Opportunism in supply chains: Dynamically building governance mechanisms to address sustainability-related challenges

Abstract

Opportunism has long been highlighted as one of the hazards of complex buyer–supplier relationships. This hazard has become more challenging to manage as the pressure from consumers and the public for improved sustainability-related performance is passed along the supply chain between buyers and suppliers. For example, buyer demands for and supplier implementation of sustainability requirements, such as low carbon emissions or fair worker treatment, are often poorly defined; difficult to document; and subject to change as pressure for immediate improvement builds, as scientific understanding deepens and as societal expectations advance. This complex setting generates tempting openings for either a buyer or supplier to act opportunistically. In an effort to advance both theory and managerial practice, we consider three aspects of sustainability-related opportunism. First, in line with prior research, we focus on defining sustainability-related opportunism as jointly considering the codification of expectations and verification of performance (while allowing for false suspicions). Second, our conceptualization stresses the need to move away from an implied static view to embrace more fully the changing nature of stakeholders’ sustainability-related concerns. For example, supply chain relationships evolve based on repeated interactions as firms influence each other’s beliefs, practices and outcomes. Third, in a related sense, a dynamic model can combine several theoretical perspectives to inform how the balance of transactional and relational governance mechanisms might adapt as our understanding of sustainability changes, institutional forces evolve, and dyadic relationships mature.