Improving performance and reducing cost in buyer-supplier relationships: The role of justice in curtailing opportunism

Yadong Luo, Yi Liu, Qian Yang, Vladislav Maksimov, Jigang Hou

Research output: Contribution to journalArticle

49 Scopus citations

Abstract

Building on social exchange theory, we study the role of justice perceptions in curtailing opportunism and, in turn, improving performance and reducing governance cost in buyer-supplier relationships. Our analysis of 225 dyads in the Chinese home appliance industry indicates that distributive justice is negatively linked to strong form opportunism, whereas procedural justice and interactional justice perceptions are negatively related to weak form opportunism. Additionally, while relationship performance is equally reduced by both forms of opportunism, governance cost increases significantly more with strong form opportunism. We conclude that preserving the formal structure of the exchange through distributive justice and the informal mechanisms of interaction through procedural justice and interactional justice is important in enhancing performance and reducing cost. We caution that we view the role of organizational justice as complementary to economic forces such as contractual and managerial governance.

Original languageEnglish (US)
Pages (from-to)607-615
Number of pages9
JournalJournal of Business Research
Volume68
Issue number3
DOIs
StatePublished - Mar 1 2015

Keywords

  • Buyer-supplier relationships
  • Governance cost
  • Opportunism
  • Organizational justice
  • Relationship performance
  • Social exchange theory

ASJC Scopus subject areas

  • Marketing

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