Determinants of contract renewals in business-to-business relationships

Abstract

Purpose -This paper aims to analyze the underlying factors of contract renewals in business-to-business (B2B) contracts.Design/methodology/approach -The authors build a unique data set with 296 contracts signed between a major firm supplying petrochemical goods and its 128 customers between 2013 and 2016. They use Insider Econometrics as their methodological approach.Findings -The econometric results suggest that contracts involving higher volume of trade, higher levels of dedicated assets representing seller's specific investments in each transaction, and contracts comprising more than one product present an increased likelihood of being renewed.Research limitations/implications -Although limited to a single organization, this paper contributes to management theories focused on buyer-supplier relationships in which coordination between interdependent parties is required.Practical implications -Practitioners engaged in B2B relationships may benefit from the findings to shape their bargaining strategies in contexts of high levels of asset specificity and bilateral dependence.Originality/value -This paper contribute to theories related to the strategic negotiation between buyers and suppliers by emphasizing the importance of asset specificity in a nuanced and multifaceted fashion, by highlighting aspects related to resource dependency, and idiosyncratic characteristics on contract renewal.

Satisfaction in Business Relationships Between Companies and Dark Side Behaviour: A Literature Review

“…Other theoretical frameworks utilized encompass social psychology Swann Jr. and Gill, 1997), relationship marketing (Dutta et al, 2020;Corsaro, 2015;Gazdecki, 2018;Huderek-Glapska and Nowak, 2016;Poddar et al, 2013;Visentin and Scarpi, 2012), social capital (Miocevic, 2020;Villena et al, 2011), role theory (Gao et al, 2016), economics (Cabral et al, 2019;Raeside and Khan, 2015;Gërdoçi et al, 2017;Dutta et al, 2020), international relations (Barnes et al, 2015;Leonidou et al, 2011), the resourcebased view (Chung et al, 2016;Homburg and Tischer, 2023), and Dynamic Capabilities Theory (Homburg and Tischer, 2023).…”