Abstract

Purpose: The study explores how environmental variability influences opportunism and trust in inter-firm channel relationships. It further examines the moderating role of network embeddedness, particularly the effects of strong and weak ties, in shaping these dynamics under uncertain conditions. Research design, data and methodology: To investigate these relationships, the study develops hypotheses suggesting that environmental variability increases opportunism while reducing trust. It also proposes that network embeddedness moderates these effects, with strong and weak ties playing distinct roles. The analysis draws on empirical data from firms engaged in inter-firm exchanges. Statistical analyses are conducted to assess how different levels and types of embeddedness impact the effects of environmental variability on opportunism and trust. Results: The results support all proposed hypotheses. Environmental variability is positively associated with opportunism and negatively associated with trust. Network embeddedness significantly moderates these relationships. Firms embedded in strong tie networks experience reduced opportunism and enhanced trust, as these ties function as informal control mechanisms and promote mutual understanding. Weak ties show limited moderating effects. Conclusions: The research underscores the importance of network embeddedness in managing opportunism and promoting trust amid environmental variability. Strong ties enhance information sharing, mutual understanding, and relational stability, helping firms navigate volatile conditions more effectively. The study contributes to the literature by integrating social exchange theory and social network theory, highlighting the need for firms to strategically manage their network relationships to foster cooperation and reduce risks associated with uncertainty.