Business Strategy and Operations Services
A relational contract is a contract that helps organizations meet many of the challenges of doing business in an economy characterized by volatility, uncertainty, complexity and ambiguity (VUCA). In the network economy, long term business relationships have become an important source of competitive advantage.
But companies and organizations struggle to establish and thereafter live by a set of rules based on which they can collaborate to generate value. Research and experience show that the traditional, transactional contract is often not an efficient instrument to create the kind of partnerships that successful commercial relationships often require. This is where the relational contract provides an alternative. We have over the years assisted several large Nordic and global companies and organizations in areas such as IT-outsourcing, business process outsourcing and strategic partnerships.
Based on award winning research in behavioural economics and other areas, the relational contract has the following characteristics implemented in 5 steps :
- It focuses on the relationship rather than on the deal
- It establishes a partnership instead of an arm’s-length relationship
- It embeds value-generating social norms at the heart of the commercial relationship
- It mitigates risk by creating continuous alignment of interest
- It provides a flexible framework, accepting that all contracts are incomplete
To learn more about relational contracting, please download our written summary here – The Modern Contract. You can also find more information about Relational Contracts in this article published in Harvard Business Review – A New Approach to Contracts.
You may also take a look at this short video featuring our managing partner, David Frydlinger.
Cirio is a thought leader on relational contracting and provides a unique set of services, including:
- Compatibility and trust assessments between organizations
- Facilitation of implementation of the 5 steps
- Drafting and negotiations of relational contracts
- Standing neutral services of organizations in partnerships based on relational contracts
We believe in combining business with a personal approach, and therefore bring in-depth expertise, dedication and engaged deal teams to our clients.
Our high quality of service and our determination to deliver outstanding results ensure that we build long-term relationships with our clients, aiming to be not just an exceptional legal adviser, but also their trusted business partner.
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