Breaking the letter vs. spirit of the law: How the interpretation of contract violations affects trust and the management of relationships
Article first published online: 11 FEB 2014
Copyright © 2014 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 36, Issue 4, pages 497–517, April 2015
How to Cite
Harmon, D. J., Kim, P. H. and Mayer, K. J. (2015), Breaking the letter vs. spirit of the law: How the interpretation of contract violations affects trust and the management of relationships. Strat. Mgmt. J., 36: 497–517. doi: 10.1002/smj.2231
- Issue published online: 3 MAR 2015
- Article first published online: 11 FEB 2014
- Accepted manuscript online: 15 JAN 2014 02:39AM EST
- Manuscript Accepted: 31 DEC 2013
- Manuscript Revised: 20 DEC 2013
- Manuscript Received: 10 MAY 2013
- relationship management
Contract violations are ubiquitous. There has been little attention, however, dedicated to understanding the mechanisms involved in making sense of and addressing such occurrences. Two experimental studies investigated how people interpret contract violations and how these interpretations affect trust and the management of relationships. By drawing on the distinction between violations of the letter versus spirit of the law, we show that letter violations are more difficult to overcome than spirit violations, due to higher perceived intentionality. These effects generalized across different populations, levels of contracting experience, types of contracting contexts, levels of ambiguity within the contract, and degrees of contract complexity. The results yield important implications for understanding contract violations, trust, and organizational responses as a relationship management capability. Copyright © 2014 John Wiley & Sons, Ltd.