Contracts as cornerstones in relationship building

Abstract

PurposeThe purpose of this paper is to investigate the significance of contracts in long‐term relationship building comparing public and private contexts. In order to investigate this, the paper addresses literature about relationship building, negotiation process and the role of contracts.Design/methodology/approachThis paper takes a qualitative approach and is based on comparative studies between the private and public sectors with the main focus on four companies within the public transport and paper industry. The unit of analysis is the enterprise's use of contracts in relationships. The analysis is based on the empirical material received from interviews and contextual analysis of the actual contracts. Internal and external documents have also been used in the analysis. The paper has categorized the material into different areas in relation to the relationship building.FindingsIn this paper the authors highlight the importance of contracts in the interaction between companies in different business situations. The findings in this study show that contracts function as cornerstones in relationship building. The conclusions also indicate that the type of contract used is depending of the uncertainty in the business relationship due to the relationship lifecycle. A main contribution from the study is that contracts affect the relationship building. In the private sector the relationship forms the contract while in the public sector the contract forms the relationships.Originality/valuePrevious research has mainly focused on how to manage long‐term relationships where the relationship is the result of a gradual development process between the parties and where there are few or next to no regulations regarding the interactions between the parties, for example who are involved or how the counterparty should be selected. Consequently, the results of this study adds to the literature the importance of contracts in long‐term relationship building comparing private and public contexts. Further, previous research has acknowledged that there is a need for more empirical research concerning the nature and form of contractual arrangements.

“Forget it, let’s go with a handshake”: contracting practices of exporting small to medium size enterprises (SMEs)

“…Most of the studies on the use of contracts in industrial marketing (Camén et al , 2012; Ferguson et al , 2005; Hoetker and Mellewigt, 2009; Möhring and Finch, 2015; Osmonbekov et al , 2016; Petersen and Østergaard, 2018; Poppo and Zenger, 2002; Poppo and Zhou, 2014; Rai et al , 2012; Yu et al , 2006; Saussier, 2000), focus on domestic business-to-business exchanges [2]. Contracts play multiple roles including providing structure to the initial agreement, fostering the platform for relational interaction and enabling the ongoing modification of the exchange relationship (Möhring and Finch, 2015).…”

“…Not all exchange situations necessarily lend themselves to formal contractual governance: Hoetker and Mellewigt (2009) demonstrate that contractual governance mechanisms are best suited for strategic alliances involving property (as opposed to knowledge-based) assets. Likewise, Camén et al (2012) observe that formal contracts in the marketplace are not always conventional (i.e. transactional or arm’s length).…”

“…Scholarship on contractual governance suffers from a constricted conceptualization of contracting practices. Contracting practices are defined as contractual governance (Camén et al , 2012; Yu et al , 2006) or using narrowly defined constructs such as contract complexity (Poppo and Zenger, 2002; Poppo and Zhou, 2014), contract specificity (Griffith and Zhao, 2015; Zhou and Xu, 2012), contract inclusiveness and obligatoriness (Lusch and Brown, 1996) and contract enforcement (Ju and Gao, 2017; Osmonbekov et al , 2016). Further, past research investigates no more than two of these constructs.…”

Quality and legal aspects in public care procurement

“…However, detailed and static contracts reduce the scope for flexibility in developing the contractual relationship (Camén, 2010) and can thus impact quality management. This lack of flexibility is stronger under public procurement legislation than in long-term private industry relationships (Camén et al, 2012). A contract awarded under the Act has a 652 TQM 28,4 fixed expiry date, which means that the relationship between the contracting authority and the provider ends when the contract expires.…”

Determinant Factors That Influence Supplier Selection for Online Business Sellers in Malaysia.

“…Significance of the Study:-In previous research, there are a lot of literatures about quantity, relationship, reliability, flexibility, quality, delivery, cost, intention and behaviour in various areas (Camen et al, 2012;Teng& Jaramillo, 2010). Even though there are a lot of literatures in these variables, there are very limited scholarswho focused on determinant factors that influence supplier selection for online business sellers in Malaysia.…”