Abstract
This paper aims at achieving a greater understanding of how contracts operate in practice through a review of recent empirical literature on inter-firm contract design. Our focus on the structure of contractual agreements differentiates this review from others that dedicated ample coverage also to the antecedents of the decision to contract and of the choice of contracting versus integration. Our framework develops Stinchcombe’s (Organization Theory and Project Management, 1985) hypothesis that contracts are an organizational phenomenon. This allows us to uncover considerable but unevenly distributed evidence on a number of organizational processes formalized in relational contracts, which partially overlap with the processes that are observed in integrated organizations. It also enables us to describe contracts in terms of a larger number of dimensions than is commonly appreciated. The paper summarizes the evidence by proposing a general and tentative framework to guide the design of relational contracts, discusses a number of lingering issues, and outlines directions for further research on contracts as an organizational phenomenon.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
The meaning of this expression will be made explicit in Sect. 2.
Throughout his exposition Stinchcombe referred to ‘hierarchies’. We assume that he borrowed the term from TCE itself, without implying that the organizations that are substituted by contracts necessarily score high on hierarchical intensity. For this reason we prefer to use the terms ‘integrated structures’ or ‘organizations’.
Indeed, this requirement wipes away the bulk of the TCE-inspired empirical literature on contracting and restricts the target population to a few dozen articles.
For clarity’s sake, this means neglecting essentially those studies in the specialized literature on franchising that have investigated the antecedents of variables like the level of the ‘initial fee’, ‘royalty rate’, etc. The interested reader may refer to Lafontaine and Slade (1998) for an excellent review of the empirical literature on franchising.
We neglect also some specialized literature, like that on public debt and agricultural contracts.
Readers interested in this kind of studies may refer to a paper by Keser and Willinger (2002).
“Previous literature [focused] only on the strictly ‘monetary’ aspects of the contracts” (Arruñada et al. 2001: 257). “Empirical transaction-cost research on contract design has looked primarily at three types of provisions: incentive provisions, pricing structures and price adjustment methods” (Masten and Saussier 2002: 285).
Hubbard and Weiner (1986) have also interpreted take-or-pay provisions as efficient responses to the need for adjustment in long-term contracts. DeCanio and Frech (1993) show how an efficiency interpretation of take-or-pay provisions in natural gas supply is more convincing than alternative arguments based on market-power, and provide an estimation of the efficiency gains entailed by vertical contracts with minimum bill provisions.
We shall discuss the implications of this study for contract ‘completeness’ in Sect. 5.4.
This study also found that contracts associated with lower incentive intensity tend to be chosen as prior relationships between the parties (measured at the site level) increase.
In Saussier’s (2000) reading of this article Crocker and Reynold’s decision to focus on the probability of each contracting party to behave opportunistically was due to data limitations that did not allow measuring asset specificity.
“For cost reductions in operating and maintenance activities, which are difficult to measure with RIB’s [company name] cost data, the partners in good faith simply agreed to ‘negotiate a reasonable estimate’ of the savings, to come to a fair division of the alliance’s financial benefits” (Dekker 2004).
Methodologically this study deserves mention for proper econometric handling of the simultaneity of dependent and independent variables (values for ‘duration’ and ‘take or pay’ estimated from separate regression and fed as independent variables into the model of price adjustment).
Strictly speaking the data analyzed are not exclusively contract clauses since the variables are coded from information collected by a specialized industry analyst that relies on a variety of sources, besides contracts.
Given the puzzling nature of these results, it is a bit unfortunate that the authors did not discuss in detail the issue of endogeneity since it is perfectly conceivable that the financial strength of the R&D firm is affected by the number of patents it holds, the proxy for project maturity.
Clearly only some of them relate to decision-making.
Consistent with the predictions of agency theory (Holmstrom 1979), the paper also found that the pay-performance sensitivity of entrepreneur’s remuneration decreases as asymmetric information about venture quality declines.
Since the variables come from a variety of documents—not just from the contract—and are often common between successive contracts, it can be said that the unit of analysis is the deal rather than the contract.
In this paper subjectivity in the measurement of this and other independent variables clearly could be an issue. To circumvent this problem the authors supply readers almost literally with each sentence in the investment analyses documents that relate to the focal independent variable, and the way it was coded.
“Higher internal risk is associated with more VC control, more contingent compensation to the entrepreneur, and more contingent financing in a given round (...) Overall, we interpret these results as very positive for the agency theories (...) External uncertainty is also related to many contractual features. Like internal risk, higher external risk is associated with more VC control and more contingent compensation (...) with increases in VC liquidation rights (...) These findings are highly inconsistent with optimal risk sharing between risk-averse entrepreneurs and risk-neutral investors” (Kaplan and Strömberg 2004: 2199).
“Execution risk is significantly positively related to founder time vesting provisions and negatively related to contingent compensation and VC liquidation rights” (Kaplan and Strömberg 2004: 2200).
Just to mention a few, the manufacturer has the authority to decide the sales targets, the size and décor of the show room, to set the maximum authorized price, etc.
Here we are using the term ‘fiat’ simply in the sense of a right to make decisions, even against the will of the counterparty. Following Williamson (1991) it could be argued that in a contractual relationship such a right is qualitatively different from that of an internal organization, since “courts will refuse to hear disputes between one internal division and another” over technical issues (Williamson 1991: 274). However, such a difference is no longer clear if the parties wave their rights—as they often do (Ryall and Sampson 2003: 14; Grandori and Furlotti 2007: 29)—to bring disputes to courts.
Arruñada et al. (2001) also consider monitoring rights. We shall treat monitoring as a separate dimension and report their findings later.
It must be noticed that the contract the authors focus upon only improves the payoff of the financing firm, not the overall surplus. Therefore the allocation of property rights it establishes is profit-maximizing for the financing firm only if it is assumed that the R&D firm is financially constrained, hence unable to compensate the financier for agreeing to a different arrangement.
The dependent variable is operationalized in two alternative ways. All the operationalizations deliver approximately the same results. The operationalization of the main independent variable (non-contractibility of output) takes advantage of a particular feature of biotechnology research, where it is easy to classify projects according to the fact that a lead product candidate is specifiable or not at the time of the agreement.
These clauses include supplier’s threats, like the right of exploitation of further developments of the contractual project, and buyer’s commitments, like the right of the supplier to be informed about further developments.
‘Free riding hazard’ is a variable capturing the interaction of the brand-name value and the spillover of the effects of franchisee’s improper behavior on the rest of the franchise.
The items considered are ‘financial penalties for underperformance’ and ‘right to terminate for underperformance’.
The authors analyze also the influence of relational mechanisms on other contract terms. We shall present other results from this study in Sects. 4.2.4 and 5.4.
As argued by Klein and Murphy (1988), as long as the marginal return to a franchisee is only a fraction of the total return of an extra sale, the franchisee chooses to provide a lower amount of services than would be optimal from the point of view of the whole franchising network.
The prescription of a specific amount of advertising does not remove the externality, so that the marginal return to the agent of additional expenditure is lower than his marginal cost. Thus if actions could not be observed, the franchisee would still have an incentive to free ride.
We take this article to represent a series of four that Joskow published between 1985 and 1990 on contracts between coal suppliers and electric plants.
The authors discuss at some length an issue of identification (whether contract duration reflects hold-up risk or the fact that it takes longer to complete a novel project) and conclude that upon controlling for task characteristics that may influence project length independently of contracting hazards, contracts for novel technologies are still significantly longer than contracts for more mature ones. However, the authors had to make do with the limited information about task characteristics that is available in their dataset. Hence there is room for future studies employing richer databases to try isolating project effects and contracting effects.
The last of these relationships is fairly easily understandable. The first and the second one warrant a little clarification. As the authors explain, “contingency planning can place limits on how much of the supplier’s proprietary technology must be revealed in the event of changes to the schedule or the addition of new features” and “the parties can outline exactly what access is allowed and what steps will be taken if certain problems occur that may impact the use of the supplier’s proprietary technology” (Mayer and Bercovitz 2003: 14–15). This explanation makes clear that contingency planning, qua planning, not only enhances flexibility but also specifies, and thus constrains, how the parties will respond to certain changes. To the extent to which contingency planning constrains responses, it is a little surprising that it has been found efficient in situations characterized by one type of interdependence that prima facie could be described as ‘reciprocal’. In fact under those conditions organization theory would typically recommend coordination by mutual adjustment, rather than by plan (Thompson 1967). Although the coefficient of task interdependence is significant at a very high confidence levels, we think this is an issue that requires further investigation.
Other findings of Argyres et al. (2007) are mentioned in the Sect. 5.4.
As noise increases, “the difference in the cost of providing the control right for high and low quality firms becomes greater” (Elfenbein and Lerner 2005: 7).
One caveat is in order. We do not claim that unilateral options are suitable to enhance the adaptability of all the types of contracts. At minimum one should be aware that the use of certain unilateral options, like stipulated damages, “requires that most of the uncertainty associated with performance be only on one side of the transaction. If there were uncertainty also on the other side, the penalty stipulated ex-ante could lead to inappropriate incentives ex-post” (Crocker and Masten 1988: 329).
Subject to the disclaimer as per note 35, contingency planning also increases the higher the task interdependency between the parties.
“Actual contracts incorporate few if any explicit contingencies” (Masten 2000: 29).
While the authors interpret their findings as indicative also of complementarity between contractual and social governance, we prefer to say they indicate an impact of the ‘shadow of the past’ on contractual governance. In fact, past alliancing experience is not an element of ‘governance’, susceptible to design. Rather, from a design perspective it can be regarded as a dimension of the transaction.
This result is in contrast with what has been found by Ryall and Sampson (2006). However, it must be noticed that while in Ryall and Sampson (2006) contract detail is a six-values polychotomous variable, in Corts and Singh the parties are faced only with a stark choice between ‘turnkey’ and ‘dayrate’. Thus, parties that opt for more detailed contracts (turnkey) have to accept an accompanying sharp increase in maladaptiveness.
For precision’s sake, Crocker and Reynolds use ‘completeness’ instead of ‘ambiguity’ but the contract characteristic they measure better captures the dimension of ambiguity.
Saussier finds that the dependent variable is positively affected by asset specificity and negatively by uncertainty.
The actual figure is smaller than it appears. In fact, some of the studies that investigated actual contract content based most of their analyses on readily available variables coded by industry analysts, who did not necessarily have specific theoretical concerns in mind.
References
Aghion, P., & Bolton, P. (1992). An incomplete contracts approach to financial contracting. Review of Economic Studies, 59(200), 473.
Aghion, P., & Tirole, J. (1994). The management of innovation. Quarterly Journal of Economics, 109(4), 1185–1209.
Al-Najjar, N. I. (1995). Incomplete contracts and the governance of complex contractual relationships. American Economic Review, 85(2), 432.
Anderson, S. W., & Dekker, H. C. (2005). Management control for market transactions: The relation between transaction characteristics, incomplete contract design, and subsequent performance. Management Science, 51(12), 1734–1752.
Argyres, N. S., Bercovitz, J., & Mayer, K. J. (2007). Complementarity and evolution of contractual provisions: An empirical study of IT services contracts. Organization Science (forthcoming).
Ariño, A. M., & Reuer, J. J. (2004). Alliance contractual design. Barcelona, IESE Business School Working Paper No. 572.
Arruñada, B., Garicano, L., & Vazquez, L. (2001). Contractual allocation of decision rights and incentives: The case of automobile distribution. Journal of Law, Economics & Organization, 17(1), 257–284.
Arruñada, B., Garicano, L., & Vazquez, L. (2005). Completing contracts ex post: How car manufacturers manage car dealers. Review of Law and Economics, 1(1), 150–173.
Bercovitz, J. E. L. (1999). An analysis of the contract provisions in business-format franchise agreements. In: J. Stanworth & D. Purdy (Eds.), Franchising beyond the millennium: Learning lessons from the past; Proceedings of the 13th conference of the society of franchising.
Bernheim, B. D., & Whinston, M. D. (1998). Incomplete contracts and strategic ambiguity. American Economic Review, 88(4), 902.
Bhattacharyya, S., & Lafontaine, F. (1995). Double-sided moral hazard and the nature of share contracts. Rand Journal of Economics, 26(4), 761–781.
Boerner, C. S., & Macher, J. T. (2005). Transaction cost economics: An assessment of empirical research in the social sciences. Georgetown University, Robert E. McDonough School of Business Working paper.
Brickley, J. A. (1999). Incentive conflicts and contractual restraints: Evidence from franchising. Journal of Law & Economics, 42(2), 745–774.
Brousseau, E. (1995). Contracts as modular mechanisms: Some propositions for the study of ‘Hybrid Forms’. International Journal of the Economics of Business, 2(3), 409.
Brousseau, E., Coeurderoy, R., & Chaserant, C. (2006). The Governance of contracts: Empirical evidence on technology licensing agreements. Université de Paris X, EconomiX Working Paper.
Ciccotello, C. S., Hornyak, M. J., & Piwowar, M. S. (2004). Research and development alliances: Evidence from a federal contracts repository. Journal of Law & Economics, 47(1), 123–166.
Coase, R. H. (1992). The institutional structure of production. American Economic Review, 82(4), 713–719.
Corts, K. S., & Singh, J. (2004). The effect of repeated interaction on contract choice: Evidence from offshore drilling. Journal of Law, Economics & Organization, 20(1), 230–260.
Crocker, K. J., & Masten, S. E. (1988). Mitigating contractual hazards: Unilateral options and contract length. Rand Journal of Economics, 19(3), 327–343.
Crocker, K. J., & Masten, S. E. (1991). Pretia ex machina? Prices and process in long-term contracts. Journal of Law & Economics, 34(1), 69–99.
Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. Rand Journal of Economics, 24(1), 126–146.
David, R. J., & Han, S. (2004). A systematic assessment of the empirical support for transaction cost economics. Strategic Management Journal, 25(1), 39–58.
DeCanio, S. J., & Frech, H. E. III (1993). Vertical contracts: A natural experiment in gas pipeline regulation. Journal of Institutional and Theoretical Economics, 149(2), 370–392.
Deeds, D. L., & Hill, C. W. L. (1999). An examination of opportunistic action within research alliances: Evidence from the biotechnology. Journal of Business Venturing, 14(2), 141.
Dekker, H. C. (2004). Control of inter-organizational relationships: Evidence on appropriation concerns and coordination requirements. Accounting, Organizations & Society, 29(1), 27.
Elfenbein, D., & Lerner, J. (2005). Contractual incompleteness, contingent control rights, and the design of internet portal alliances. Harvard Business School Working Paper.
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law & Economics, 26(2), 301–325.
Goldberg, V. P. (1976a). Regulation and administered contracts. The Bell Journal of Economics, 7(2), 426–448.
Goldberg, V. P. (1976b). Toward an expanded economic theory of contract. Journal of Economic Issues, 10(1), 45.
Goldberg, V. P., & Erickson, J. R. (1987). Quantity and price adjustment in long-term contracts: A case study of petroleum coke. Journal of Law & Economics, 30(2), 369–398.
Grandori, A. (1997a). Governance structures, coordination mechanisms and cognitive models. Journal of Management & Governance, 1(1), 29–47.
Grandori, A. (1997b). An organizational assessment of interfirm coordination modes. Organization Studies (Walter de Gruyter GmbH & Co. KG.), 18(6), 897.
Grandori, A. (2006). Innovation, uncertainty and relational governance. Industry & Innovation, 13(2), 127–133.
Grandori, A., & Furlotti, M. (2006). The bearable lightness of inter-firm strategic alliances: Resource-based and procedural contracting. In: A. Ariño & J. Reuer (Eds.), Strategic alliances: governance and contracts. London: Palgrave.
Grandori, A., & Furlotti, M. (2007). Facio Ut Facias: Associational contracts and innovation. Paper presented at the international workshop on “Internal Organization, Cooperative Relationships among Firms and Competitiveness,” January 19–20, 2007, Lucca, Italy.
Hart, O. (1995). Firms, contracts, and financial structure. Oxford and New York: Oxford University Press, Clarendon Press.
Hart, O., & Moore, J. (1999). Foundations of incomplete contracts. Review of Economic Studies, 66(1), 115–138.
Helm, R., & Kloyer, M. (2004). Controlling contractual exchange risks in R&D interfirm cooperation: An empirical study. Research Policy, 33(8), 1103–1122.
Holmstrom, B. (1979). Moral hazard and observability. Bell Journal of Economics, 10(1), 74–91.
Hubbard, R. G., & Weiner, R. J. (1986). Regulation and long-term contracting in us natural gas markets. Journal of Industrial Economics, 35(1), 71.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Joskow, P. L. (1987). Contract duration and relationship-specific investments: Empirical evidence from coal markets. American Economic Review, 77(1), 168.
Kalnins, A., & Mayer, K. J. (2004). Relationships and hybrid contracts: An analysis of contract choice in information technology. Journal of Law, Economics & Organization, 20(1), 207–229.
Kaplan, S. N., & Strömberg, P. (2003). Financial contracting theory meets the real world: An empirical analysis of venture capital contracts. Review of Economic Studies, 70(245), 281–315.
Kaplan, S. N., & Strömberg, P. (2004). Characteristics, contracts, and actions: Evidence from venture capitalist analyses. Journal of Finance, 59(5), 2177–2210.
Keser, C., & Willinger, M. (2002). Experiments on moral hazard and incentives: Reciprocity and surplus-sharing; experiments on moral hazard and incentives: Reciprocity and surplus-sharing. The Economics of Contracts: Theories and Applications, 293–312.
Klein, P. G. (2005). The make-or-buy decision: Lessons from empirical studies. In: C. Ménard & M. Shirley (Eds.), Handbook of new institutional economics (pp. 435–464). New York: Springer.
Klein, B., Crawford, R. G., & Alchian, A. A. (1978). Vertical integration, appropriable rents, and the competitive contracting process. Journal of Law & Economics, 21(2), 297–326.
Klein, B., & Leffler, K. B. (1981). The role of market forces in assuring contractual performance. Journal of Political Economy, 89(4), 615–641.
Klein, B., & Murphy, K. M. (1988). Vertical restraints as contract enforcement mechanism. Journal of Law & Economics, 31(2), 265–298.
Lafontaine, F., & Slade, M. E. (1998). Incentive contracting and the franchise decision; incentive contracting and the franchise decision. National Bureau of Economic Research, Inc., NBER Working Papers: 6544.
Lafontaine, F., & Slade, M. E. (2005). Exclusive contracts and vertical restraints: Empirical evidence and public policy. Advances in the Economics of Competition Law.
Lerner, J., & Malmendier, U. (2005). Contractibility and the design of research agreements. NBER Working Paper No. W11292.
Lerner, J., & Merges, R. P. (1998). The control of technology alliances: An empirical analysis of the biotechnology industry. Journal of Industrial Economics, 46(2), 125–156.
Luo, Y. D. (2002). Contract, cooperation, and performance in international joint ventures. Strategic Management Journal, 23(10), 903–919.
Lyons, B. R. (1994). Contracts and specific investment: An empirical test of transaction cost theory. Journal of Economics and Management Strategy, 3(2), 257–278.
Lyons, B. R. (1996). Empirical reference of efficient contract theory: Inter-firm contracts. Oxford Review of Economic Policy, 12(4), 27–52.
Macaulay, S. (1985). An empirical view of contract. Wisconsin Law Review, 465–482.
Macneil, I. R. (1974). The many futures of contracts. Southern California Law Review, 47, 691–816.
Masten, S. E. (2000). The regulation of contracts: Contractual choice. In: B. Bouckaert & G. De Geest (Eds.), Encyclopedia of law and economics. Volume 3. The regulation of contracts (pp. 25–45). Williston, Vt, Cheltenham, U.K. and Northampton, Mass.: Elgar; distributed by American International Distribution Corporation.
Masten, S. E., & Crocker, K. J. (1985). Efficient adaptation in long-term contracts: Take-or-pay provisions for natural gas. American Economic Review, 75(5), 1083.
Masten, S. E., & Saussier, S. (2002). Econometrics of contracts: An assessment of developments in the empirical literature of contracting. In: E. Brousseau & J. M. Glachant (Eds.), Economics of contracts: Theories and applications. Cambridge: Cambridge University Press.
Mayer, K. J. (2006). Spillovers and governance: An analysis of knowledge and reputational spillovers in information technology. Academy of Management Journal, 49(1), 69–84.
Mayer, K. J., & Argyres, N. S. (2004). Learning to contract: Evidence from the personal computer industry. Organization Science, 15(4), 394–410.
Mayer, K. J., & Bercovitz, J. (2003). The influence of relationships, learning and inertia on contract design: The Extent of contingency planning in information technology services contracts. University of Southern California working paper.
Ménard, C. (2004). The economics of hybrid organizations. Journal of Institutional and Theoretical Economics, 160(3), 345–376.
Nooteboom, B. (2004). Inter-firm collaboration, learning and networks: An integrated approach. London: Routledge.
Oxley, J. E. (1997). Appropriability hazards and governance in strategic alliances: A transaction cost approach. Journal of Law Economics & Organization, 13(2), 387–409.
Parkhe, A. (1993). Strategic alliance structuring: A game theoretic and transaction cost examination of interfirm. Academy of Management Journal, 36(4), 794.
Pirrong, S. C. (1993). Contracting practices in bulk shipping markets: A transactions cost explanation. Journal of Law & Economic, 36(2), 937–976.
Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements? Strategic Management Journal, 23(8), 707.
Reuer, J. J., & Ariño, A. (2002). Contractual heterogeneity in strategic alliances. Barcelona, IESE Working Paper No. D/482.
Reuer, J. J., & Ariño, A. (2003). Strategic alliances as contractual forms. Academy of Management Best Paper Proceedings.
Reuer, J. J., Ariño, A., & Mellewigt, T. (2003). Entrepreneurial alliances as contractual forms. Barcelona, IESE Working Paper No. 527.
Rindfleisch, A., & Heide, J. B. (1997). Transaction cost analysis: Past, present, and future applications. Journal of Marketing, 61(4), 30.
Ryall, M. D., & Sampson, R. C. (2003). Do prior alliances influence contract structure? Evidence from technology alliance contracts. Simon School of Business Working Paper No. FR 03-11.
Ryall, M. D., & Sampson, R. C. (2006). Formal contracts in the presence of relational enforcement mechanisms: Evidence from technology development projects. Melbourne University Business School Working Paper.
Salanié, B. (2005). The economics of contracts: A primer. Cambridge (Mass.): MIT Press.
Sampson, R. C. (2004). The cost of misaligned governance in R&D alliances (pp. 484–526). UK: Oxford University Press.
Saussier, S. (2000). Transaction costs and contractual incompleteness: The case of Electricité de France. Journal of Economic Behavior & Organization, 42(2), 189–206.
Shelanski, H. A., & Klein, P. G. (1995). Empirical research in transaction cost economics: A review and assessment. Journal of Law, Economics & Organization, 11(2), 335.
Shepard, A. (1993). Contractual form, retail price, and asset characteristics in gasoline retailing. Rand Journal of Economics, 24(1), 58–77.
Simon, H. A. (1976). From substantive to procedural rationality. In: S. J. Latsis (Ed.), Method and appraisal in economics. Cambridge: Cambridge University Press.
Sobrero, M., & Schrader, S. (1998). Structuring inter-firm relationships: A meta-analytic approach. Organization Studies (Walter de Gruyter GmbH & Co. KG.), 19(4), 585–615.
Stinchcombe, A. (1985). Contracts as hierarchical documents. In: A. Stinchcombe & C. Heimer (Eds.), Organization theory and project management. Oslo: Norwegian University Press.
Stinchcombe, A. L. (1990). Information and organizations. Berkeley and Oxford: University of California Press.
Suchman, M. C. (2003). Contracts as social artifacts. Law & Society Review, 37(1), 91–142.
Thompson, J. (1967). Organizations in action. New York: McGraw-Hill.
Turner, J. R. (2004). Farsighted project contract management: Incomplete in its entirety. Construction Management & Economics, 22(1), 75–83.
Vannoni, D. (2002). Empirical studies of vertical integration: The transaction cost orthodoxy. RISEC: International Review of Economics and Business, 49(1), 113–141.
Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications – a study in the economics of internal organization. New York: Free Press.
Williamson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law & Economics, 22(2), 233–261.
Williamson, O. E. (1983). Credible commitments: Using hostages to support exchange. American Economic Review, 73(4), 519.
Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Adminstrative Science Quarterly, 36(2), 269–296.
Woolthuis, R. K., Hillebrand, B., & Nooteboom, B. (2005). Trust, contract and relationship development. Organization Studies (Sage Publications Inc.), 26(6), 813–840.
Acknowledgements
I would like to thank Anna Grandori, Eric Brousseau, Robert Merges, George WJ Hendrikse, three anonymous reviewers and participants at the EMNet Conference on the “Economics and Management of Networks”, Budapest, Hungary, September 15–17, 2005 for helpful suggestions that led to the development of this paper. All errors are my own.
Author information
Authors and Affiliations
Corresponding author
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Furlotti, M. There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design. J Manage Governance 11, 61–99 (2007). https://doi.org/10.1007/s10997-007-9020-y
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10997-007-9020-y