Contracts as Organizations

Arizona Law Review, Vol. 51, No. 1, 2009

45 Pages Posted: 11 Mar 2007 Last revised: 10 Jun 2015

Date Written: March 1, 2007

Abstract

Empirical studies of contracts have become more common over the past decade, but the range of questions addressed by these studies is narrow, inspired primarily by economic theories that focus on the role of contracts in mitigating ex post opportunism. We contend that these economic theories do not adequately explain many commonly observed features of contracts, and we offer four organizational theories to supplement-and in some instances, perhaps, challenge-the dominant economic accounts. The purpose of this Article is threefold: first, to describe how theoretical perspectives on contracting have motivated empirical work on contracts; second, to highlight the dominant role of economic theories in framing empirical work on contracts; and third, to enrich the empirical study of contracts through application of four organizational theories: resource theory, learning theory, identity theory, and institutional theory. Outside economics literature, empirical studies of contracts are rare. Even management scholars and sociologists who generate organizational theories largely ignore contracts. Nevertheless, we assert that these organizational theories provide new lenses through which to view contracts and help us understand their multiple purposes.

Keywords: contracts, organizations, empirical, law

JEL Classification: L14, L22, K12, M13

Suggested Citation

King, Brayden and Smith, D. Gordon, Contracts as Organizations (March 1, 2007). Arizona Law Review, Vol. 51, No. 1, 2009. Available at SSRN: https://ssrn.com/abstract=969816 or http://dx.doi.org/10.2139/ssrn.969816

Brayden King

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

D. Gordon Smith (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

422 JRCB
Provo, UT 84602
United States
801.422.3233 (Phone)
801.422.0390 (Fax)

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