Opportunism and Transaction Costs In Inter-Firm Relationships: Antecedent, Consequence, and Moderator

Abstract

This study examines the impact of an ex-ante control mechanisms on opportunistic behavior and ex-post transaction costs, as well as how this leads to relationship termination intention. Data gathered from 211 companies in South Korea that have installed and run outsourced vending machines is analyzed and used to validate the article's theoretical and empirical contributions. The findings show that contractual completeness has a negative and direct effect on both active and passive opportunism. The study also discovers that active opportunism has a positive effect on both bargaining costs and monitoring costs, whereas passive opportunism has a positive and direct effect on maladaption costs but a negative effect on monitoring costs. Both bargaining and maladaption costs have a positive and direct effect on relationship termination intention, while monitoring costs have a negative effect on same. Furthermore, alternative attractiveness moderates the relationships between bargaining costs and relationship termination intention as well as maladaption costs and relationship termination intention. The implication is that contract completeness can function as an important ex-ante control mechanism, whereas the two types of opportunism can raise transaction costs. Alternative attractiveness is identified as a driver of the impact of transaction costs on relationship termination intention.