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Chapter 5. Theoretical framework

5.3 Operationalization of norms in empirical studies

form and develop such provisions with a common, harmonized understanding of possible rewards and punishments (Ivens and Blois, 2004).

5.3.1 Operationalization of norms by studies in the “blue” cluster

Studies in the “blue” cluster are interested in performance or a measurable outcome of interfirm exchanges over time. These are, without exception, quantitative studies that look at various measurements of business performance over time, depending on the nature of business relationships between the firms (discrete or relational) and the objective, measurable uncertainty in the environment, such as availability or scarcity of resources, technological advances, and so on. These studies operationalize contractual norms through, for instance, percentage of delayed and failed deliveries (Fink et al., 2008b), measurements of industries and sizes of business actors (Fink et al., 2011), or innovativeness of a country or region (Grandori and Furlotti, 2019).

Three of the five studies in the “blue” cluster are conducted by the same or closely similar constellation of researchers (Fink et al., 2008a, 2008b, 2011), and these three develop the same or closely similar operationalization of contractual norms. The authors here rely on seven “normative dimensions” proposed by Kaufmann and Dant (1992):

(1) relational focus – the extent to which the exchange relationship is perceived as relatively more important to the parties than the individual transactions;

(2) solidarity – reflects the process by which an exchange relationship (as distinct from a series of discrete transactions) is created and sustained;

(3) mutuality – the requirement of a positive incentive to exchange for both parties;

(4) flexibility – if the change is to occur in the contracts between parties, it must conform to changes in the environment, and be permitted within the existing relationship, whether by implicit agreement or by law;

(5) role integrity – for the necessary predictability of the contract, the roles of the parties must remain relatively stable;

(6) restraint – the degree to which the parties restrain their use of legitimate power;


(7) conflict resolution – the social context in which the contracts are created and executed.

Kaufmann and Dant (1992) develop these dimensions with the purpose of making Macneil’s ten norms “more usable and measurable”. Each of the seven dimensions of commercial exchange (in the authors’ own terms) represent a spectrum of possible manifestations of contractual relationships, from discrete to relational. It is thus possible, the authors argue, to measure each of these dimensions on a Likert-like scale.

For instance, a lower degree of flexibility would point towards discrete exchange, the higher degree of relational focus norm would point towards relational exchange, higher reliance on trust, embodying the norm of solidarity, would point towards relational exchange, and so on.

In developing their dimensions, Kaufmann and Dant (1992) extensively reference Macneil’s work, but they do not propose any direct connections between their developed dimensions and Macneil’s ten norms. The authors also do not offer any explicit justification for organizing the dimensions in this way, as pointed out in a critique by Ivens and Blois (2004). Neither do Kaufmann and Dant follow Kaufmann’s earlier work (e.g., Kaufmann and Stern, 1988) or explain the discrepancies compared to dimensions suggested earlier (Ivens and Blois, 2004, present a detailed account of the discrepancies).

To conclude, in operationalizing the contractual terms, studies in the “blue” cluster pursue the easily quantifiable measurements that would help to interpret the nature of exchanges as, for instance, more or less flexible, more or less long-term oriented, or more or less explicit.

5.3.2 Operationalization of norms by studies in the “green” cluster

Studies in the “green” cluster take an interest in opportunistic behaviors and conflict resolution mechanisms within the different forms of contracting. The authors of these studies argued that a general property of relational exchanges is the parties’ acceptance of behaviors aimed at maintaining a relationship, and rejection of behaviors that promote individual goal seeking (Heide and John, 1992, Evanschitzky et al., 2016).

Thus, the relational focus – or the extent to which the relationship is valued by the parties more than own individualistic goals – is the key to understanding the exchanges.

The “green” cluster consists of nine studies that use the elements of qualitative research more frequently than other groups. Studies in this cluster also attempt to interview or survey both parties in the exchange. Gyau et al. (2011) develop the following operationalization of norms:

(1) communication and information exchange – the parties’ readiness to proactively share all information that can be useful to the other party;

(2) power avoidance and restrain – the parties’ expectation that no party will use their legitimate power against the other party’s interest;

(3) cooperation or jointness – the parties’ ability to coordinate tasks and activities to maintain and develop the contractual relationship;

(4) social bonds – the commitment of the parties to one another and personal relationships developed as a result of economic exchange;

(5) flexibility – the parties’ readiness to adapt the existing contracts to changing mutual interests and environmental conditions; and

(6) conflict resolution – the parties’ ability to use informal mechanisms and general social norms to resolve conflicts.

The theoretical frame of reference for the “green” studies varies vastly – from the already mentioned Kaufmann and Dant, 1992, to social exchange literature and Granovetter’s (1973, 1985) notion of ties specifically, to strategy literature on trust and cooperation (Zaheer and Venkatraman, 1995). A common factor for the “green” cluster is that direct references to Macneil and relational contracting are scarce, while the influence of transaction costs economics, behavioral economics, and strategy is strongly pronounced. With minor variations, the studies use 3–6 “relational norms” that the authors devise themselves based on varied inspiration sources, and additionally use measurements related to individual behaviors. For instance, Huo et al. (2016) add to their questionnaire questions related to shirking – or intentional passive destructive behavior by one of the parties, and poaching – or using the relationship and its resources to pursue own individualistic interests. Another example is Benoit et al. (2019), where the authors develop “aggregate dimensions of relationalism” – procedural justice, distributive justice, informational justice, and interpersonal justice – that each contain a combination of discrete and relational contractual norms.

5.3.3 Operationalization of norms by studies in the “red” cluster

The “red” cluster studies look at governance modes moderated by various contractual norms. This is the largest group, consisting of ten studies that operationalize the contractual norms most closely to Macneil’s ten norms. Ott and Ivens (2009) term the behaviors of parties in exchange as “norm-based actions” that divide, following the economics theory, into actions that are guided by economic rationality and actions that are guided by social norms. They further argue that the key to understanding the nature of exchange – whether it is economic norm-based or social norm-based – lies within the regulatory mechanisms behind (1) the parties’ expectations of each other’s behavior, and (2) the sanctions for failing the expectations or the premises of exchange. The contractual norms are scattered across all the different behaviors. The “purely discrete”

norms are implementation of planning and effectuation of consent – the group enhancing discreteness and presentation. The rest of the norms are essentially relational, but they may present themselves as more or less economic based or social

norm-based in various contractual relationships. Based on the norms’ reliance on situations and contexts, some studies in the “red” cluster devised a third mode of exchange – situational exchange – as a middle ground between discrete and relational exchanges (Tuusjarvi and Möller, 2009).

5.3.4 Operationalization of norms by studies in the “yellow” cluster

The “yellow” cluster is the smallest group, consisting of three legal studies that discuss the nature of business contracts. This group only marginally contributes to the purpose of my review. The studies discuss the business contracts in terms of being guarded by either explicit legal norms or implicit social norms. The authors conclude that most of the business contracts cannot rely strictly on one or the other group of norms, but rather incorporate the both legal and social norms (Raskolnikov, 2008; Beheshti, 2016). The studies in the “yellow” cluster follow the ten contractual norms in Macneil’s original terms.

Below, I present my review conclusions, where I also add my reflections on relational contracting theory usage in entrepreneurship research.