Contract length and buyer satisfaction with the supplier in B2B partnerships: Evidence from an experiment

Abstract

Prior research has largely ignored the relationship between contract length and buyer satisfaction with the supplier when the supplier cooperates, competes, and coopetes (i.e., cooperates and competes at the same time). To address this gap, we propose one main hypothesis and three moderating hypotheses for cooperation, competition, and coopetition. The main hypothesis investigates whether short-term (vs. long-term) contracts negatively influence buyer satisfaction with the supplier. The cooperation and competition hypotheses separately argue that supplier cooperation and competition positively moderate the relationship between contract length and buyer satisfaction with the supplier, whereas the coopetition hypothesis argues that supplier coopetition negatively moderates the relationship between contract length and buyer satisfaction with the supplier. We test these hypotheses in an experiment with 215 managers with substantial experience in serving as partner or alliance managers in their respective organizations. The findings indicate that short-term (vs. long-term) contracts have a negative effect on buyer satisfaction with the supplier, thereby supporting the main effect. Furthermore, the negative effect of short-term contracts becomes weaker in cases of high levels of supplier cooperation or high levels of supplier competition. Yet, when the level of supplier coopetition increases, the adverse effect of short-term contracts on buyer satisfaction becomes stronger.