaction-specific assets and performance ambiguity) on supply chain opportunism. We predict that legal enforceability and guanxi importance mitigate supply chain opportunism, but their interaction does not necessarily help to curb opportunism. In addition, we propose that legal enforceability and guanxi importance have differential moderating effects on the relationships between exchange hazards and opportunism. The empirical analyses of a dyadic buyer-supplier dataset in China confirm the predicted direct and interactive effects of the institutional forces. In addition, the positive impact of transaction-specific assets on opportunism is attenuated by legal enforceability but not by guanxi importance, whereas the effect of performance ambiguity decreases due to guanxi importance but not legal enforceability.