Contractual Governance, Fairness, and Extra-Role Altruistic Behavior in Chinese Buyer–Seller Relationships

Abstract

ABSTRACT Purpose This article aims to investigate how the control and coordination functions of the contract enforcement of a firm influence the extra-role altruistic behavior (ERAB) of its partner through distinct perceptions of fairness in buyer-seller relationships. It also examines how a critical institutional factor, marketization distance, moderates the influence of contractual governance on fairness. Methodology A survey was conducted on 627 distributors in China. Findings Our empirical analysis reveals that the seller’s contractual coordination encourages the buyer’s ERAB by increasing its perceptions of distributive, procedural, and interactional fairness, while contractual control inhibits the buyer’s ERAB by reducing its perceptions of distributive, and interactional fairness. Further, marketization distance weakens the positive effects of contractual coordination on all three types of fairness, but positively moderates the effect of contractual control on distributive fairness. Implications These findings make contributions to both research and practice in supply chain management.