Abstract Drawing on transaction cost theory, this study explores the different effects of the safeguarding function of contracts, operationalized as contract monitoring, and the coordinating function of contracts, operationalized as interfirm joint action, on the distributor's active versus passive opportunistic behaviors in the context of manufacturer-distributor channel relationship. By analyzing the data collected from 512 manufacturers, we find that, first, contract monitoring inhibits distributor's active opportunistic behavior, but it does not have significant impact on the distributor's passive opportunistic behavior. Second, joint action deters the distributor's passive opportunistic behavior, but it does not have significant influence on the distributor's active opportunistic behavior. Third, both the distributor's active and passive opportunistic behaviors negatively influence the cooperation performance. Fourth, the distributor's active opportunistic behavior mediates the positive relationship between contract monitoring and cooperation performance; the distributor's passive opportunistic behavior mediates the positive relationship between joint action and cooperation performance.
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