Antecedents of buyer opportunistic behavior in outsourcing relationships

Abstract

Parties acting opportunistically are a major concern in many buyer–supplier relationships, especially in strategic outsourcing arrangements. The extant literature has focused mainly on opportunistic behavior of suppliers and the safeguards that buyers need to put in place to protect their interests. Buyers can also act opportunistically; however, this side of the dyadic relationship has not received adequate attention and remains an under researched area. We address this imbalance by establishing the antecedents of buyer opportunism and strategies to manage this. Based on the transaction cost economics theory, we tested a model consisting of three factors that could give rise to buyer opportunism with dyadic data from 51 outsourcing arrangements between firms in Australia. Our results indicate that only one predictor, frequency of exchange, had a significant and positive effect on buyer opportunism. The other two factors, investments made by suppliers and uncertainty, were not significant. These findings show that, in contrast to what has been found previously for suppliers, only one factor gives rise to buyer opportunism. The results suggest that buyers׳ opportunism can be controlled by the frequency of transactions that takes place. Implications for theory and practice in outsourcing relationships are presented.