Individualism, Collectivism, and Opportunism: A Cultural Perspective on Transaction Cost Economics

Abstract

Researchers criticize the transaction cost economics (TCE) paradigm for over-generalizing the assumption of opportunism as human nature. We suggest that opportunistic propensity is affected by cultural prior conditioning of individualism-collectivism (I-C). Specifically, we propose that individualists have a higher opportunistic propensity in intra-group transactions, and collectivists in inter-group transactions. Our cultural specification of opportunism helps TCE to more effectively accommodate some criticisms and more realistically deal with problems of economic organization in today’s global economy.