Antecedents of Intentionally Incomplete Inter-Firm Contracts

25 Pages Posted: 23 Aug 2011

See all articles by Marina Fiedler

Marina Fiedler

University of Passau - Business Administration and Economics

Carolin Blank

affiliation not provided to SSRN

Arnold Oskar Picot

Ludwig Maximilians University of Munich - Faculty of Business Administration (Munich School of Management)

Date Written: August 22, 2011

Abstract

We investigate (1) whether firms deliberately write incomplete contracts, and (2) if so, under which conditions. A better understanding of this phenomenon is important, because research shows that incomplete contracts can yield higher results than fully specified ones. We investigate these questions using the grounded theory methodology developed by Glaser and Strauss, and specifically the Straussarian version. We conducted thirty-seven semi-structured in-depth interviews with executives from different industries who negotiate contracts. We found that, given a confident view of the world, executives are willing to write incomplete inter-firm contracts under the following circumstances: a) they have a confident attitude towards their environment, b) they trust their contracting partner, c) the power relationship between the companies is equal, and d) the value of the contract is relatively low, i.e., of minor strategic importance.

Keywords: cooperation, grounded theory, trust, indefiniteness, intentionally incomplete contracts, non-verifiable contracts, power balance, qualitative research

Suggested Citation

Fiedler, Marina and Blank, Carolin and Picot, Arnold Oskar, Antecedents of Intentionally Incomplete Inter-Firm Contracts (August 22, 2011). Available at SSRN: https://ssrn.com/abstract=1914506 or http://dx.doi.org/10.2139/ssrn.1914506

Marina Fiedler (Contact Author)

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

HOME PAGE: http://www.wiwi.uni-passau.de/index.php?id=3199&L=2

Carolin Blank

affiliation not provided to SSRN ( email )

Arnold Oskar Picot

Ludwig Maximilians University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstraße 28
München, 80995
Germany
+49 89 2180-2252 (Phone)
0049-89-2180-3685 (Fax)

HOME PAGE: http://www.iom.bwl.uni-muenchen.de

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