Key account management

Purpose - We investigate how business-to-business Key Accounts deal with the consequent tension between cooperation and competition, and how they can resolve that relational paradox, using framework contracts.

Design/methodology/approach - We argue that the role played by framework contracts can be bivalent: as a tool to define cooperation with suppliers while simultaneously organising competition within suppliers, but by formalising such bivalence it does help to ease the tensions that may arise. To clarify such a conceptual and counter-intuitive ambivalence, we use a case study that shows how framework contracts are used to solve the inherent tensions between cooperation with ‘preferred suppliers’ and their price competition with invited ‘challengers’, in a competitive bidding situation.

Findings - This study is a first step in an investigation of the role of framework contracts in a customer-supplier relationship, aiming to explain their use as they highlight the "coopetitive" nature of the relationship, turning it into something tangible and psychologically acceptable.

Research limitations/implications - Because of the complexity of vertical "coopetition" and the research method adopted, the findings may not be generally applicable.

Practical implications - This research offers an enlarged perspective for suppliers as well as customers to think over their own relationships (in an industrial setting).

Originality/value - Little research has been conducted to date on vertical coopetition and the role and effects of framework contracts in the context of such complex customer-supplier relationships. This case study offers insights for practising managers and academics into the effective use of framework contracts.