Safeguarding Interorganizational Performance and Continuity Under Ex Post Opportunism

Abstract

Opportunism is a central construct in exchange theory. Economists contend that despite the firm's best efforts to erect governance structures that reduce opportunism and preserve outcomes, some opportunism always remains once the transaction is in place. Despite this fact, few studies systematically investigate the safeguarding efficacy of relationship attributes in the presence of such ex post opportunism. In this research, we develop a theoretical framework and provide a longitudinal test of the ability of various relationship safeguards to preserve performance outcomes and future expectations given varying levels of ex post opportunism in the relationship. Our survey results from over 300 buyers and suppliers indicate that in relationships with extremely low levels of ex post opportunism, bilateral idiosyncratic investments and interpersonal trust enhance performance outcomes and future expectations, while goal congruence produces no discernable effect. However, at higher levels of ex post opportunism, goal congruence gains efficacy, becoming a more powerful safeguard, while interpersonal trust loses efficacy, becoming a less effective safeguard. Bilateral idiosyncratic investments continue to preserve performance outcomes and future expectations, and with the same efficacy, at higher and lower levels of opportunism. Implications for the long-term management of interorganizational alliances are discussed.

Keywords: Opportunism, relational safeguards, interorganizational performance