Relationship Marketing and Contract Theory

• Main Authors: SESHADRI, Sudhi, MISHRA, R.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2004
• Subjects: Relationship marketing; Contracts; Procurement; Program management; Marketing
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/657; https://doi.org/10.1016/j.indmarman.2004.03.004
• Institution: Singapore Management University

The theoretical foundation of contracts and their limitations in governing exchange between firms is a current area of research in economics and business. The relationship marketing approach in business-to-business markets focuses on aspects in interfirm exchange that contracts cannot deal with efficiently. However, the ability to use contractual forms of governance where possible is crucial to the enhanced scope of relationship marketing management. We argue that contracts and relationships are complementary and that contracts provide an evolving governance structure for relationships. We examine the evolution of interfirm exchange theories in this framework and illustrate the convergence between contract theory and relationship marketing management, with examples from procurement in the supply chain, capacity reservation contracts, and program management.