From flat to spiky: how globalization rewired contracts — and why we must now undo the damage
Globalization reshaped contracting far more deeply than most organizations acknowledge. What began as a pursuit of efficiency and scale gradually hardened into procurement models dominated by cost-based analysis, risk transfer, and control. Contracts became instruments of protection rather than vehicles for value creation. Two decades of World Commerce & Contracting (WorldCC) research now makes clear that this shift has materially damaged trust, obscured supply ecosystems, and embedded unsustainable commercial behavior into standard contract models.
Much of globalization’s appeal rested on the assumption that the world was flattening — that geography, institutional differences, and relational proximity mattered less than price, process discipline, and scale. As your Commitment Matters writing has long argued, this was always a partial truth. The world did not flatten; it became increasingly confused by concentrated capability, uneven dependency, regulatory divergence, and fragile interconnections. Meanwhile, contracts continued to assume homogeneity, predictability, and enforceability.
WorldCC benchmark studies repeatedly show how this mismatch plays out in practice. As supply ecosystems expanded and fragmented, organizations relied increasingly on standard templates, unilateral risk allocation, and non-negotiable terms. Procurement models equated rigor with toughness. Risk was treated as something to be transferred downstream rather than understood and managed across the system. The contract became a substitute for trust.
The consequences are now well documented. WorldCC research consistently identifies systemic value erosion during both contract formation and performance, not primarily caused by supplier failure, but by misaligned incentives, late issue discovery, and governance models designed for enforcement rather than adaptation. As contracts grew more protective, transparency declined. Information was withheld. Problems were surfaced only when positions had hardened. Commercial behavior became defensive on all sides.
Trust is the invisible variable that explains this outcome. WorldCC’s work on relationship management and commercial capability shows that where trust is weak, organizations respond by tightening controls. Where uncertainty increases, they add clauses rather than conversations. Suppliers, in turn, price in risk, limit disclosure, and protect optionality. Buyers respond with further standardization and compliance pressure. The result is a self-reinforcing cycle that WorldCC research has observed across sectors, geographies, and market maturity levels.
This legacy persists even as external conditions deteriorate. Recent WorldCC and Commerce & Contract Management Institute research on resilience and adaptability highlights a stark gap: most contracts remain designed for stable environments, despite operating in a world shaped by geopolitical volatility, tariffs, regulatory fragmentation, and systemic supply risk. Contract models still assume that remedies, escalation, and enforcement will resolve disruption — even though experience shows they rarely do.
This is why reform is so difficult. Contracts are not neutral documents. The Contract Management Standard (CMS-4) explicitly recognizes that contracts encode behaviors, governance norms, and assumptions about intent. Today’s templates reflect the history of globalization’s cost-driven logic and the erosion of relational capital that followed. Simply adding collaborative language or ESG clauses does little if the underlying commercial architecture remains adversarial.
WorldCC research increasingly points to the need for a different foundation — one that reconnects contracts to value, not just cost avoidance. This includes:
- recognizing risk as dynamic and shared, not static and transferable,
- designing governance that supports early visibility and adjustment, not late-stage escalation,
- enabling data flows across supply ecosystems rather than reinforcing silos,
- and aligning commercial incentives with performance and outcomes, not compliance alone.
This is not a call for naïve partnership or the abandonment of discipline. WorldCC’s evidence shows that resilient contracting requires stronger commercial capability, not weaker controls — but controls that are fit for a spiky, volatile world. In such environments, trust is not a “soft” attribute; it is a structural necessity. And trust cannot exist where contracts institutionalize suspicion.
Globalization taught organizations how to optimize for cost. WorldCC research now shows that the next phase requires them to relearn how to design commitments — contracts that enable learning, adaptation, and sustained value creation across complex ecosystems. Until that shift occurs, procurement will remain constrained by models it increasingly recognizes as unsustainable.
ABOUT THE AUTHOR
Tim Cummins is President of World Commerce & Contracting and a Professor in the School of Law at the University of Leeds. For 25 years, Tim has led research and the development of standards for the Commercial and Contract Management discipline, an achievement that was recognized by the Financial Times ‘Market Shaper of the Year’ award in 2019.
Over that time, he was instrumental in developing the world’s only non-profit association dedicated to Commercial and Contract Management and continues to work with its 80,000 members in both public and private sector to improve the quality and integrity of trading relationships. Tim’s inspiration came from a career in Finance and Commercial Management, spanning multiple industries and countries and providing insight to the critical role that commercial innovation plays in delivering business and social value.
ABOUT WORLD COMMERCE & CONTRACTING
Our purpose is to support the shaping of the rules for global commerce and increase organizational, individual and institutional capability in commercial practice, particularly through effective contract and relationship management. Our vision is a world where all trading relationships deliver social and economic benefit. And our mission is to improve the quality and integrity of trading relationships; to identify and promote the international standards and practices for defining and managing successful trading relationships; and to develop and communicate leading practices that support economies and society by ensuring that our commitments are ethical, achievable, and sustainable.
We fulfil this mission by:
- raising awareness through research, publications, and advocacy
- increasing insight through analytics, events, and networking
- continuous learning, professional development and promotion of lifelong learning
- creating standards, principles, leading practice, and raising capabilities
- inspiring innovation and an innovative mindset through awards programs to create a strong and connected community.