A comprehensive theoretical framework for sustainable network contracts: Contracting dimensions and Contract...

Area of Science:

• Supply Chain Management
• Contract Theory
• Sustainability

Background:

• Supply chain disruptions lead to performance failures and poor return on investment (ROI).
• Existing contract theories lack a focus on sustainability principles in network governance.
• A gap exists in the literature regarding the theory of sustainable network contracts.

Purpose of the Study:

• To develop a theoretical framework for sustainable network contracts.
• To extend existing contract dimensions by incorporating sustainability.
• To provide a practical framework for managers to evaluate and implement sustainable contracts.

Main Methods:

• Extended Transaction Cost Economics and Relational Exchange Theory to include sustainability.
• Proposed a five-step approach and analytical tool for theory building, using costs, benefits, and risks (CBR) factors.
• Collected interview and cost data, integrated behavioral elements, and used constrained optimization techniques.

Main Results:

• Developed the sustainable contracting framework (SCF)/theory.
• Mapped eight distinct contract types onto the CBR-space, considering network externalities and risks.
• Demonstrated practical application and relevance of sustainable network contracts.

Conclusions:

• Sustainable network contracts are crucial for mitigating supply chain disruptions and enhancing ROI.
• The proposed SCF provides a valuable tool for managers to improve contract evaluation and decision-making.
• The framework aligns buyer and supplier interests, safeguarding network investments through a coordinated sustainable approach.