Using Psychological Theories to Shape Partner Relationships Through Contracting
48 Pages Posted: 18 Feb 2008
Date Written: February, 18 2008
In this paper, we combine insights from economics and psychology to understand how managers can use contract framing to shape interfirm relationships. Although the two differentially framed contracts may be economically similar, this framing can have very different psychological effects on how the parties view the relationship. To understand these effects, we draw on Regulatory Focus theory and Expectancy Violation theory to understand how choosing to confirm or violate the expectations set by the contract framing can shape the relationship, leading to the development of a contracting capability.
Keywords: contracting capability, interfirm relationships, psychology
JEL Classification: L14
Suggested Citation: Suggested Citation