The Hidden Cost of Contracts on Relationships and Performance
21 Pages Posted: 21 May 2010
Rather than acting as a safeguard, contracts may actually damage relationships. Using field and lab studies, we assessed the effects of contracts on contract formation, implementation, and ultimate outcomes. Studies 1 and 2 showed that the presence of a contract led people to anticipate more contentious interactions, which then led to a reduction in their actual cooperative behavior. Studies 3 and 4 showed that contracts that included sanctions led to poor team performance.
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