Opportunistic strategy under cooperation: Subtle, deceitful practices in Taiwan’s agri-food supply chain

Authors: Chia-Yi Liu

Journal: Corporate Management Review. Jun. 2022, 42(1): 1-35

Keywords: Cognitive dissonance, opportunism, Heckman model, contract farming.

Abstract:
Transaction cost theory (TCE) scholars regard opportunism as a source of transaction cost that hinders cooperation; however, collaboration, such as contract farming, is widespread in the food and agribusiness industry, even if most partnerships maintain opportunistic practices. Therefore, based on contract farming, this study elucidates how opportunistic practices diminish the transaction cost of cooperation by distinguishing subtle and deceitful practices from opportunistic behavior. This study employs the Heckman model to resolve the sample selection bias problem based on 113 contract farming transactions in Taiwan’s organic agri-food supply chain. Under cooperative transactions, opportunistic behavior is affected by the decision-maker's perception of their partners’ opportunism. The perception of partners’ deceitful and unethical behaviors enhances the decision-maker’s subtle and deceitful behavior. This study adopts the cognitive dissonance perspective to extend the transactional and relational views of cooperation using three approaches. First, this study views opportunistic behavior as a strategic response to the perception of partners’ opportunism rather than an assumption of behavior. In addition, this study distinguishes subtle and deceitful practices from opportunistic behaviors. Finally, using the cognitive dissonance view, this study argues that opportunistic strategy, which reduces cognitive dissonance and is a type of governance mode, diminishes transaction cost.