The Role of Ownership in Managing Interfirm Opportunism: A Dyadic Study
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We extend research on transaction cost theory that shows that vertical integration enables firms to protect their investments in exchange relationships better than market mechanisms. However, extant research finds ownership to exacerbate, rather than limit, exchange partner opportunism. Hence, the purpose of this study is to investigate conditions under which ownership can be effective for constraining an exchange partner’s opportunism. Using matched dyadic data for 296 hotel brands, we conduct multi-level hierarchical linear modeling and identify conditions under which common ownership limits hotel opportunism. Findings indicate that ownership can limit hotel opportunism when brand headquarters can easily monitor the hotel’s activities.
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Canada; hierarchical linear modeling; interfirm relations; opportunism; ownership; transaction cost theory; United States
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Required Publisher Statement: © Taylor & Francis. Final version published as: Brown, J. R., Krishen, A. S., & Dev, C. S. (2014). The role of ownership in managing interfirm opportunism: A dyadic study. Journal of Marketing Channels, 21, 31-42. doi: 10.1080/1046669X.2013.831014 Reprinted with permission. All rights reserved.