A common fear in business relationships is becoming a victim of opportunism. Opportunism is the tendency to zealously pursue one’s interests in manipulative and exploitative ways. It means being selfish, underhanded, greedy, sneaky and duplicitous in one’s dealings with others.
The trait tends to cross national and cultural lines, despite moral and philosophical dictates against it. The problem of opportunism is particularly salient when customer-supplier business partnerships are being formed.
As a nation of exporters, Canadians are particularly aware of the problem of opportunism, both domestically and internationally. And as Canada’s, and particularly British Columbia’s, trade and investment in China continues to boom, there is a focus on opportunistic relationships between the two countries.
We supply China with billions of dollars worth of wood, pulp, organic chemicals such as acyclic alcohols, used to make plastics, cereals like wheat and barley, as well as computer and office machinery, fish, crab, lobster and shrimp, plus fertilizers, telephone equipment, nickel, ores and oils.
As Canada increasingly forms long-term customer-supplier business relationships with China, concerns about opportunism from both nations are coming to the fore.
In a recent Globe and Mail article on trade with China, Canadian businessman Ron Ball of EHC, an escalator handrail company in China, reduced the potential for opportunism by creating anti-corruption agreements with suppliers, requiring them to agree that the price they were billing was the best available and there were no kickbacks.
But another Western businessman inadvertently created his own competition when the employees he fired at his newly acquired plant set up shop next door, with Chinese government aid. While the project was a joint venture between the Chinese government and the Western investor, Chinese officials had to find the displaced workers jobs. The Western investor’s business plan was justified by self-interest: he hoped to trim costs by laying off workers, but this strategy didn’t account for the needs of his government business partner and this turned into an ongoing problem for his company.
Creating successful long-term partnerships with customers in China requires understanding of a deeply collectivist culture. According to Alfred Wong, Dean Tjosvold and Zi-you Yu at Lingnan University, Department of Management in Hong Kong, strong relational bonds or “Guanxi” are critical to doing business in China. This is due, in part, to the difficulty faced when attempting to settle grievances through the courts. As a result, Chinese business people tend to avoid what the researchers term “aggressive ways of dealing with others.”
However, Wong, Tjosvold and Yu assert that while “guanxi” appears to be highly valued, it can not be assumed to be prevalent in Asia. The authors note that the downside of valuing strong relational business bonds is the risk that in-group and out-group thinking or “us versus them” behaviour can take hold. For example, as in the West, if a business concludes that its supply partner is in the “out-group” (not part of “our” team), the business may be more likely to exploit that business, making opportunism a barrier to partnerships.
As Canadian business strives to increase alliances with Chinese business, the role of opportunism and self-interest must be dealt with effectively.
To this end, the researchers studied 206 companies in China. Half were customers and half were suppliers in Shanghai. In China, customer organizations have tremendous power, making suppliers concerned about opportunism. The organizations were surveyed about goal interdependence by being given phrases to assess, like, “Our partner and we seek compatible goals”, “Our partner and we have a ‘win-lose’ relationship”. They measured shared vision (e.g., Our partnership encourages employees to feel they are one unit dedicated to a common purpose) and opportunism (e.g., Sometimes our partner alters the facts slightly in order to get what they need).
The results of the study were surprising: they indicated that pursuing self- interested goals or asking ‘what’s in it for me and my company?’ does not lead automatically to opportunistic behaviour, contradicting previously held views by the researchers that self interest led to opportunism – and to think otherwise was, unrealistic and even dangerous.
In fact the opposite is true. Wong, Tjosvold and Yu noted that the more the customers and suppliers were committed to their own self interest, the less likely they were to engage in opportunism, as long as the partners understood their interests to be positively and mutually related.
And that’s key. The partners need to know not just the costs and benefits of their partnership; they also need to believe in a common purpose for the alliance to really start to look after each other’s interests.
According to Wong, Tjosvold and Yu, opportunism does not threaten self- interested customer-supplier partnerships if the parties develop a shared vision for their working relationship.
Organizations take a lot of time to develop a vision for themselves. When embarking on a customer-supplier relationship, it is important to design a shared vision for the partnership. This means defining co-operative goals and a common direction for the partnership. Decide on the values you wish to share. Discuss each other’s stake in the partnership, understand your partner’s needs, aspirations and self-interested perspective. Identify ways of ensuring that both partners are getting their needs met by being curious about the others business and show empathy for your partner.
The authors observed that if the partners are willing to pursue their self- interested goals while recognizing their interests are inter-related, they will engage in less opportunistic behaviours. However, if conversations about a shared vision and purpose don’t happen, the danger is that the partnership becomes implicitly adversarial with each “partner” attempting to get the most out of the other with little regard for the long term ramifications of ‘us-against-them’ thinking.
When doing business in China or in Canada, focusing on ways to reduce opportunism through the traditional value of guanxi will strengthen partnerships and increase prosperity in the long term.
Dr. Jennifer Newman and Dr. Darryl Grigg are registered psychologists and directors of Newman & Grigg Psychological and Consulting Services Ltd., a Vancouver-based corporate training and development partnership. They can be contacted at email@example.com
Identifying information in cases cited has been changed to protect confidentiality.