Opportunism in exchange relationships in supply chains: theory development and empirical evidence

Opportunism in supply chains is a barrier to effective business relationships in Africa. Ingrained in a culture of corruption, it leads to poor firm performance and inefficient economies incapable of fostering development and creating employment. Despite the prevalence of opportunism, there is little if any research on understanding what drives opportunism in Africa. Outside Africa, empirical research on opportunism is based on reports from a single category of respondents within firms with limited focus on investigating comprehensive frameworks of opportunism antecedents, mediation effects, differences in opportunism engagement across firm sizes and industry sectors and the impact of opportunism on firm performance. Applying the Transaction Cost Economics (TCE) Theory and Relational Exchange Theory (RET), this study investigates opportunism in Uganda, a developing country context to address these limitations by investigating the extent to which nine antecedents (environmental uncertainty, power asymmetry, information sharing, governance structures, relationship duration, relational norms, cooperation, competition and cultural values) explain opportunism engagement. Furthermore, the study investigates the parallel and serial mediation effects of three variables (favourable attitude towards opportunism, long-term orientation, relationship quality) on relationships between antecedents and opportunism as well as the impact of opportunism on firm performance. The research is based on a cross-sectional survey of 198 procurement and sales managers from 99 Ugandan manufacturing firms, comprising SMEs and large firms drawn from agricultural and non-agricultural sectors. All respondents admitted to engaging in opportunism. Consistent with TCE and RET and previous studies in more developed economies, power asymmetry and environmental uncertainty increase opportunism, although this varies with firm size and sector. Information sharing has a negative but weak effect, it has no influence based on firm size or sector, except in the agricultural sector where information sharing is encouraged by government-funded initiatives. By better understanding why firms engage in opportunism in Africa, the research provides important direction to African governments and International Donor agencies in their efforts to curb opportunism. For example, opportunism can be minimised by strengthening legal frameworks, creating more stable market environments, and improving Information Technology infrastructure to enhance information sharing and long-term orientation. Recognising differences across firm sizes and sectors allows policies, programmes to be targeted, and more effective. A key theoretical contribution is the application of two theories, TCE and RET in a developing country to demonstrate how contextual factors constrain the applicability of the TCE and RET in explaining opportunism. For instance, environmental uncertainty does not reduce opportunism when governments protect firms from the effects of environmental uncertainty. Capturing data on self-reported opportunism from both supplier and buyer perspectives is a major advancement in comprehending opportunism.