Five Configurations of Opportunism in International Market Entry

• DOI: http://doi.org/10.1111/joms.12355
• Date: 01 November 2019
• Author: Luis E. Lopez,Luciano Ciravegna,Alain Verbeke,Sumit K. Kundu
• Published date: 01 November 2019

© 2018 John Wiley & Sons Ltd and S ociety for the Advancement of Ma nagement Studies

Five Configurations of Opportunism in International

Market Entry

Alain Verbekea,b,c, Luciano Ciravegnad,e, Luis E. Lopeze and

Sumit K. Kunduf

aUniversity of Calgary; bUniversity of Reading; cVrije Universiteit Brussel (VU B); dKing’s

College, University of London; eI NCAE Business School; fF lorida International University

ABST RACT We investigate the conditions under which opportun ism occurs in interna-

tional market entry. Exam ining 133 entries into new markets by 38 Ch inese exporters,

we uncover instances of opportuni stic behaviour on the par t of importers. We study five

variables affecting such behaviour: m anagerial expe rience, mark et entry share, mark et

distance, young age, and netwo rk size. Whi le we find no single vari able on its own associ -

ated with opportu nism, we do find that in concert t hey form five config urations of

opportunism. In one conf iguration, even older firms with exp erienced managers and a

large network are subject to part ners behaving opport unistical ly when they are entering

a distant market. We conclude that simplistic predict ions based on the presence of a

single antecedent should make way for a configur ational approach whereby a set of

conditions must be in place for opportunism to m aterialize.

Keywo rds: interna lization theor y, internationalizat ion, market entry, opportunism,

tran saction co st economics

INTRODUCTION

Entering a foreign market is risky and can affect a f irm’s long-term evolution

(Markman and Waldron, 2014). Much influential international business (IB) re-

search draws upon transaction cost economics (TCE) to describe the challenges

of internationalizing (for classic references, see Buckley and Casson, 1998, 2009;

Hennart, 1982, 1988, 2009; Rugman a nd Verbeke, 2003; for a recent synthesis, see

Journal of Man agement Studi es 56:7 November 2019

doi :10.1111/jom s.1235 5

Address for reprints: Alain Verbeke, Haskayne Scho ol of Business, Universit y of Calga ry, 2500

University Drive Nor thwest, Calgar y, Alberta T2N 1N4, Cana da (alain.verbeke@haskayne.ucalgar y.ca).

1288 A. Verbeke et al.

© 2018 John Wiley & Sons Ltd and S ociety for the Advancement of Ma nagement Studies

Buckley, 2016). Opportunism, which Williamson (1985, p. 30) defines as ‘self-in-

terest seeking behavior with guile’, poses threats to successful internat ional mar-

ket entry. Firms can adopt a variety of governance mechanisms to mitigate these

threats (Narula and Verbeke, 2015; Williamson, 1985).

A large segment of the predictive scholarly work on entry mode choice builds

upon the assumption of opportunism, that is, a tendency toward deceitful be-

haviour leading to explicit or implicit violations of contracts with foreign partners.

Yet, few IB studies have actually examined the conditions under which opportun-

ism occurs leaving an important gap between theory, where opportunism is a

key assumption, and empirics, where evidence continues to be scarce (Kano and

Verbeke, 2015). One reason for the gap is that mainstream IB theory purports to

be predictive, meaning that firms are assumed to select ‘optimal’ entry modes,

i.e. those that minimize opportunism. Thus, by design, the empirical IB literature

does not examine the contexts wherein opportunism actually occurs, because it

focuses on how to avoid it (Brouthers, 2002; Verbeke and Ciravegna, 2018).

We address the gap and respond to calls for more research on opportunism

in new market entries (Luo, 2007a; Verbeke and Greidanus, 2009). Our focus

is on how managers actually make decisions as opposed to how they should be

making them (Buckley et al., 2007). In international market entries, both parties

involved, the firms entering a host country–exporters for example–and their host

country partners–the corresponding importers–can act opportunistically and

thus inflict costs on each other. In this paper, we address the following research

question: When exporters enter new, foreign markets, which combinations of antecedents

will be associated with importers’ opportunism?

We look at 133 international entries by 38 textile exporters from China into

41 foreign markets, using fuzzy sets Qualitative Comparative Analysis – fsQCA

(Misangyi et al., 2017).1 We analyze five antecedents of opportunism derived from

mainstream IB research (Figure 1): managerial experience; market entry share; market

distance; young age; and network size.

Our main contribution is that we study empirically configurations of opportunism. A

configuration represents a number of contextual antecedents that must be in place

simultaneously for opportunism to occur. This has not been recognised in the IB

entry mode literature. First, as noted above, much of the literature suggests that op-

portunism can easily be anticipated and eliminated through proper governance.

Second, most researchers have either assumed the presence of opportunism as a

generalised behavioural antecedent, or have focused on individual causes, such as

asset specificity (Tsang, 2006; Verbeke and Greidanus, 2009). Our findings differ

sharply with the prevailing view of a single antecedent of opportunism. Instead we

identify in our data five configurations of antecedents of opportunism (see Figure 2

in the Results section); one of them being the case of older firms with experienced

managers and a large network entering geographically very distant markets.

Identifying configurations such as the one above is important for the dialogue

between theory and empirics, and between research and managerial practice. It is

configurations of variables taking on particular scores that lead to opportunism,