An integrated anti-opportunism system in international exchange
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An integrated anti-opportunism system in international exchange
Yadong Luo Department of Management, University of Miami, Coral Gables, FL, USA Correspondence: Y Luo, Department of Management, School of Business Administration, University of Miami, 417 Jenkins Building, Coral Gables, FL 33124-9145, USA. Tel: þ 1 305 284 4003; Fax: þ 1 305 284 3655; E-mail: [email protected]
Abstract Building on economic and social exchange theories, this study develops an integrated model in which curtailing opportunism in international joint ventures (IJVs) requires four interrelated sets of suppressing forces: (1) contractual ordering (contractual inclusiveness and contractual obligatoriness); (2) structural ordering (managerial governance and equity captiveness); (3) relational ordering (interparty attachment and boundary-spanner ties); and (4) justice ordering (procedural justice and distributive justice). Using a sample of 192 IJVs in an emerging market, this study finds general support for our theoretical model. Our research validates that countering opportunism involves a system-wide effort that integrates economic and social mandates, unifies ex ante and ex post mechanisms, controls both egoistic and non-egoistic motivations, and combines organizational-level and individual-level forces. For partners from individualist cultures, economic ordering forces (contractual and structural) are stronger than social ordering forces (relational and justice) in relation to opportunism resistance, whereas for partners from a collectivistic culture, social ordering forces are relatively stronger than economic ordering forces for this end. Journal of International Business Studies (2007) 38, 855–877. doi:10.1057/palgrave.jibs.8400300 Keywords: opportunism; IJV; control; governance
Received: 8 September 2004 Revised: 21 April 2006 Accepted: 26 March 2007 Online publication date: 19 July 2007
Introduction International joint ventures (IJVs) continue to be a popular vehicle for firms to expand globally and improve their global competitive advantages, but they raise complicated issues of governance. They are ‘hybrid’ organizations that combine elements of both market and hierarchy, and each party has a de facto right to manipulate its own contribution and commitment. All IJVs inevitably involve some degree of opportunistic behavior by individual parties or fiduciary risks of interdependence between parties (Parkhe, 1993; Das and Teng, 1998). Any joint venture is a loosely coupled system in which investing parties interdependently share existing resources or jointly develop new resources while maintaining their respective parental identities and resource control. This looseness, together with inherent interparty differences in strategic objective, corporate culture, and managerial style, plus interparty asymmetry in bargaining power, joint venture importance, and parent control, explains why opportunism, or self-interest seeking with guile (Williamson,
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