Contract Frames and Supplier Learning

This research examines the impact of contract framing on supplier learning activities within buyer-supplier relationships, an area previously overshadowed by a focus on internal organizational learning mechanisms. Grounded in regulatory focus theory and organizational learning theory, this study assesses how promotion and prevention contract framing influences suppliers’ exploration and exploitation activities. Survey data from 135 buyer-supplier relationship dyads reveals that promotion and prevention framing distinctly affect suppliers’ learning activities. Specifically, during the duration of the contract, (a) compared with prevention contract framing, promotion contract framing has a stronger positive impact on the supplier’s exploration learning activities; and (b) compared with promotion contract framing, prevention contract framing has a stronger negative impact on the supplier’s exploitation learning activities. This study also reveals how the portfolios and clusters of contract framing influence supplier learning activities. Finally, this study reveals that different learning activities result in varied outcomes for the buyer, with exploration boosting continuity and exploitation improving performance. This contribution broadens the understanding of contract framing’s psychological effects on supplier behavior, offering new insights into the dynamics of organizational learning activities and contract design. Funding: This work was supported by National Natural Science Foundation of China [Grant 72072152]; Research Grants Council, University Grants Committee [Grant CityU 11502218]; and Natural Science Foundation of Shandong Province [Grant ZR2023QG003]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.16526 .