Turning contracts to action - A qualitative single case study of long-term licensing contract implementation

Abstract

Traditionally the purpose of business contracts in trade has been to safeguard exchange parties’ rights and economic interests from potential exploitation of the other contract party. During past two decades many researchers have argued business contracts to have, besides the traditional safeguarding function, an important managerial function not just between, but within organizations as well. Meanwhile, an increasing number of researchers have observed traditional business contracts to appear for lay persons mostly as useless paper piles that should be left to lawyers’ concern stored deep in the archives. In archives or not, contracts do not fulfil any obligations – people fulfil. In my qualitative research I endeavour by means of an interdisciplinary literature review and a single case study to understand how organization’s contract obligations are turned from long-term licensing agreement documents to their end-users’ concrete actions. Specifically, I ask how the end-users interpret, use and apply long-term business agreements and what are the challenges they encounter with those contracts. In my research, I have interviewed eight employees of the case organization who have had roles, responsibilities and duties in fulfilling long-term licensing agreement obligations. Alongside, I have analysed multiple licensing agreement documents and the e-mail conversations related. In my study, I find the end-users to interpret the licensing agreements as if they were their work instructions. In such purpose, the licensing agreements however appear to be in many ways incomplete and arduous. Whereas the end-users would require exact information promptly, the agreements provide merely incomplete definitions in form of unattractive paper monoliths. Therefore, the end-users translate the licensing agreement documents for themselves into more user-friendly tools and hence create an adaptable interface between immutable licensing agreement documents and themselves. Since the user-friendly tools are available, the end-users diminish the use of the original licensing agreement documents to few extraordinary cases. Consequently, there are multiple contract documents of the same agreements used to serve different purposes. Against the propositions of relational contracting, I nevertheless observe the end-users to endeavour to apply licensing agreements almost literally regardless of the fact that the original licensing agreement documents are seldom used in everyday job duties. To turn contract obligations into concrete actions, I conclude that organizations are practically forced to create connecting interfaces between long-term business contracts and their ultimate end-users. This is because designing simultaneously complete, adaptable and explicit agreements appears to be an infeasible equation, in which the explicitness is sacrificed. In the managerial implications section of my research I emphasize taking into account the end-users’ perspectives and seizing legal design already in the contract drafting phase. Moreover, I recommend clarifying internal contract ownership and accountability as well as applying potential artificial intelligence services in the process of making contracts user-friendly.