Contractual Governance, Relational Governance: Why Do Firms Continue Drafting Contracts?

Abstract

Governing relationships effectively is central to marketing channel performance. Relational governance theory singles out two key mechanisms, contracts and norms, and suggests that norms surpass contracts in their ability to minimize opportunistic behaviour. Recent research has disputed that perspective though, by noting the dark side of norms and calling for a renewed perspective on contractual governance. An analysis of existing empirical research on contractual versus relational governance of marketing channels leads into the proposal of four research directions that can help better understand why firms keep drafting contracts.