IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v168y2023ics0148296323005908.html
   My bibliography  Save this article

Managers’ dispositions toward formal contracts: A cross-country examination

Author

Listed:
  • Stefanidis, Abraham
  • Banai, Moshe
  • Newburry, William
  • Fainshmidt, Stav
  • Richter, Ulf Henning
  • Schinzel, Ursula
  • Kong, Yin
  • Erkus, Ahmet
  • Shakirova, Svetlana
  • Ozbek, Mehmet Ferhat
  • Goelzner, Herbert
  • Shetach, Ana
  • Sigri, Unsal

Abstract

This study integrates institutional and dispositional theories to develop a multilevel model predicting that managers’ endorsement of formal contracts increases with the quality of formal institutions. This effect is contingent upon managerial dispositions of ethical idealism and interpersonal trust, which provide a morally driven override of uncertainty and a substitute source of certainty in business practices, respectively. We test our arguments on hand-collected data from 3,652 manager-negotiators in 16 countries. We find that managers endorse formal contracts when they are embedded in contexts with high quality contract enforcement institutions, but this effect diminishes substantially among ethically idealistic managers. These results suggest that an understanding of managers’ reliance on formal contracts requires multilevel theory informed by how managerial dispositions interact with the formal institutional context.

Suggested Citation

  • Stefanidis, Abraham & Banai, Moshe & Newburry, William & Fainshmidt, Stav & Richter, Ulf Henning & Schinzel, Ursula & Kong, Yin & Erkus, Ahmet & Shakirova, Svetlana & Ozbek, Mehmet Ferhat & Goelzner, , 2023. "Managers’ dispositions toward formal contracts: A cross-country examination," Journal of Business Research, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:jbrese:v:168:y:2023:i:c:s0148296323005908
    DOI: 10.1016/j.jbusres.2023.114231
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296323005908
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2023.114231?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kevin Zheng Zhou & Laura Poppo & Zhilin Yang, 2008. "Relational ties or customized contracts? An examination of alternative governance choices in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 526-534, April.
    2. Chuck C Y Kwok & Solomon Tadesse, 2006. "The MNC as an agent of change for host-country institutions: FDI and corruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(6), pages 767-785, November.
    3. G Tomas M Hult & David J Ketchen & David A Griffith & Carol A Finnegan & Tracy Gonzalez-Padron & Nukhet Harmancioglu & Ying Huang & M Berk Talay & S Tamer Cavusgil, 2008. "Data equivalence in cross-cultural international business research: assessment and guidelines," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 1027-1044, September.
    4. Kevin Zheng Zhou & Dean Xu, 2012. "How foreign firms curtail local supplier opportunism in China: Detailed contracts, centralized control, and relational governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(7), pages 677-692, September.
    5. Nielsen, Bo Bernhard, 2010. "Strategic fit, contractual, and procedural governance in alliances," Journal of Business Research, Elsevier, vol. 63(7), pages 682-689, July.
    6. Urbano, David & Felix, Claudia & Aparicio, Sebastian, 2021. "Informal institutions and leadership behavior in a developing country: A comparison between rural and urban areas," Journal of Business Research, Elsevier, vol. 132(C), pages 544-556.
    7. Ruth V. Aguilera & Birgitte Grøgaard, 2019. "The dubious role of institutions in international business: A road forward," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(1), pages 20-35, February.
    8. Alvaro Cuervo-Cazurra & Mehmet Genc, 2008. "Transforming disadvantages into advantages: developing-country MNEs in the least developed countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 957-979, September.
    9. Chan, Christine M. & Du, Jialin, 2022. "Formal institution deficiencies and informal institution substitution: MNC foreign ownership choice in emerging economy," Journal of Business Research, Elsevier, vol. 142(C), pages 744-761.
    10. Elango, B. & Dhandapani, Karthik, 2020. "Does institutional industry context matter to performance? An extension of the institution-based view," Journal of Business Research, Elsevier, vol. 115(C), pages 139-148.
    11. Alain Verbeke & Nathan S Greidanus, 2009. "The end of the opportunism vs trust debate: Bounded reliability as a new envelope concept in research on MNE governance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1471-1495, December.
    12. Lee, Yikuan & Cavusgil, S. Tamer, 2006. "Enhancing alliance performance: The effects of contractual-based versus relational-based governance," Journal of Business Research, Elsevier, vol. 59(8), pages 896-905, August.
    13. Miriam Muethel & Michael Harris Bond, 2013. "National context and individual employees’ trust of the out-group: The role of societal trust," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(4), pages 312-333, May.
    14. Birger Maekelburger & Christian Schwens & Ruediger Kabst, 2012. "Asset specificity and foreign market entry mode choice of small and medium-sized enterprises: The moderating influence of knowledge safeguards and institutional safeguards," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 43(5), pages 458-476, June.
    15. Castro-Lopez, Adrian & Iglesias, Victor & Santos-Vijande, María Leticia, 2023. "Organizational capabilities and institutional pressures in the adoption of circular economy," Journal of Business Research, Elsevier, vol. 161(C).
    16. Heather Berry & Mauro F Guillén & Nan Zhou, 2010. "An institutional approach to cross-national distance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1460-1480, December.
    17. Ted London & Stuart L Hart, 2004. "Reinventing strategies for emerging markets: beyond the transnational model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 350-370, September.
    18. Istipliler, Baris & Bort, Suleika & Woywode, Michael, 2023. "Flowers of adversity: Institutional constraints and innovative SMEs in transition economies," Journal of Business Research, Elsevier, vol. 154(C).
    19. Kevin Zheng Zhou & Laura Poppo, 2010. "Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(5), pages 861-881, June.
    20. Agnieszka Chidlow & Emmanuella Plakoyiannaki & Catherine Welch, 2014. "Translation in cross-language international business research: Beyond equivalence," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(5), pages 562-582, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    2. Umar Burki & Richard Glavee-Geo & Robert Dahlstrom & Renger Kanani & Arnt Buvik, 2023. "The moderating effect of market knowledge on contractual efficacy: evidence from Asian supplier–Western buyer relationships," Asian Business & Management, Palgrave Macmillan, vol. 22(4), pages 1454-1484, September.
    3. Chan, Christine M. & Du, Jialin, 2022. "Formal institution deficiencies and informal institution substitution: MNC foreign ownership choice in emerging economy," Journal of Business Research, Elsevier, vol. 142(C), pages 744-761.
    4. Panikos Georgallis & João Albino-Pimentel & Nina Kondratenko, 2021. "Jurisdiction shopping and foreign location choice: The role of market and nonmarket experience in the European solar energy industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 853-877, July.
    5. Newburry, William & Gardberg, Naomi A. & Sanchez, Juan I., 2014. "Employer Attractiveness in Latin America: The Association Among Foreignness, Internationalization and Talent Recruitment," Journal of International Management, Elsevier, vol. 20(3), pages 327-344.
    6. Huo, Baofeng & Fu, Dijia & Zhao, Xiande & Zhu, Jingwen, 2016. "Curbing opportunism in logistics outsourcing relationships: The role of relational norms and contract," International Journal of Production Economics, Elsevier, vol. 182(C), pages 293-303.
    7. Verbeke, Alain & Simoes, Sean & Grøgaard, Birgitte, 2024. "The role of multinational enterprises and formal institutions in BOP markets," Journal of International Management, Elsevier, vol. 30(4).
    8. Amankwah-Amoah, Joseph & Debrah, Yaw & Nuertey, Dorcas, 2018. "Institutional Legitimacy, Cross-Border Trade and Institutional Voids: Insights from the Cocoa Industry in Ghana," MPRA Paper 84393, University Library of Munich, Germany.
    9. Mbalyohere, Charles & Lawton, Thomas & Boojihawon, Roshan & Viney, Howard, 2017. "Corporate political activity and location-based advantage: MNE responses to institutional transformation in Uganda’s electricity industry," Journal of World Business, Elsevier, vol. 52(6), pages 743-759.
    10. Zahoor, Nadia & Khan, Zaheer & Shenkar, Oded, 2023. "International vertical alliances within the international business field: A systematic literature review and future research agenda," Journal of World Business, Elsevier, vol. 58(1).
    11. Geleilate, José-Mauricio G. & Magnusson, Peter & Parente, Ronaldo C. & Alvarado-Vargas, Marcelo J., 2016. "Home Country Institutional Effects on the Multinationality–Performance Relationship: A Comparison Between Emerging and Developed Market Multinationals," Journal of International Management, Elsevier, vol. 22(4), pages 380-402.
    12. Huo, Baofeng & Ye, Yuxiao & Zhao, Xiande, 2015. "The impacts of trust and contracts on opportunism in the 3PL industry: The moderating role of demand uncertainty," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 160-170.
    13. Schlägel, Christopher & Sarstedt, Marko, 2016. "Assessing the measurement invariance of the four-dimensional cultural intelligence scale across countries: A composite model approach," European Management Journal, Elsevier, vol. 34(6), pages 633-649.
    14. Tao Zhang, 2019. "How Do Information Technology Resources Facilitate Relational and Contractual Governance in Green Supply Chain Management?," Sustainability, MDPI, vol. 11(13), pages 1-17, July.
    15. Christian Falaster & Manuel Portugal Ferreira & Dan Li, 2021. "The influence of generalized and arbitrary institutional inefficiencies on the ownership decision in cross-border acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1724-1749, December.
    16. Bernhard Swoboda & Cathrin Huber & Tassilo Schuster & Johannes Hirschmann, 2017. "Corporate Reputation Effects Across Nations: The Impact of Country Distances and Firm-Specific Resources," Management International Review, Springer, vol. 57(5), pages 717-748, October.
    17. Fang, F., 2019. "When performance shortfall arises, contract or trust? A multi-method study of the impact of contractual and relational governances on performance in public – private partnerships," Other publications TiSEM 473840ee-6945-4a93-9326-5, Tilburg University, School of Economics and Management.
    18. Andrews, Luke R.J. & Luiz, John M., 2024. "Conceptualizing institutional voids in terms of severity and how the home country affects this understanding," Journal of Business Research, Elsevier, vol. 176(C).
    19. Wang, Liwen & Sheng, Shibin & Wu, Shuilong & Zhou, Kevin Zheng, 2017. "Government role, governance mechanisms, and foreign partner opportunism in IJVs," Journal of Business Research, Elsevier, vol. 76(C), pages 98-107.
    20. Fernando Moreira Silva & Mario Henrique Ogasavara & Renato Pereira, 2024. "Institutional distances and equity-based entry modes: a systematic literature review," Management Review Quarterly, Springer, vol. 74(3), pages 1723-1790, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:168:y:2023:i:c:s0148296323005908. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.