Managing opportunism in international joint ventures: The role of structural and social mechanisms

Abstract

Building on transaction cost economics (TCE) and social exchange theory (SET), we develop an integrated framework in which reducing opportunism requires two sets of mechanisms: (1) structural mechanisms of symmetric dependence, symmetric equity share and resource complementarity, and (2) social mechanisms of trust, communication and cultural adaptation. The framework is tested empirically using web-survey data collected from 89 IJVs established by Nordic firms in Asia, Europe and America. Empirical data analysis based on structural equation modelling shows that TCE proposed mechanisms of symmetric dependence and resource complementarity, and SET proposed mechanisms of trust, communication and cultural adaptation reduce opportunism. Contrary to expectation, the structural mechanism of symmetric equity share does not reduce opportunism. In addition, interesting results are found related to interaction effects between social and structural mechanisms in relation to reducing opportunism.