Private-order market institutions founded on trust-based relational contracts suffer adverse selection and moral hazard problems, while public-order market institutions have a limited capacity to enforce contracts. We model agent selection between contract enforcement institutions and demonstrate that the state’s contract enforcement capacity is complementary to private-order contract enforceme...

A principal can make an investment anticipating a repeated relationship with an agent, but the agent may appropriate the returns through ex post bargaining. I study how this holdup problem and efficiency depend on the contracting environment. When investment returns are observable, informal contracts ex post can be more efficient than formal contracts, as they induce higher investment ex ante: ...

A management framework has been successfully utilized at Imperial College London in the United Kingdom to improve the process for developing and managing university-industry research collaborations. The framework has been part of a systematic approach to increase the level of research contracts from industrial sources, to strengthen the university’s academic base, and to diversify the provision...

We investigate whether managers in outsourcing firms, through their prior experience in managing similar strategic alliances and prior association with the provider, learn to create value in their outsourcing relationships. Value creation is estimated in terms of long-term abnormal stock returns to the outsourcing firm relative to an industry, size and book-to-market matched sample of control f...

Within IS outsourcing research there is an ongoing discussion whether formal contracts and relational norms function as substitutes or as complements to each other. However, even those deals which are based on relational norms usually comprise a contract as their foundation. We therefore aim at analyzing differences in contracting between both governance modes (i.e. contract-based or based on r...

Despite the prevalence of IT outsourcing, a substantial amount of contracts have been terminated. Prior research has primarily assumed that clients initiate it, overlooking the possibility of vendors doing so. Unlike clients whose reasons may stem from poor performance or other alternatives, vendors would be triggered by very different reasons. They are less likely to admit their own poor perfo...

In 1937, Ronald Coase argued that firms will exist only in environments in which firms perform better than markets could. To create space for firms, Coase suggested that some environments might be plagued by “transaction costs” that cause markets to perform poorly. Coase’s paper was to become the cornerstone of the economic theory of the firm (i.e., the “make or buy” decision: which activities ...

Advancing upon taxonomical research on interfirm alliances, we investigate the design of entrepreneurial firms’ alliances in more fine-grained terms by focusing on the specific contractual provisions that firms negotiate into their alliance contracts. Drawing upon transaction cost arguments, we examine the determinants of the contractual complexity of collaborative agreements in the German tele...