Effect of Information Access through Social Capital on Mitigating Business Opportunism of Small Enterprises in Sri Lanka

Abstract

The study explored how information access through different dimensions of Social Capital (SC) (structural, relational and cognitive) affects the mitigation of business opportunism. Data were collected from 373 Small Enterprises (SEs) in Sri Lanka, conducting face-to-face interviews with the owners of SEs. Partial Least Squares-Structural Equation Modelling (PLS-SEM) was employed to analyse data. The results revealed that information accessed through different dimensions of SC have significant negative effects with business opportunism of exchange partners. Therefore, the study recommends SEs to develop SC while having strong relationships with exchange partners in order to access information leading to the mitigation of opportunism of exchange partners.

ICT Usage, Bounded Rationality and Business Performance of SMEs in Sri Lanka

“…However, due to the considerable behavioural characteristics of the market, SMEs fail to reach this level (Carmel & Nicholson, 2005;Dyer & Chu, 2003;Nooteboom, 1993;Priyanath, 2017). Especially, the opportunistic behaviour of the market incur more cost on the SMEs and hence they finally fail in doing business (Priyanath, 2017;Priyanath & Premaratne, 2014;Priyanath & Premaratne, 2017a, 2017b. This cost generated by the market mechanism is called TC and it is incurred due to the limitation of decision-making power (bounded rationality) on solving the business management issues created by opportunism (Zhang, 2009).…”

Role of Mobile Technology on Business Opportunism and Performance of SMEs in Sri Lanka

“…According to Williamson (1975), opportunism is self-interest-seeking with guile. More generally, researchers mentioned opportunism as incomplete or distorted disclosure of information, especially to calculated efforts to mislead, distort, disguise, obfuscate, or otherwise confuse (Priyanath and Premarathne, 2017b). Two kinds of opportunism such as exante which can establish by the principal business partner by providing imperfect information or misleading expose of information before the transaction and ex-post opportunism which occurs after a transaction due to the hidden activities of the principal business partner.…”

“…However, this phenomenon has not been examined by the studies, especially in the Sri Lankan context. According to Priyanath and Premarathne (2017b), if SMEs capable to collect and evaluate information, they would be able to reduce opportunism. Nevertheless, mobile technology can easily be used to end up the situation of scarcity of information around the stakeholders of SMEs (Alghizzawi, 2019;Fischer and Smolnik, 2013).…”

Digital Literacy, Business Uncertainty & Economic Performance: An Empirical Study of Small Businesses in Sri Lanka

“…The major goal of the SEs is reach to the satisfactory level of EP. SEs fail to reach this level because of uncertainty (Priyanath, 2017;Priyanath & Premarathne, 2014;Priyanath & Premaratne, 2017a, 2017b. They need to make proper accurate decisions to avoid various inappropriate opportunistic influences which are raised on financial and environmental factors and conversely, it is the way of plastering the above uncertainty (Priyanath & Premarathne, 2015).…”

“…Consequently, SEs fail to safeguard the hazards from the opportunism of exchange partners (Agwu & Emeti, 2014) and the result is the increase of Transaction Cost (TC) and the failure rate (Carmel & Nicholson, 2005;Nooteboom, 1993). SEs need to get proper accurate decisions to avoid various inappropriate opportunistic influences which are raised on financial and environmental factors and conversely, it is the way of plastering the above uncertainty and furthermore the human has less rational ability and it again increases the inability of covering the uncertainty effects (Priyanath, 2017;Priyanto et al, 2014). The decision theories which can be used to make such optimum decisions are mainly depended on the availability of adequate, reliable and timely information (James, 2007;Kenneth & Jane, 2013).…”