The Role of Ownership in Managing Interfirm Opportunism: A Dyadic Study

At times in their interfirm relationships, distribution channel organizations may take advantage of their exchange partners by behaving guilefully. This opportunistic behavior adversely impacts channel member satisfaction (Gassenheimer et al., 1996) as well as the relational exchange norms among channel partners (Gundlach et al., 1995; Sindhav & Lusch, 2008). It also increases transaction costs (Luo, 2007), including the costs of monitoring the channel (Dahlstrom & Nygaard, 1999). Such costs, along with others, can lead to decreases in the channel’s performance (Claycomb & Frankwick, 2010). Thus, managing opportunism in interfirm relationships, such as distribution channels, improves relationship quality and is an important task (Li, 2007). Previous research has identified a number of mechanisms that can be useful in limiting interfirm opportunism. Among them are common ownership (Williamson, 1985), congruent goals among channel members (Anderson, 1988; Jap & Anderson, 2003), investments in idiosyncratic assets (Rokkan et al., 2003; Williamson, 1985), monitoring partner activities and outcomes (Heide et al., 2007), and relational exchange norms (Brown et al., 2000; Vázquez et al., 2007). The article is organized as follows. First, we use transaction cost theory, agency theory, and relational exchange theory to discuss channel member opportunism and explain how specific facets of common ownership can manage it. We also use these theories to develop hypotheses that explicate how a firm’s characteristics as well as its partner’s characteristics can moderate the impact of common ownership in limiting partner opportunism. Next, we describe an empirical study designed to test the conceptual framework suggested by our hypotheses. After we discuss our empirical findings, we explore their implications for both managers and researchers. We then summarize our research and succinctly draw some conclusions from it. Address correspondence to Anjala S. Krishen, Lee Business School, University of Nevada, Las Vegas, Las Vegas, NV 89154-6010, USA. E-mail: [email protected] The Role of Ownership in Managing Interfirm Opportunism: A Dyadic Study