An Empirical Investigation of Interorganizational Opportunism and Contracting Mechanisms

Lumineau, Fabrice and Quelin, Bertrand (2012): An Empirical Investigation of Interorganizational Opportunism and Contracting Mechanisms. Published in: Strategic Organization , Vol. 1, No. 10 (2012)

Abstract

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 – that is, strong form versus weak form opportunism – and different types of contracting mechanisms – that is, the controlling and coordinating functions of formal contracts and the cooperative and competitive sides of relational contracts. The authors’ detailed empirical analysis suggests distinct relationships between the different contracting mechanisms, the different types of opportunism, and the level of legal fees necessary to deal with the dispute. From these findings the authors derive implications for research on the role of contractual mechanisms in dealing with interorganizational opportunism.

• Item Type: MPRA Paper
• Language: English
• Keywords: Formal contract; Legal fees; Opportunism; Relational contract; Vertical relationship
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks; K - Law and Economics > K1 - Basic Areas of Law > K12 - Contract Law; K - Law and Economics > K1 - Basic Areas of Law; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty

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