Prevention and promotion approaches to contracting: implications for negotiator focus and contract frames on exchange performance and relationships in the digital age

Abstract

Contracting can be approached in very different ways, depending on whether negotiators and the contracts themselves focus on preventing negative events or promoting positive outcomes. These two different approaches influence the exchange and exchange relationship in predictable ways. This chapter reviews prior work on how regulatory focus affects the traditional contracting process; that is, how individuals negotiate, draft, review, and then manage the contract, highlighting the need to expand the promotion role for contracts in practice. However, the advent of AI contracting tools and smart contracts is significantly changing this process. Thus, this chapter also provides an examination of these new digital contacting tools and how they further bias people and contracts toward prevention. Understanding these effects can allow managers to strategically use negotiator focus and contract frames to increase performance and enhance exchange relationships in the digital age, as use of AI tools and smart contracts becomes widespread.