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

This paper aims to contrast 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.

The paper draws on cross-case comparison of three projects, as actors develop an engineering service for optimizing the maintenance of large-scale capital equipment by analyzing real-time data from sensors and user records. Comparison is by coding interview and observational data as micro-sequences of interactions among actors.

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, thus incorporating incremental innovation and absorbing some uncertainties.

The research approach benefits from detailed comparison and captures some variety across its three cases, but the discussion is limited to theoretical generalization.

The 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.

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, thus identifying contract as a particular business resource, to be deployed and embedded.