Safeguards against Opportunism in Freelance Contracting on the Internet
| Date | 01 June 2018 |
| Author | Denis Strebkov,Andrey Shevchuk |
| Published date | 01 June 2018 |
| DOI | http://doi.org/10.1111/bjir.12283 |
British Journal of Industrial Relations doi: 10.1111/bjir.12283
56:2 June 2018 0007–1080 pp. 342–369
Safeguards against Opportunism in
Freelance Contracting on the Internet
Andrey Shevchuk and Denis Strebkov
Abstract
Based on a large sample of 5,756 Russian-speaking freelancers from an
international online labour market, this study providesrare quantitative evidence
of the external labour market where freelancers act under constant threat of
client-side opportunism. Weexplore how the formalization of agreements, social
embeddedness and mode of communication are associated with the incidence of
opportunism and further possibilities of resolving problems caused by agreement
violations. Social ties and face-to-face contact appear to be better safeguards
against opportunism in freelance contracting, which is largely informal. The
study has important implications for the debates about non-standard work,
online labour markets and job quality in the new economy.
1. Introduction
The trend towards non-standard work arrangements and moving various
aspects of work outside of the organization are well documented (Ashford
et al. 2007; Cappelli 1999; Connelly and Gallagher 2004; Kalleberg 2009).
Firms are increasingly relying on workers who are not regular employees,
including independent contractors and freelancers. This shift has increased
interest in the quality of the relationships between these workers and firms
(Barley and Kunda 2004; Connelly and Gallagher 2006; Osnowitz 2010).
There is a consensus in the literature that autonomous contracting involves
more insecurity, uncertainty and risk than standard employment (Blair 2003;
Dex et al. 2000; O’Mahony and Bechky 2006; Storey et al. 2005). However,
scholars have rarely examined the problem of opportunism in freelance
contracting when firms violate established agreements in many ways. Non-
payments, late payments and unilateral changes in schedules, budgets and
specifications at the firm level are common issues in freelance contracting
(Osnowitz 2010; Rodgerset al. 2014). The digitization of freelance contracting
The authors are at National ResearchUniversity Higher School of Economics, Moscow, Russia
C
2017 John Wiley & Sons Ltd.
Safeguardsagainst Opportunism in Freelance Contracting on the Internet 343
and the rise of online labour markets, with millions of participants relying
on the Internet to work from a distance, have created additional risks, which
have remained underexplored (Agrawal et al. 2015; Aguinis and Lawal 2013).
Relationships between freelancers and clients in the virtual environment
across spatial and political borders may lack important information and
interaction controls, as well as enforcement of established agreements and
open up further possibilities for opportunism.
Based on unique quantitative data from the international Russian-
language online labour market, we consider the problem of opportunism
in freelance contracting on the Internet. The general notions of contracting
and opportunism as ‘self-interest seeking with guile’ (Williamson 1985)
are appropriate for researching external labour markets based on an array
of discrete business-like transactions between workers and firms. Such an
approach allows us to apply contracting theories from other fields (such as
transaction cost economics, economic sociology and organizational studies)
and then to generalize findings from the labour market to other types of
economic relations (Kallebergand Reve 1993; Rousseau 1995). An important
task of empirical research on employment relations and labour markets is to
examine the consequences of the various dimensions of contracting (Kalleberg
and Reve 1993). We explore how the formalization of agreements, social
embeddedness and mode of communication are associated with the incidence
of ex-post opportunism. Since opportunism does not always lead to the end
of the relationship (Rousseau 1995), we go further by investigating how three
dimensions of contracting aect the possibility of settling disputes caused
by agreement violations. This gives us a better understanding of safeguards
against opportunism in external labour markets. Revealing the contradictory
experience of non-standard workers, such as freelancers, in the new economy,
we contribute to labour market research as well as to the general literature
on the role of institutional arrangements and social relations in economic
exchange.
2. Conditions of opportunism and safeguards: theoretical framework
Contracting implies an exchange agreement between parties that has legal,
social and psychological underpinnings (Kalleberg and Reve 1993; Rousseau
1995). According to Williamson (1985, 1993), opportunism is ‘self-interest
seeking with guile’ and may include lying, cheating and stealing, violating
the spirit of an agreement, deliberately inducing a contract breach, and
other forms of strategic behaviour. Although scholars diverge in theoretical
explanations, all assume that some conditions of economic exchange
facilitate opportunistic behaviour more than others. Otherwise, there are
safeguards against opportunism. We address three dimensions that may
aect the incidence and the extent of ex-post opportunism in contracting,
as well as the possibilities of consequent problem resolutions. These
dimensions include the form in which agreementsare made, the characteristics
C
2017 John Wiley& Sons Ltd.
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