In‐group preference as opportunism governance in a collectivist culture: evidence from Korean retail buyer‐supplier relationships

Abstract

Purpose

The purpose of this paper is to examine whether preference toward in‐group members can serve as opportunism governance in channel relationships in a collectivist culture. This study proposes a model of opportunism incorporating in‐group preference and trust as antecedents of opportunism. Based on Transaction Cost Economics and Social Exchange Theory, transaction‐specific investment and relationship length are employed in the model as confounding variables of in‐group preference for opportunism and trust.

Design/methodology/approach

Data were collected from 109 Korean department store buyers and analyzed using Structural Equation Modeling (EQS 6.0).

Findings

The results showed that buyers' in‐group preference increased buyers' trust toward suppliers and decreased suppliers' opportunistic behavior. Buyers' increased trust toward suppliers was found to reduce suppliers' opportunistic behavior. Further, Trust was significantly influenced by supplier TSI, but not by length of relationship. On the other hand, opportunism was significantly influenced by length of relationship, but not by supplier TSI.

Research limitations/implications

This study examined only the positive side of in‐group membership. Some criticisms of in‐group preference are favoritism, interference with fair competition, and collective blindness, any of which might decrease the efficiency of business operations. These impacts should be examined to gain a balanced view of the implications of in‐group preference in business settings.

Practical implications

Multinational companies should understand that in‐group membership is an important source of building trust and oppressing opportunism in the Korean market. Multinational companies can strategically approach in‐group members of business partners to become members of those in‐groups.

Originality/value

This is the first empirical study to examine collectivists' tendencies toward in‐group preference as opportunism governance.

Citation

Chung, J. and Jin, B. (2011), "In‐group preference as opportunism governance in a collectivist culture: evidence from Korean retail buyer‐supplier relationships", Journal of Business & Industrial Marketing, Vol. 26 No. 4, pp. 237-249. https://doi.org/10.1108/08858621111126983