Munich Personal RePEc Archive

Beyond intentional trust: supplier opportunism and management control mechanisms in public sector procurement and contracting

Lonsdale, Chris and Sanderson, Joe and Watson, Glyn and Peng, Fei (2016): Beyond intentional trust: supplier opportunism and management control mechanisms in public sector procurement and contracting. Published in: Policy & Politics , Vol. 44, (April 2016)

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Abstract

We test an argument, drawn from transaction cost economics, that an assumption of intentional trust should be replaced with one of supplier opportunism in public sector procurement and contract management. We use structural equation modelling to evaluate quantitative evidence from 180 public and private sector buyers on the perceived effectiveness of various management control mechanisms aimed at restraining supplier opportunism. Our findings suggest that supplier opportunism is potentially a problem and that certain procurement and contract management mechanisms can assist buying organisations in moderating that opportunism. This supports arguments in favour of a ‘cautious approach’ to procurement and contract management.

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