Prof Bernstein presented the findings of their study on ‘Managerial Contracting’ with her co-author Brad Peterson (Partner at Mayer Brown LLP). In their study, they examined over one hundred firms and observed an increasing trend regarding their contractual industrial supply chain relationships. According to them, newer forms of contracts tend to be ‘neither fully transactional nor fully relational’ and include terms that lay out in precise and immense detail the actions that are to be expected from the supplier. Thereby, they aim to create more cooperative relationships and facilitate the emergence of greater process-based and over time even interpersonal trust between the parties of the agreement.

One remarkable finding concerns the fact that traditional legal enforcement has become less important in managerial contracts. In many instances the buyer will simply notify the supplier and urge him to conform more closely with the contract, regarding any deviation more as a ‘mistake that should not be repeated’ rather than a breach of contract resulting in legal action. This allows managerial provisions to be an interesting supplement to the more traditional and legally enforceable agreements.

We would like to thank Prof Bernstein and Mr Peterson very much for an interesting and informative evening!

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