The Moderating Effects of a Network Norm of Obligation

Abstract

This paper examines the moderating effects of network norms of obligation which is defined as the sentiments and sense of responsibility that are expected to be fulfilled by the involved parties and that accrue among individual firms engaged in recurring contractual economic exchange. The purpose of our research is to propose a new dimension of norms, the obligational feature, to argue traditional dimensions that explain relational exchanges need a new dimension to explain how relational exchanges are maintained without legal safeguards. The study results show that the positive relationship between Transaction Specific Investments (TSI) and performance became stronger, and the negative relationship between opportunism and performance became weaker under high level of network norm of obligation. However, different from expectation, it was found to have a negative impact on the relationship between technological uncertainty and performance. A network norm of obligation has costs as well as benefits. It could effectively protect the party which invested in TSI and also reduce exchange the partners’ opportunism, but it also constrains the behaviors of the firm.