Coopetition and framework contracts in industrial customer-supplier relationships

Purpose – The paper aims to investigate how business-to-business key accounts deal with the consequent tension between cooperation and competition, and how they can resolve that relational paradox, using framework contracts. Design/methodology/approach – The paper argues that the role played by framework contracts can be ambivalent: as a tool to define cooperation with suppliers while simultaneously organising competition within suppliers, but by formalising such ambivalence, it does help to ease the tensions that may arise. To clarify such a conceptual and counter-intuitive ambivalence, the paper uses a case study that shows how framework contracts are used to solve the inherent tensions between cooperation with “preferred suppliers” and their price competition with invited “challengers”, in a competitive bidding situation. Findings – This study is a first step in an investigation of the role of framework contracts in a customer-supplier relationship, aiming to explain their use as they highlight the “coopetitive” nature of the relationship, turning it into something tangible and psychologically acceptable. Research limitations/implications – Because of the complexity of vertical “coopetition” and the research method adopted, the findings may not be generally applicable. Practical implications – This research offers an enlarged perspective for suppliers as well as customers to think over their own relationships (in an industrial setting). Originality/value – Little research has been conducted to date on vertical coopetition and the role and effects of framework contracts in the context of such complex customer-supplier relationships. This case study offers insights for practising managers and academics into the effective use of framework contracts.