Abstract:

Drawing from self-enforcing theory that is developed from transaction cost theory, this paper focuses on exploring the hybrid effect of transaction governance and relational governance on supplier opportunism. The finding suggests that relational norm is positively related to joint-specific investments and observability of the exchanges. And two dimensions of relational norm: norm solidarity and norm participation have a negative effect on supplier opportunism. Specifically, when the norm solidarity is high, exchange partners act based on their mutual benefit and responsibilities, so that supplier opportunism will decrease in the exchange. When the norm participation is high, exchange partners make decisions and set organizational goals together, which will curb supplier opportunism. In addition, the paper finds that monitoring moderates the effect of relational norm on supplier opportunism. Specifically, the higher the level of monitoring, the stronger the negative effect of relational norm on supplier opportunism.

Key words: self-enforcing agreement, relational norm, joint-specific investments, obeservability, opportunism