Relational Contracts and the Theory of the Firm
Top Cited Papers
- 1 February 2002
- journal article
- research article
- Published by Oxford University Press (OUP) in The Quarterly Journal of Economics
- Vol. 117 (1) , 39-84
- https://doi.org/10.1162/003355302753399445
Abstract
Relational contracts—informal agreements sustained by the value of future relationships—are prevalent within and between firms. We develop repeated-game models showing why and how relational contracts within firms (vertical integration) differ from those between (nonintegration). We show that integration affects the parties' temptations to renege on a given relational contract, and hence affects the best relational contract the parties can sustain. In this sense, the integration decision can be an instrument in the service of the parties' relationship. Our approach also has implications for joint ventures, alliances, and networks, and for the role of management within and between firms.This publication has 27 references indexed in Scilit:
- Bringing the Market Inside the Firm?American Economic Review, 2001
- Fisher—General Motors and the Nature of the FirmThe Journal of Law and Economics, 2000
- The Architecture of Cooperation: Managing Coordination Costs and Appropriation Concerns in Strategic AlliancesAdministrative Science Quarterly, 1998
- Implicit Contracts, Incentive Compatibility, and Involuntary UnemploymentEconometrica, 1989
- The Costs and Benefits of Ownership: A Theory of Vertical and Lateral IntegrationJournal of Political Economy, 1986
- Economic Action and Social Structure: The Problem of EmbeddednessAmerican Journal of Sociology, 1985
- The Role of Market Forces in Assuring Contractual PerformanceJournal of Political Economy, 1981
- Internal Pricing in Firms When There are Costs of Using an Outside MarketThe Journal of Business, 1964
- Non-Contractual Relations in Business: A Preliminary StudyAmerican Sociological Review, 1963
- On the Economics of Transfer PricingThe Journal of Business, 1956