Preferred Customer Status and the Influence of (Non-)Fulfillment of Psychological Contracts – a Case Study with a Multinational Oil and Gas Company

The concept preferred customer status received increasing attention in academic literature in recent years. If customers can satisfy their suppliers and perform better than their competitors, the supplier assigns a preferred customer status. This preferred customer status will increase the buying firm’s performance and can lead to a competitive advantage. Besides the written contract, psychological contracts are present in buyer-supplier relationships. Psychological contracts are necessary for a successful inter-organizational relationship because they define the type of relationship and mutual expectations. This case study investigates the effect of psychological contracts on the preferred customer status based on a case company and five of its suppliers. Financial, innovative, qualitative, operational, and interactional benefits were identified as being awarded to preferred customers of the participating companies. Furthermore, growth potential, profitability, operative excellence, and relational behavior factors were crucial antecedents for supplier satisfaction. All participants recognized the presence of psychological contracts in buyer-supplier relationships. Moreover, the positive effects of psychological contract fulfillment on trust, commitment, supplier satisfaction, and the preferred customer status have been supported in this case study. The negative influence of psychological contract breach on trust was supported, but it was not supported on commitment. Additionally, the negative effect of psychological contract breach on supplier satisfaction and the preferred customer status was partially supported.