Great Expectations: the Moderating Effects of Supplier Service Model and Market Dynamics on Relational Contract Performance

Under a relational contract the value placed on expected future business must outweigh the short-term temptations to deviate for the buyer-supplier relationship to persist. Operational and relational factors that influence this trade-off have been explored, however there is a considerable lack of research on the moderating effects of supplier and market characteristics. We offer insights on how supplier service models and market dynamics impact suppliers’ decisions to renege on the relational contract.