Opportunism

About: Opportunism is a research topic. Over the lifetime, 2030 publications have been published within this topic receiving 97170 citations. The topic is also known as: opportunist.

Agency Contracts, Institutional Modes, and the Transition to Foreign Direct Investment by British Manufacturing Multinationals Before 1939

Abstract: This paper analyzes the transition from agents to branch selling as alternative institutional modes for transacting abroad by pre-1939 British manufacturing multinationals. A model to explain the shift between alternative modes is specified in terms of transaction costs. Agent opportunism and contract monitoring costs are the major transaction costs. Besides transaction costs, the frequency of transactions and the accumulation of market-specific knowledge by the principal were found to be important variables.

Relational Governance and Opportunism in Logistics Outsourcing Relationships: Empirical Evidence from China

Abstract: Logistics outsourcing is prevalent in today's business world as a strategy to obtain competitive advantages. As in other relational exchanges, it is imperative to understand how to alleviate opportunistic behaviour in logistics outsourcing relationships. Using China's burgeoning logistics industry as a backdrop, and drawing on social exchange and transaction cost theories, this study examines how relational norms and trust mitigate opportunistic behaviour and how environmental uncertainty moderates the effects of norms and trust from logistics users’ perspective. Employing data collected from 119 manufacturing and service firms in China, we empirically test the proposed model and find that trust and norms are effective safeguards in reducing the opportunistic behaviour of logistics service providers, particularly in highly uncertain environments.

The Effect of Cultural Differences in Perceptions of Transaction Costs on National Differences in the Preference for Licensing

Abstract: The transaction cost framework explains the preference for licensing over direct foreign investment at the firm level (Hennart, 1990). However, as it presently stands, the theory does not explain national differences in the preference for licensing. Since many authors have shown that some countries engage in more direct foreign investment than do others (Caves, 1982; Robinson, 1961; Brooke and Remmers, 1992; Franko, 1976; Stopford and Habervich, 1978; Kogut and Singh, 1988; Hennart, 1982; Gatignon and Anderson, 1988), such an extension is warranted. The purpose of this paper is to make this extension by showing that cultural differences in trust make some countries more likely than others to favor licensing over direct foreign investment. This paper argues that cultural differences in perceptions of transaction costs are influenced by the degree of trust in a society as measured by Hofstede's (1980) power distance index. A low score on the power distance index increases a nation's preference for licensing over direct foreign investment. This study tests this argument with industry level data from the United States Commerce Department's Benchmark Survey (1985) of operations of US-based multinational corporations in 1977 and 1982. Literature Review When entering markets, firms choose between direct foreign investment and licensing (Caves, 1982). However, these alternatives are not equal. When markets fail, firms can earn higher economic rents for proprietary assets by engaging in direct foreign investment rather than by licensing (Caves, 1982). One might ask if market failure is more likely in some countries than in others because perceptions of transaction costs in them are higher. The argument that cultural differences influence perceptions of transaction costs stems from the work of Williamson (1975, 1985), Ouchi (1980) and Maitland et al. (1985). It goes as follows: People must obtain cooperation to achieve many organizational aims, but differences in people's goals makes this cooperation difficult to establish and maintain (Maitland et al., 1985). Two basic approaches are used: the establishment of contracts, and the creation of hierarchies. People's opportunism helps to explain which mechanism is chosen. According to Williamson (1975, 1985), individuals will not keep promises, will violate agreements, and will present incomplete or distorted information to confuse others. To control this opportunism, contracts which specify roles and responsibilities are written. However, when contracts cannot be written to cover all circumstances, organizations are formed (Maitland et al., 1985; Williamson, 1975). Under internal organization, potential disputes are resolved by hierarchy rather than by bargaining (Williamson, 1975). If complete trust existed between people, however, no hierarchies would be needed. For example, Hennart (1988) has explained that if raw materials suppliers and customers were willing to uphold agreements under all circumstances, vertical integration would not be necessary. Backward integration occurs when the customer fears that the seller will act opportunistically to change an agreement once a transaction specific investment has been made (Hennart, 1988). However, vertical integration would be unnecessary if the party making the transaction specific investment could trust the other party to adhere to the spirit of the agreement and not act opportunistically (Williamson, 1985). Similarly, if people trusted each other to offer high quality output, internalization to ensure high quality would be unnecessary. Hennart (1988) explains that firms are reluctant to franchise because a franchisee can use a trademark while failing to maintain quality standards. To prevent this problem, the firm turns the franchisee into an employee in a wholly owned subsidiary (Hennart, 1990). However, if trust between the franchisor and the franchisee exists, such control is unnecessary. …

Strategy as Options on the Future

Abstract: Traditional strategic planning draws from forecasts of parameters like market growth, prices, exchange rates, and input costs that managers are unable to predict five or ten years in advance with any accuracy. Nevertheless, some firms meticulously construct strategic plans on the basis of forecasting that, in all probability, will be wrong. These companies tend to overinvest in building assets and capabilities that are highly specific to a particular strategy, relative to what would be optimal if planning explicitly acknowledged that forecasts would likely be off the mark. While companies may focus on executing a single strategy at any particular time, they must also build and maintain a portfolio of strategic options on the future. They must invest in developing new capabilities and learning about new, potential markets. By establishing a set of strategic options, a company can reposition itself faster than competitors that have focused on "doing more of the same." Williamson discusses a strategy that embodies a coherent portfolio of options, sketches a process managers can use to develop this kind of strategy, and explains how planning and management opportunism can reinforce each other. Creating a portfolio of future options involves: ? Uncovering the hidden constraints on a company's future ? both capability constraints and market-knowledge constraints. ? Establishing processes to minimize the costs of building and maintaining the portfolio. ? Optimizing the portfolio by considering (1) alternative capabilities that could profitably meet customer needs and (2) future markets or new customer behaviors. ? Combining planning and opportunism, both of which are essential to the proactive creation of strategic options. Williamson cautions that a company must keep tactical opportunism within the bounds of its overall direction, ruling out options that might cause it to deviate from its long-term mission. Short-term opportunism must determine which precise option a company chooses to exercise.