New Product Creativity: Understanding Contract Specificity in New Product Introductions

Abstract

Introducing new products necessitates that manufacturers not only carefully craft the initial contract terms with retailers but also consider how the specificity of the terms influences a retailer's relational behaviors throughout the duration of the contract, contingent upon the new product's success. The authors develop a series of hypotheses to investigate new product introductions using a multimethod design consisting of a survey of manufacturers and a repeated measures experiment with retailers. The results indicate that manufacturers craft increasingly specific contract terms as new product creativity increases when frequency of new product introductions and performance ambiguity are higher. When they are lower, the positive influence of new product creativity on contract specificity weakens and can in some instances become negative. The results also indicate that there is no significant change in a retailer's relational behaviors throughout a contract's duration when contract specificity is lower, regardless of the new product's success. However, under the condition of higher contract specificity, the retailer's relational behaviors increase (decrease) over a contract's duration when the new product is successful (unsuccessful).

Inter-organizational governance: a review, conceptualisation and extension

“…More recent studies on inter-organizational governance have moved towards exploring contractual governance in further detail. For example, the literature shifted its focus towards exploring issues pertaining to contract design (Bercovitz and Tyler 2014;Dean, Griffith, and Calantone 2016;Ozmel et al 2017), the content of the contract (Duplat and Lumineau 2016;Schilke and Lumineau 2018) and the link between contracting and a range of performance outcomes such as supply chain alignment (Selviaridis and Spring 2018), new product performance (Dean, Griffith, and Calantone 2016), exchange performance (Poppo and Zhou 2014) and dispute resolution (Lumineau and Malhotra 2011).…”

Effects of Contract Ambiguity in Interorganizational Governance

“…First, researchers have examined the content of written contracts as formal governance mechanisms, primarily focusing on the concepts of contract specificity and contract completeness. 1 “Contract specificity” is defined as the extent to which the contract states elements, such as implementation procedures, technical specifications, and resolution of problems (Dean, Griffith, and Calantone 2016; Mooi and Ghosh 2010; Ouchi 1980), whereas “contract completeness” is defined as the extent to which relevant clauses are codified in a contract ex ante and in subsequent ex post governance efforts (e.g., Kashyap, Antia, and Frazier 2012). Research on these contracting aspects have increased our understanding of interorganizational effectiveness, finding, for example, that the chosen level of contract specificity is a trade-off that balances ex ante contract costs with ex post transaction problems (Mooi and Ghosh 2010), and that greater contract completeness minimizes opportunism (Ouchi 1980).…”

“…Although written contracts serve as the foundation of a franchise system, they are but one aspect of governance (i.e., noncontractual elements also affect the administration of a relationship and therefore should be investigated jointly with written contracts; e.g., Li, Poppo, and Zhou 2010; Lusch and Brown 1996; Poppo and Zenger 2002). For example, Dean, Griffith, and Calantone (2016) find that greater contract specificity enhances a retailer’s relational behaviors in supporting the manufacturer’s product throughout the duration of the contract. Heide (1994, p. 81) argues that socialization (i.e., the process by which new parties learn skills and internalize another party’s values, goals, and rules; Heide and Wathne 2006), complements written contracts.…”

Beyond listening: the distinct effects of proactive versus responsive customer orientation on the reduction of uncertainties at the fuzzy front end of innovation

“…In line with prior research (Narver et al, 2004;Atuahene-Gima et al, 2005;Yi et al, 2006;Ingram et al, 2014;Dean et al, 2015), we used the hierarchical multiple regression analysis procedure that Cohen et al (2003) suggest to test interaction effects. Before carrying out the analysis, data was mean-centered to avoid multicollinearity (Cohen et al, 2003;Spanjol et al, 2011;Wang et al, 2015).…”