Repeated Interactions and Contractual Detail: Identifying the Learning Effect

Organization Science, Forthcoming

36 Pages Posted: 3 Oct 2006 Last revised: 14 Dec 2009

Date Written: July 17, 2008

Abstract

Organizations interacting repeatedly on similar transactions may learn from prior experiences, allowing contracts to be specified in greater detail. In this study, we analyze the conditions under which this learning effect is most likely to manifest itself by focusing on different parts of a contract as well as differences across transacting parties. Using a survey of IT procurement contracts from 788 Dutch small and medium-sized enterprises, we show that the learning effect is stronger for technical than for legal detail in contracts, and is stronger for firms with IT expertise than for firms without such expertise.

Keywords: Contracts, learning, trust

JEL Classification: D23, L22

Suggested Citation

Vanneste, Bart and Puranam, Phanish, Repeated Interactions and Contractual Detail: Identifying the Learning Effect (July 17, 2008). Organization Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=934394

Bart Vanneste (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Phanish Puranam

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore

HOME PAGE: http://www.insead.edu/facultyresearch/faculty/profiles/ppuranam/

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