A central precept of Western capitalism is its selfish and individualist nature (Helper et al., 2000 and Hofstede, 1991). Firms tirelessly and aggressively pursue advantages in cost leadership, product/service differentiation, and product/service excellence (Porter, 1980). Because competition is the “constant struggle among firms for comparative advantages in resources that will yield marketplace positions of competitive advantage for some market segment(s) and, thereby, superior financial performance” (Hunt, 2000: p. 138) firms are expected to leverage their advantages in the marketplace. However, the continuous struggle to improve performance creates the potential for decision-makers to choose to behave opportunistically.
Transaction cost analysis (TCA) theory is an integral part of both the buyer–seller and channel research traditions (e.g., Heide and John, 1992, Morgan and Hunt, 1994, July and Morgan and Hunt, 1997). Furthermore, researchers continue to integrate TCA theory with relationship marketing theory. One of the central premises of TCA is the assumption of opportunism. Opportunism is defined as self-interest seeking with guile (Williamson, 1975) and includes such activities as stealing, cheating, breach of contract, dishonesty, distorting data, obfuscating issues, confusing transactions, false threats and promises, cutting corners, cover ups, disguising attributes or preferences, withholding information, deception, and misrepresentation (Anderson, 1988, John, 1984, Wathne and Heide, 2000, Williamson, 1981, Williamson, 1987 and Williamson, 1993). In short, opportunism is aggressive selfishness and disregards the impact of the firm's actions on others (Lai et al., 2005, Macneil, 1981 and Williamson, 1975).
Though opportunism has been widely researched, it is not completely understood. From reviewing the literature, one may conclude that opportunism is universally viewed as “bad” for all business relations. Is there merit in this consensus? Are there situations where opportunism is expected and accepted even when viewed as unacceptable? Are there situations where a firm or a supply chain may benefit from opportunistic behavior? Are there cost-benefit tradeoffs that should be considered? Additionally, we are left wondering why opportunistic behavior is so common (Maitland, Bryson, & Van De Ven, 1985). The Wall Street Journal is fraught with reports of opportunistic behavior such as Cosmopolitan Gem Corporation's deceiving its lender, Capital Factors, Inc., and defrauding their holding company of $20 million (Bray, 2004). Indeed, textbooks describe opportunistic negotiation techniques such as phantom offers, escalation, the switch, the best and final offer, silence (Monczka, Trent, & Handfield, 2002: p. 472), artificial legal leverage, the missing person, and stalling (Cavinato & Kauffman, 2000: p. 514). That opportunism is commonplace behavior raises a number of questions. In particular, are there aspects of opportunism that we do not yet understand?
Researchers have substantially advanced our understanding of opportunism. There have been a modest number of empirical studies supporting a multitude of antecedents and consequences. However, to date, antecedents and consequences of opportunism have not been comprehensively synthesized. Therefore, the purpose of this paper is to review and synthesize empirical research on antecedents and consequences of opportunistic behavior as defined in TCA and suggest new directions for research. This review consists of three sections. First, we provide a brief review of two critical theories of exchange that provide a theoretical foundation for opportunism. We next provide a discussion of the antecedents and consequences of opportunism with emphasis on the contribution of each finding. Finally, we offer several promising paths for further research.
