The Safeguarding Effect of Governance Mechanisms in Inter-firm Exchange: The Decisive Role of Mutual Opportunism

This study empirically investigates the safeguarding effect of (1) administrative control, (2) a dominant power position and (3) relational norms, on opportunistic behaviour of suppliers, by means of a survey among 624 information and communication technology professionals in Dutch municipalities. The findings indicate that individual effectiveness of relational norms, particularly in terms of flexibility and solidarity, was most prominent. Administrative control and power did not show a significant impact on supplier opportunism in our sample. Research into the simultaneous use of several safeguards against opportunism generated the finding that different relational norms fortify each other's safeguarding effect. Furthermore, we demonstrate that supplier opportunism is only mitigated by a dominant power position when the buyer does not exploit its favourable position and the buyer does not behave opportunistically. Hence, power seems to have a safeguarding effect only when it is not used.