Authors
Neale G O'Connor, David M Reeb, Lim Chee Ming
Publication date
2020/4
Description
We examine various screening, auditing, and resolution mechanisms to limit both spontaneous and calculated supplier opportunism. Using a proprietary dataset, with over 1000 complaints registered about suppliers during the period 2014 to 2017, we find substantial heterogeneity in firm risk reduction strategies to limit supplier opportunism. Buyers from developed economies appear to experience less supplier opportunism than firms from non-OECD countries. Opportunism appears more pronounced in suppliers from poor countries than in firms from emerging market economies, such as China. Importantly, our analysis demonstrates several mechanisms that appear have limited, if any, impact on supplier opportunism, such as the use of company references and third-party visits. In contrast, direct factory visits and third-party quality checks are strongly associated with lower supplier opportunism. Overall, our results reveal the relative effectiveness of several different mechanisms to limit supplier opportunism.
Scholar articles