Can digitalization transform conventional governance to curb supplier opportunism in emerging markets?

Purpose Building on transaction cost economics, social exchange theory and supply chain (SC) digitalization literature, we examine how different types of digital technologies (DTs) – independently and in conjunction with conventional governance mechanisms (detailed contracts and relational governance) – curb supplier opportunism of different forms in emerging markets. Design/methodology/approach We collect dyadic data from 868 managers working for 217 suppliers in China and matched buyers located in 66 countries to test the hypotheses. Interaction effects are tested using multiple regression. Multiple robustness and endogeneity tests are performed to evaluate the robustness of the findings. Findings We find that while physical DTs suppress strong-form supplier opportunism (SSO), they are not effective in curbing weak-form supplier opportunism (WSO). In contrast, network DTs have the opposite effects on SSO and WSO. Our findings further show that detailed contracts strengthen the negative effect of physical DTs on SSO, while their impact on the relationship between network DTs and WSO is negligible. Meanwhile, relational governance strengthens the negative effect of network DTs on WSO but has no effect on the relationship between physical DTs and SSO. Originality/value To the best of the authors’ knowledge, this is the first study that examines the direct governance functions of different types of DTs and how they interact with conventional governance mechanisms to curb SSO and WSO. This study contributes to SC governance research by identifying DTs as novel ways of governing global SCs and clarifies the controversy on whether DTs and conventional governance mechanisms complement or substitute for each other.