Strategic Gift Giving in Vendor Relationships: The Gift of Cognitive Regard

Increasing competition in the IT vendor landscape means it is increasingly difficult for vendors to sustain themselves by competing on price. Thus, many vendors desire to become strategic partners with their clients to thereby acquire a secure monopoly-like position on IT services. How should vendors do so? We argue one way is via the strategic distribution of gifts. This research unpacks one particularly effective gift type- the gift of cognitive regard through a qualitative analysis of a client-vendor relationship. This gift type has five properties: (1) Known Effortfulness, (2) Deep cognitive understanding, (3) Inalienability, (4) Nontransferrability, and (5) Contract temporality and signals to the client that (1) the vendor understands the client's specific business practices, (2) the vendor can do things to improve the client's business and (3) the vendor has unique value to the client.