On the Genesis of Interfirm Relational Contracts

29 Pages Posted: 11 Dec 2017

See all articles by John M. de Figueiredo

John M. de Figueiredo

Duke University School of Law; Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Brian S. Silverman

University of Toronto - Rotman School of Management

Date Written: November 1, 2017

Abstract

In a wide range of circumstances, relational contracts can enable strategies that might not otherwise be possible. While most studies focus on the maintenance and performance of existing relational contracts, this paper explores the origins of interfirm relational contracts, focusing on how firms go from no contract to a relational contract. Relying on a microanalytic investigation of the birth of the desktop laser printer industry, we identify a combination of four emergent and deliberate steps that enhance the probability that a relational contract will arise: pre-existing personal relationships; capability complementarity; cultural similarity; and pursuit of non-competing but mutually reinforcing revenue models. We consider how each of these factors helps to undergird the parties’ clarity and credibility to increase the probability of the genesis of a relational contract, which in turn enables collaborating firms to undertake successful, difficult-to-imitate strategies.

Keywords: Strategic Alliances, Relational Contracting, Organizational Capabilities, Strategy Implementation, Competitive Advantage, Canon-HP Alliance

JEL Classification: L14, L24, L63, M10, O32

Suggested Citation

de Figueiredo, John M. and Silverman, Brian S., On the Genesis of Interfirm Relational Contracts (November 1, 2017). Rotman School of Management Working Paper No. 3083556; Duke Law School Public Law & Legal Theory Series No. 2018-5. Available at SSRN: https://ssrn.com/abstract=3083556 or http://dx.doi.org/10.2139/ssrn.3083556

John M. De Figueiredo

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
United States

Brian S. Silverman (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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