The impact of contractual governance on forms of opportunism

Danyang Zhao, Flora F. Gu, Longwei Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

The relationship between contractual governance and partner opportunism is widely discussed in the interfirm governance literature. However, a consensus regarding whether contractual governance increases ex post opportunism or whether such opportunism can be curtailed by contractual or social governance is lacking. We believe that this inconclusive state is due to the insufficient demarcation between different types of opportunism and the unclear temporal treatment of contracts. The findings from 227 firms with interfirm cooperation experience reveal that ex ante contract completeness reduces ex post strong form opportunism while increasing weak form opportunism in a curvilinear manner. Moreover, ex post contractual enforcement alleviates the negative impact of strong form opportunism on cooperation performance but shows no significant influence on the negative effect of weak form opportunism. Conversely, ex post social enforcement alleviates the negative impact of weak form opportunism, suggesting a match between forms of opportunism and types of enforcement. Our study advances the understanding of contract design and the use of governance mechanisms within interfirm relationships.

Original languageEnglish
Pages (from-to)89-103
Number of pages15
JournalIndustrial Marketing Management
Volume102
DOIs
Publication statusPublished - Apr 2022

Keywords

  • Contract completeness
  • Contractual enforcement
  • Cooperation performance
  • Opportunism
  • Social enforcement

ASJC Scopus subject areas

  • Marketing

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