Effectiveness of Contracts in Marketing Exchange Relationships: A Meta-analytic Review

Abstract

Exchange partners devise and implement contracts to improve performance within a relationship. Detailed, specific contracts provide a blueprint designed to guide desired interfirm behavior, and firms may use the contract to resolve disputes and to ensure the partner fulfills its obligations. Extant research, however, reports contradictory findings on the efficacy of contracts. The objective of our research is to provide a quantitative review of contract specificity and utilization in business-to-business marketing. The findings suggest that specificity and utilization enhance economic performance, relationship quality, and relational norms. Contract specificity is found to discourage opportunism, whereas contract utilization exacerbates opportunism. Theoretical (specific investments, product complexity, and relationship length) and contextual factors (product type, market type, and study location) moderate influences of contractual properties on exchange outcomes. Discussion of these results addresses the implications of the meta-analysis for marketing theory and practice.