Open AccessDeterminants of contract renewals in business-to-business relationships
Author(s) -
Sandro Cabral,
Priscila Fernandes Ribeiro,
Sanders Zurdo Romão
Publication year - 2019
Publication title -
rausp management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.235
H-Index - 4
ISSN - 2531-0488
DOI - 10.1108/rausp-04-2019-0057
Subject(s) - asset specificity , business , negotiation , originality , transaction cost , interdependence , value (mathematics) , database transaction , industrial organization , product (mathematics) , set (abstract data type) , asset (computer security) , microeconomics , marketing , contingency , economics , programming language , linguistics , geometry , mathematics , computer security , philosophy , machine learning , creativity , political science , computer science , law
Purpose This paper aims to analyze the underlying factors of contract renewals in business-to-business (B2B) contracts. Design/methodology/approach The authors build a unique data set with 296 contracts signed between a major firm supplying petrochemical goods and its 128 customers between 2013 and 2016. They use Insider Econometrics as their methodological approach. Findings The econometric results suggest that contracts involving higher volume of trade, higher levels of dedicated assets representing seller’s specific investments in each transaction, and contracts comprising more than one product present an increased likelihood of being renewed. Research limitations/implications Although limited to a single organization, this paper contributes to management theories focused on buyer–supplier relationships in which coordination between interdependent parties is required. Practical implications Practitioners engaged in B2B relationships may benefit from the findings to shape their bargaining strategies in contexts of high levels of asset specificity and bilateral dependence. Originality/value This paper contribute to theories related to the strategic negotiation between buyers and suppliers by emphasizing the importance of asset specificity in a nuanced and multifaceted fashion, by highlighting aspects related to resource dependency, and idiosyncratic characteristics on contract renewal.