ISSN: 1648 - 4460

International Journal of Scholarly Papers


Transformations  in
Business & Economics

Transformations in
Business & Economics

  • © Vilnius University, 2002-2013
  • © Brno University of Technology, 2002-2013
  • © University of Latvia, 2002-2013
Kuriame Lietuvos ateitį
Contractual Competencies as a Source of Differentiation: The Case of the Natural Gas Sector
Constantino Garcia-Acebron, Manuel Gonzalez-Diaz, Victor Iglesias

ABSTRACT. The aim of this paper is to show that firms’ competencies in developing contracts serve not only as a means to safeguard a stable relationship, but also as a way to differentiate the firm from competitors. By analysing contractual practices in the provision of natural gas to manufacturing industries (pricing, take-or-pay clauses, contract duration), we show that complex agreements are becoming formalized, with a high degree of customization (menu of contracts). We argue that the aim is to gain private information about customer preferences (e.g., attitude toward risk) in order to better match offers with customer needs. Not all firms, however, have the same level of contractual competencies so the most capable ones are able to use their distinctive competencies to achieve a competitive advantage. The use of contractual competencies as a source of differentiation may be especially interesting in commodity markets because of the intrinsic difficulties in differentiating the product.

KEYWORDS: contracts, pricing strategy, differentiation, industrial relations, natural gas sector.

JEL classification: L14, L15, L95, M31.

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Scholarly papers Transformations in Business & Economics
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