Compliance or Cooperation? Partner Reactions to Contractual Governance in Buyer–Seller Relationships

Purpose This study aims to investigate how the safeguard and coordination functions of contractual enforcement influence buyers’ compliance and cooperation in buyer–seller relationships. It also examines how relationship tenure moderates the effects of these contractual enforcement mechanisms on buyers’ compliance and cooperation.Design/Methodology/Approach This study employs a quantitative research design based on survey data from 586 manufacturing firms in China. Hierarchical regression analysis was conducted to examine the effects of contractual enforcement on buyers’ compliance and cooperation and the moderating role of relationship tenure.Findings The results show that buyers’ compliance is positively affected by both safeguard enforcement and coordination enforcement, whereas buyers’ cooperation is positively affected only by coordination enforcement. Moreover, relationship tenure weakens the positive effect of safeguard enforcement on compliance and strengthens its negative effect on cooperation. Relationship tenure also strengthens the positive effect of coordination enforcement on compliance but weakens its positive effect on cooperation.Originality/Value The study contributes to the supply chain and interfirm governance literature by distinguishing between safeguard enforcement and coordination enforcement and demonstrating that these contractual enforcement mechanisms elicit different forms of buyer response.