This paper discusses the theory behind ex ante governance decisions in inter-organizational
relationships and uses an explanatory case study involving an inter-firm relationship
between two European airlines to empirically assess the theoretical propositions. The
case study complements existing literature by providing a comprehensive explanation
of opportunism-based ex ante governance decisions. It deconstructs opportunism, links
such behavior to unique governance responses and discusses the ex post effects of ex ante
governance decisions in light of the necessary development of trust and relational governance
mechanisms. In this context, it also takes account of differences in bargaining power
between the two partners and examines the “control strategy” employed by the dominant
partner. The paper offers further insights into the influence of bargaining power on
governance decisions by illustrating how cooperating partners can address ex ante power
differences. An interesting finding from this case study is the fact that the more powerful
of the two partners deliberately relinquished the advantages associated with its ex ante
privileged position. It accepted a governance structure that virtually equalized positions to
motivate its weaker partner to participate and stimulate the development of trust