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Understanding and resolving major contractual breaches in buyer–seller relationships: a grounded theory approach

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Abstract

In business-to-business relationships, sellers are often faced with instances of contractual breaches by buyers. In many cases, relationship factors preclude legal enforcement of contract terms, requiring sellers to explore alternate resolution options. Literature on contractual breaches has primarily focused on enforcement options based on terms specified in the contract. However, little is known about how companies deal with contractual breaches by their customers when legal enforcement is not a viable option. The authors use a grounded theory approach to investigate this important issue. Based on in-depth interviews with 40 supplier managers and executives in multiple industries, the authors identify: (a) types of out-of-contract alternatives for resolving breaches, (b) factors that lead to use of enforcement options outside the terms specified in the contract, (c) contextual influences, and (d) individual and firm-level consequences of outside-of-contract enforcement.

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Acknowledgment

The authors would like to thank the editor and three anonymous reviewers for their helpful comments and suggestions.

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  1. Henry W. Bloch School of Management, University of Missouri-Kansas City, 5110 Cherry Street, Kansas, MO, 64110, USA

    Jeff S. Johnson

  2. College of Business Administration, University of Nebraska-Lincoln, 512 N. 12th Street, Lincoln, NE, 68588, USA

    Ravipreet S. Sohi

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Johnson, J.S., Sohi, R.S. Understanding and resolving major contractual breaches in buyer–seller relationships: a grounded theory approach. J. of the Acad. Mark. Sci. 44, 185–205 (2016). https://doi.org/10.1007/s11747-015-0427-8

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