The key role of opportunism in business relationships

Abstract

PurposeThis study seeks to examine the key role of opportunism in business relationships relative to environment uncertainty (i.e. competitive intensity and market turbulence), bonding structure (i.e. specific assets and dependence), and relationship quality (i.e. trust and commitment).Design/methodology/approachInitially, informants were contacted by phone and a total of 581 surveys were mailed to small‐ and medium‐sized manufacturers asking them to answer questions about their suppliers. In total, 212 surveys were returned generating a response rate of 36.5 percent. To test the measurement properties and hypothesized relationships between the constructs in focus, confirmatory factor analysis and structural equation modelling were used.FindingsThe results supported all six hypotheses. The principal findings are competitive intensity leads to market turbulence and market turbulence, in turn, is positively associated with opportunism; specific assets leads to dependence and dependence is, in turn, positively associated with opportunism; and supplier opportunism is negatively associated with both trust and commitment.Research limitations/implicationsThe research model tests a sample of business relationships between small‐ and medium‐sized manufacturers and their suppliers in Norway. Findings may not be generalized to larger companies in other countries.Practical implicationsThe results are of interest to manufacturing executives since they provide a framework of contextual variables and relational characteristics that need to be considered in corporate efforts to control supplier opportunism.Originality/valueThis study is unique in testing key constructs of two important theories of business marketing – transaction cost analysis and social exchange theory (i.e. relationship quality) rarely, if ever, used in the same empirical study.