Contract ambiguity, psychological contract schema, and customer participation in supplier product innovation
(R2024-122580)

AUTHORS

Xinchun Wang, West Virginia University; Ruiqi Wei, EMLYON Business School; ongchuan (Kevin) Bao, University of Alabama in Huntsville

ABSTRACT

BtoB firms often rely on customers’ resources for product innovation through customer participation. To facilitate customer participation, firms frequently use contracts to safeguard a relationship. In this study, we investigate how contract ambiguity affects customer participation in supplier product innovation. Based on a field study, we demonstrate that contract ambiguity has a U-shaped relationship with customer participation in supplier product innovation. This effect is partially attributed to the different perceived psychological contract schemas under different levels of contract ambiguity. We show that the effect of contract ambiguity on customer participation depends on other mechanisms including goal congruence and process-based rewards.