Hanane BougadirGarcía Sánchez, AntonioMustapha Zahir2025-09-252025-09-252025Hanane Bougadir, , García Sánchez, A. y Mustapha Zahir, (2025). Balancing relational and contractual governance to foster innovation: Evidence from smes in morocco’s textile Sector. Sustainable Futures, 10, 101295.https://doi.org/10.1016/j.sftr.2025.101295.2666-1888https://hdl.handle.net/11441/177202This study investigates the innovation behaviors of subcontracting small and medium-sized enterprises (SMEs) in Morocco’s textile industry, focusing on the governance mechanisms influencing these behaviors. SMEs signifi- cantly contribute to Morocco’s economy but face intensified global competition and complexities within multinational supply networks. Subcontracting emerges as a strategic response, providing SMEs with avenues for growth and innovation. Yet, the specific governance conditions enabling or constraining subcontractor inno- vation remain inadequately explored. Adopting an exploratory qualitative approach, this multi-case study ex- amines three Moroccan textile SMEs engaged in international subcontracting. Employing thematic analysis of interview data, observations, and secondary sources, the research identifies critical factors influencing innova- tion behaviors. Findings reveal a nuanced interplay between contractual and relational governance mechanisms. While formal contracts provide structural clarity, relational governance, grounded in trust, proactive commu- nication, and mutual commitment, proves essential for sustained innovative activities. Internal innovation ca- pacities, particularly dedicated funding and skilled personnel, significantly enhance innovation potential but are constrained by limited resources. Moreover, cooperative relationships characterized by mutual learning, risk- sharing, and transparent communication foster innovation more effectively than transactional subcontracting approaches. This research underscores the necessity of balancing relational trust with contractual protection to optimize SMEs’ innovative performance. Practical implications include recommendations for SME managers to cultivate long-term, trust-based relationships complemented by strategic contractual agreements. Policymakers are advised to encourage relational governance practices through targeted support programs. Future studies should extend these insights across different sectors and larger samples to validate the findings’ broader applicability.application/pdf23 p.engAttribution 4.0 Internationalhttp://creativecommons.org/licenses/by/4.0/Innovation behaviorSubcontracting relationshipsGovernance mechanismsSMESMoroccan textile industryRelational governanceinfo:eu-repo/semantics/articleinfo:eu-repo/semantics/openAccesshttps://doi.org/10.1016/j.sftr.2025.101295