Contracts, relationships and innovation in business-to-business exchanges

Abstract

Structured Abstract:Purpose This paper contrasts two approaches to the study of contracts in business and industrial marketing: First, as a legal document in shaping at the outset exchanges and interactions, for instance in projects; and Second, as relational norms in becoming integrated into a business relationship through interactions, for instance as a resource. Approach The paper draws on cross-case comparison of three projects as actors develop an engineering service for optimising the maintenance of large-scale capital equipment by analysing data acquired from user records and in real time from sensors. Comparison is by coding interview and observational data as micro-sequences of interactions among actors. Findings Preparing contracts allows a project to commence and is an early form of interaction, intensifying new relationships, or cutting into and recasting established ones. Relational norms augment and can supersede the early focus on the contract, so incorporating incremental innovation and absorbing some uncertainties. Limitations The research approach benefits from detailed comparison and captures some variety across its three cases, but our discussion is limited to theoretical generalization. Practical Implications Our analysis and discussion highlights and focuses on when different approaches to understanding contracting are more apparent across durable business relationships. Transitions from a contractual document to a view of relational norms are subtle, vulnerable and not always made successfully. Originality This paper's originality is in it comparison of overlapping approaches to understanding businesses' uses of contacts in business and industrial marketing, of contract and relational norms. It develops a valuable research proposition, in the transition from a mainly contractual to a mainly relational uses of contracts, so identifying contract as a particular business resource, to be deployed and embedded.

Reconciling contracts and relational governance through strategic contracting

“…The trust building that lubricates business transactions is therefore something which mainly takes place besides – and perhaps even despite – the formal contract. This separation echoes the distinction between formal contracts and relational governance that goes back to the studies by Macauley (1963) and Macneil (1978, 2000) where relational governance has received more attention in the industrial marketing literature (Ehret and Haase, 2012; Mouzas and Blois, 2013; Möhring and Finch, 2013; Yang et al , 2017). As succinctly expressed by Möhring and Finch (2013, p. 406):…”

“…This separation echoes the distinction between formal contracts and relational governance that goes back to Macauley (1963) and Macneil (1978; where relational governance has received more attention in the industrial marketing literature (e.g. Ehret and Haase, 2012;Mouzas and Blois, 2013;Möhring and Finch, 2013;Yang et al, 2017). As succinctly expressed by Möhring and Finch (2013: 406): "Contracts are under-researched in business-to-business marketing, which is remarkable given their ubiquity in practice.…”

Interactional and procedural practices in managing coopetitive tensions

“…Previous literature on coopetition has often stressed the value of contracts in managing tensions (Ritala et al , 2009; see also Möhring and Finch, 2015). However, there are also studies questioning the role and value of contracts (Fernandez et al, 2014).…”

Governance and customer value creation in business solutions

“…By making standards and expectations explicit, contracts reduce conflict, help to achieve mutual goals and gains (Williamson, 1996) and allow suppliers to focus on addressing customers' needs, thereby creating value. Contracts can also intensify newly established relationships (Möhring and Finch, 2015), which is important, given that service solutions are typically "one-off." While the codification of explicit standards may infuse contracts with a sense of rigidity, we expect that the clarity surrounding roles, obligations and interactions in explicit contracts are likely to promote customer value.…”