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Designing effective contracts: Exploring the influence of framing and expectations

How a contract influences the exchange and on-going relationship between parties is an unresolved issue. While some suggest contracts negatively or positively influence the exchange and relationship, we argue that the contract frame determines its impact. Using regulatory focus and expectancy violation theories, we argue promotion and prevention-framed contracts induce different emotions, behaviors and expectations, which lead to different exchange outcomes and relationships, depending on the context. By considering contract framing, we provide new research opportunities in areas that use contracts to achieve desired outcomes (e.g., employee incentives, alliances, and M&A)..Printed journal

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