Contracts or Trust? A Contingent View From Institutions

Drawing on institutional theory, this study examines how regulatory uncertainty and relationship structure moderate the role of contracts and trust in restricting local supplier opportunism in China. The results reveal that contracts are more effective in deterring supplier opportunism when regulatory uncertainty is high. In addition, contracts help curtail opportunism more in domestic, compared with international, buyer-supplier relationships, whereas trust is more effective in restricting supplier opportunism in international relationships than in domestic ones.