Customizing governance mechanisms to reduce opportunism in buyer–supplier relationships in the digital economy

Abstract

Digitalization benefits supply chains but also creates new challenges for buyer–supplier relationship governance. An imbalance of digitalization between exchange partners increases dependence, information asymmetry, and data leakage, which can result in a high risk of opportunism for the less digitalized firm. However, few studies have examined how to handle this opportunism in today's digital economy. Adopting a transaction cost economics perspective, we examined the customization of combinations of traditional governance instruments, including contracts, monitoring, communication, and relational norms, to efficiently combat opportunism. Applying fuzzy-set qualitative comparative analysis (fsQCA) to data collected from 137 manufacturing firms, we identified five customized combinations of various governance mechanisms that effectively reduce opportunism between supply chain partners. However, transactional mechanisms alone offer the best empirical explanation for lowering perceived opportunism than a combination of relational and transactional mechanisms. This study contributes to the literature on supply chain relationship management in the digital economy and provides practical guidance to help firms establish an appropriate governance structure to mitigate opportunism.