Learning to Contract: Evidence from the Personal Computer Industry

Kyle J. Mayer () and Nicholas S. Argyres ()
Additional contact information
Kyle J. Mayer: Management and Organization Department, Marshall School of Business, University of Southern California, Los Angeles, California 90089-0808
Nicholas S. Argyres: Boston University School of Management, 595 Commonwealth Avenue, Boston, Massachusetts 02215

Organization Science, 2004, vol. 15, issue 4, 394-410

Abstract: Organizational forms involving more detailed contracts than are found in traditional spot market exchanges appear to be increasingly prevalent. There has been relatively little analysis, however, of the extent to which firms learn how to use contracts to manage their interfirm relationships over time. In this paper, we conduct a detailed case study of a time series of 11 contracts concluded during 1989–1997 between the same two partners, both of whom participate in the personal computer industry, to explore whether and how firms learn to contract. We find many changes to the structure of the contracts that cannot be fully explained by changes in the assets at risk in the relationship, and evidence that these changes are largely the result of processes in which the firms were learning how to work together, including learning how to contract with each other. The nature of this learning appears to have been quite incremental and local, that is, not very far sighted. We suggest how and when contracts might serve as repositories for knowledge about how to govern collaborations, and suggest some boundary conditions for this phenomenon. Our findings also provide implications for the debate about whether contracts have a positive or negative effect on interorganizational trust. We conclude with suggestions for future research.

Keywords: contracts; organizational learning; transaction costs (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (181)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1040.0074 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:15:y:2004:i:4:p:394-410

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().