Contracting capabilities : how can contracting capabilities be measured and developed, and how do they impact firm performance in B2B relationships?

Abstract

This master thesis builds on previous research by Argyres and Mayer (2007). They argue that a firm´s ability and capacity to perform tasks related to contractual work can be defined as contracting capabilities. These capabilities are a competitive advantage for firms and can enhance their performance. To my knowledge, no empirical studies on contracting capabilities are conducted with an attempt to measure a firm’s contracting capabilities. Research on how contracting capabilities can be developed is also limited. I therefore aim to fill this gap by investigating how contracting capabilities can be measured and developed. I also seek to examine the impact firm characteristics have on companies level of contracting capabilities. Additionally, I will investigate how contracting capabilities influence firm performance. This study has a quantitative approach in which key respondents were located by phone. The key respondents received an online questionnaire. Out of 147 Norwegian based export companies that agreed to participate in the study, I received 76 responses. The results show that contracting capabilities can be measured along four dimensions; term specification and writing, contract adaptation, internal organizing and relationship development and maintenance. Experience is positively associated with firms’ contracting capabilities. Contrary to my predictions, resource slack, age of firm, size of firm, internal consult, external consult and training shows no significant relationship with contracting capabilities. Out of the four identified dimensions of contracting capabilities, the results show a positive relationship between internal organizing and firm performance. The other dimensions do not receive support. Depending on the way firms adapt their contractual activities to their organization and allocate human resources, contracting capabilities can be developed and enhance companies´ performance