We revisit (and seek to resuscitate) one of the earliest arguments in the theory of the firm: Williamson’s (1975) use of Simon’s (1951) conception of an employment relationship to argue that integration is the efficient governance structure for transactions that require adaptive, sequential decision-making. We contend that this relational-adaptation argument is distinct from later work by Klein...

Abstract I demonstrate that transacting parties may expend resources on ex ante contracting, which not be legally enforceable, to help build and maintain their long-term relationships. first introduce three legal concepts, namely scaffolding , managerial provisions formal relational contracts highlight the recent trend towards more detailed contracts. These concepts indicate role of is improve ...

Purpose Contracts and trust are two prominent governance mechanisms in buyer–supplier exchanges, yet controversy persists regarding the interplay between contracts trust. This study aims to provide a new perspective understand debate by differentiating between- from within-dyad effects of contracts–trust relationships. Design/methodology/approach Based on survey data 250 Chinese relationships c...

This study investigates contracting mechanisms in situations of opportunistic disputes between organizations. The authors specifically explore the relationships between the formal versus informal nature of opportunism and the formal versus informal nature of contractual governance. They use a unique data set of 102 buyer– supplier disputes to explore in depth different types of opportunism – th...

A psychological contract is an agreement between the employer and an employee that covers the parties’ informal and frequently non-verbalized obligations and expectations towards each other. The contract is a cognitive pattern-governing employee’s behaviour in the organization. A gap between employee’s expectations and the organizational reality may lead to difficult-tosolve conflicts or cause ...

For specifying and reasoning about object-based programs it is often attractive for contracts to be expressed using calls to pure methods. It is useful for pure methods to have contracts, including read effects to support local reasoning based on frame conditions. This leads to puzzles such as the use of a pure method in its own contract. These ideas have been explored in connection with verifi...

In this paper, we explore how contract structure is influenced by relational capabilities developed in cross-boundary innovation-based relationships. Differing from other studies, we focus on the organizational positions, roles, and responsibilities of the parties involved. We hypothesize that as technical personnel gain contracting experience with an exchange partner, their focus on value crea...

This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Le er (1981)) and e ciency wages (Shapiro and Stiglitz (1984)), have been o ered as solutions to the problem of enforcing an incomplete contract. It is shown that t...

This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Leffler (1981)) and efficiency wages (Shapiro and Stiglitz (1984)), have been offered as solutions to the problem of enforcing an incomplete contract. It is shown t...

C a firm developing an innovative product. Due to market pressures, production must begin soon after the product development effort is complete, which requires that an upstream supplier invests in capacity while the design of the product and production process are in flux. Because the product is ill-defined at this point in time, the firms are unable to write court-enforceable contracts that sp...