Abstract
As one of the founding editors, it is so pleasing to see our second volume in production and to have our first two issues published for 2016. It is also wonderful to know we have several papers under revision and also currently under review. For such a new journal in a very competitive and dynamic environment this is heartening. In this editorial I want to make a couple of important announcements, before talking about this latest issue. Before I go on, I would like to send out some thanks to various people on behalf of the editorial team. First, thank you to each and every one of our board members for the assistance we have received since we began the journal last year, and especially as we continue to work together to grow our journal’s reach, especially its visibility, impact and positioning.
To each of our reviewers, we cannot express deeply enough how thankful we. For each paper our reviewers give their time, share their knowledge and provide advice that helps authors submitting to our journal to produce work they can be proud of. We know how many journal editors ask you to review, and choosing to review for us while also continuing to do all the other tasks expected of you as scholars is acknowledged and greatly appreciated. So, to each and every one of our reviewers, thank you, because without you we would not survive.
Thank you to Sage and IACCM. We have written in previous editorials how important that relationship is, and the power and prestige that these two organizations bring to JSCAN. From the annoying emails I send at various times of the day regarding how to work the Manuscript Central system, to simple questions and feedback, or organizing workshops and executive summaries at the IACCM conference, thank you.
Most of all, thank you to all the authors who submit their papers to us. We hope that submitting to JSCAN has helped improve your paper, whether it is published here or subsequently published elsewhere. Thank you for submitting work to us that, for many of you, has come out of years of research and hard work. Whether your paper is accepted or desk rejected, we take the task seriously and try to offer you the best advice possible to develop your work. Most of all, we try to do this quickly; sometimes, for various reasons, this is not always possible, but typically we have a great turnaround time and always try to give you a final decision after the first review. Pleased keep those articles coming, spread the word and share your articles with others, and remember to recommend JSCAN to your colleagues as a place to publish their relevant works. Once again, authors, thank you. The reality is: no authors, no journal.
The JSCAN best paper award
Some great news is that we established the JSCAN best paper award. The award recognizes a paper that is judged to make an excellent contribution in relation to the aims and scope of the journal. Recipients receive a certificate and £2000 (approximately US$7800 at current exchange rates). We are so proud and happy to announce that the winner of the Best Paper Award for Volume 1 (2015) is: Inter-organizational conflicts: Research overview, challenges, and opportunities, by Fabrice Lumineau (Purdue University), Stephanie Eckerd (University of Maryland) and Sean Handley (University of Notre Dame). Journal of Strategic Contracting and Negotiation 2015; 1(1): 42-64. Abstract While inter-personal conflicts have attracted much attention from scholars and practitioners over the last two decades, our understanding of inter-organizational conflicts remains limited. This paper critically assesses current literature on inter-organizational conflicts. We first discuss the specific features of conflicts at the inter-organizational level. Second, we provide an overview of both qualitative and quantitative research conducted in the field. Third, we make suggestions for future research on inter-organizational conflicts. We specifically suggest opportunities to develop theoretical bridges with other streams of literature and to build multi-level models of conflict management. We then discuss important empirical issues associated with doing research on conflicts between organizations and provide recommendations to overcome these challenges.
The winners are chosen from regular papers from that year’s volume. Papers authored or co-authored by the editors-in-chief, and essays and book reviews are not eligible. This year, the process to select the best paper proceeded by asking all our editorial review board to recommend their choice; the editors-in-chief then looked at the recommendations to make a final decision. While this method worked, we realize that this put our editorial board under some pressure, as it is unrealistic, and stretching the friendship, to ask you to read all papers to make a judgment. So we will refine the process to make it more efficient and less taxing on our editorial members. However, to all of you who voted and gave feedback, thank you so much. The award is very important and, given the quality of those papers considered, we look forward to continuing this award as a central part of the journal.
Before I close, I would like to make a call for papers in two specific areas. I also welcome proposals for special issues in these areas, so if you have ideas email me at
Finally, I leave it to my wonderful colleagues Thomas D Barton, Gerlinde Berger-Walliser and Helena Haapio to give us their excellent summary of the papers in this regular issue.
Jouko Nuottila, Osmo Kauppila and Soili Nysten-Haarala explore the Proactive Law premise that better contracting requires collaboration between lawyers and commercial professionals (“Proactive contracting: Emerging changes in attitudes toward project contracts and lawyers’ contribution”). The authors state clearly the Proactive Law position: it “promotes an agenda of revising business lawyers’ behavior: Leave some of the safeguarding and preparing for litigation and start to contribute to business objectives and facilitate the co-creation of value in projects [citation omitted].” But how do lawyers and managers feel about such collaboration, and how far has it progressed? To test these questions, Nuottila et al. surveyed lawyers and business managers throughout a range of industries concerning their beliefs and attitudes about the purposes of project contracts, and their respective roles in creating, administering and handling problems relating to project contracts.
The results were encouraging. At least among the lawyer membership of the association surveyed, that evolution is well underway: “The research results indicate that managers and lawyers share the same view that contracts are made for business objectives and benefits.” That spirit should provide a sound foundation on which contracting innovations can be built, at least regarding the purposes and everyday management of project contracts.
The legal and business populations still diverge, however, in two respects: first, in the effectiveness of current collaborative efforts; and second, regarding role expectations once trouble arises. The lawyers perceive existing collaboration with managers to be more effective than managers report. The authors point out two possible explanations for this: either “managers and lawyers experience the current situation differently, or they have different expectations of how the collaboration should work.” Further research would be required to tease apart those two possibilities.
As to the differences in the event of a contract dispute, both groups expect managers to play a strong role, but lawyers see themselves as being more essential to the process than managers perceive them to be. The authors hypothesize “this might imply that lawyers see dispute-related actions as legal tasks and managers see these actions as relational tasks,” a phenomenon long observed in the literature. As the importance of relational contracting and proactive views grows in coming years, however, perhaps both of the reported divergences between lawyers’ and managers’ perceptions will narrow.
One fascinating recent innovation in contracting is the emergence of “outcome-based contracts,” or OBCs, in which payment to a seller is based on performance measures in the buyer’s business following the supply of services, rather than flat fees for the services supplied. Such contracts are the focus of the impressive research and analysis undertaken by Eva Böhm, Christof Backhaus, Andreas Eggert and Tim Cummins in the article entitled “Understanding outcome-based contracts: Benefits and risks from the buyers’ and sellers’ perspective.” As the authors summarize, “OBCs entail the buying of relevant business outcomes rather than resources…required for their provision [emphasis supplied].”
The authors begin with a crucial distinction between two subcategories of OBCs: namely the “aOBC” which bases payments on services being made available, and the “eOBC” which bases payment on ensuing economic results. The authors offer this helpful explanation of the difference: “When customers pay for availability, they are being charged for the operational readiness of a system [citation omitted].” A service and maintenance contract used by Rolls-Royce generates a good example of an aOBC: “Rather than charging its customers for the jet engine and the time and material needed for service and repair, Rolls-Royce is being paid for the number of hours that its jet engines are operating in the air.” When service providers use an eOBC, by contrast, “the performance indicator is a monetary outcome variable, such as incremental revenues or profits.”
Böhm et al. not only describe the efficiency potential of OBCs, but use intriguing logic in generating questions that ultimately result in important practical guidance for choosing between using an aOBC versus an eOBC. Based on their multi-industry survey among 259 buyers and sellers using OBCs, the authors were able to analyze and distinguish the “benefits, risks, and overall contract performance” of each model.
Generally speaking, the research showed that “both buyers and sellers attach higher benefits to eOBCs as opposed to aOBCs.” However, under conditions of significant volatility, the risk/benefit perceptions are refined, leading the authors to distinguish circumstances in which managers may find aOBCs the better option. Market volatility in services supporting goods production can stem from two alternative sources: either high product innovation by particular buyers, or high technological turbulence in the broader industry in which services are to be supplied.
The authors hypothesized and the data confirmed that where product innovation in a buyer was high—i.e. the buyer was producing novel or rapidly changing goods—then the risks to a seller in supplying economic results-based services were perceived by sellers to be higher than where the buyer produced a stable, well-understood set of goods. That stands to reason: the more experience a services-seller has in supporting a particular production process, the more predictable the seller’s costs and effectiveness of methods. The consequence is a preference for sellers to use an aOBC rather than eOBC under such conditions. As the authors explain, “A reason for this might be that in case of highly innovative products, sellers’ internal capabilities are yet on the rise, as they themselves might still learn and experiment with ways of increasing operational efficiencies of their innovative offerings.”
In contrast, where an industry in general is experiencing technological turbulence—i.e. a high rate of technological change—then one might expect higher risk perceptions surrounding economic results by both buyers and sellers of production-related services. The survey data reveal, however, that although buyers do indeed elevate risk perceptions under conditions of technological turbulence, sellers do not. That divergence leads the authors to recommend use of eOBCs where technological turbulence prevails. When technological turbulence is high, buyers will find it difficult to keep up with the technological developments in their non-core markets. Staying up-to-date in these markets would take up too many resources and would prevent them from focusing on their core competences. In line with the transaction cost framework, from a buyer’s perspective it seems thus even more reasonable to outsource entire activities to suppliers, in order to minimize production costs.
The tie-in of the Böhm et al. article with the themes of the Special Issue is not quite so direct as that of the Nuottila article, but nonetheless underpins the discussion of OBCs. As the authors state in their conclusion, to be effective “OBCs demand more intense dialogue and a readiness to be more open and collaborative [than in traditional contract negotiations].” As a consequence, OBCs therefore appear to demand a greater readiness by personnel within both the buyer and the seller firm to cooperate and share information, not only at inception but throughout performance of their relationship. This may represent a significant cultural shift by one or both parties.
Finally, Brad S Long’s thoughtful, reflective article “Collective bargaining as the negotiation of competing stories: Implications for leadership,” describes how positional negotiation can sometimes be camouflaged as a battle between mutually exclusive “antenarratives”: that is, “story fragments, not fully formed, yet which are used intentionally by sensegivers in the hopes of shaping the future story upon which an organization is constructed and identities and plot come together.” Competing interpretations of issues or framings of meaning, in other words, can be strategic tools in negotiations—but can also raise enduring obstacles to effective communication and collaboration.
Transcending a conversation which otherwise would remain at cross-purposes because of competing narratives requires not just candor, but empathy and flexibility. It requires a self-reflectiveness about the limitations of one’s personal perspective, “enabling each party in negotiations the ability to foresee and account for the other, defuse objections and establish the basis for finding common ground.” Long’s discussion reminds us of the fundamentals: the bases on which communications are built, and the often difficult skills required to make communication effective.
Long’s example is familiar to many academics: a negotiation between a unionized faculty and a university administration over issues of workload, compensation and research support. The dialogue began with the construction of competing antenarratives from which the negotiations seemed never to recover. For the university administration, the storyline was that of “crisis:” a funding shortfall stemming from cutbacks in external government support, and internal deterioration due to decline in enrollment. Long, who was Chief Negotiator for the union, described the first meeting: the administration “quickly sought to establish the narrative of financial crisis, employing the specific words ‘crisis’ and ‘dire’ and hence establishing their intended plot of ‘there’s no money.’” This crisis antenarrative, says Long, may have been strategic. Crisis stories often displace traditional, prevailing stories that are broader, and subtler. Yet leaders or negotiators may articulate such crisis antenarratives for just that purpose—to narrow conversations toward an inevitable single conclusion. Through Long, the union resisted the administration’s antenarrative by asserting one of its own: the university as “a premiere ‘destination’ and ‘experience’ characterized by productivity in research, excellence in teaching and vibrancy in campus life.”
Each side, it seemed, stuck to its own story: Throughout negotiations, both sides continued to produce texts that were intended to strengthen a premise that was advanced from the start. The…story fragments were often retold using different words and illustrative examples to create specific meanings while resisting others. The frequency of these texts increased in the lead-up to the union’s strike vote…, with both sides producing more versions of the same arguments in what amounted to a trading of punches. The mood at the bargaining table was one of inertia and exhaustion.
Hence this is a fitting conclusion to a JSCAN double issue about tradition and innovation, attitudes and communication. Our imaginations generate a wealth of opportunities through innovation. And yet our training, mentalities, professions, organizations and perceptions of others may raise obstacles to implementing those innovations. We cannot afford inertia and exhaustion if we are to increase value and productivity in contracting. We must find new skills for communicating meaningfully, and cooperating toward shared ends. As Böhm et al. conclude in describing outcome-based contracts, “To summarize, while OBCs have the potential to deliver benefit, it is clear that organizations need to understand and adjust their internal attitudes and capabilities in order to ensure these benefits are realized.”
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.