How do firms actually combine personal and impersonal institutions to safeguard their contracts?
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AbstractA survey among managers offers new evidence on the relative importance of different contract- enforcement institutions and how they are combined for the governance of interfirm relationships. By model-based clustering, we identify three distinct governance strategies that rely on distinct combinations of institutions: (1) bilateral governance, relying mostly on morality and self-enforcement; (2) third- party governance, using a mix of courts, personal and corporate reputation and community norms; and (3) comprehensive governance, relying heavily on all in stitutions. Governance choice is largely an optimising response to transaction characteristics. This suggests that the real choices at the level of governance are not between personal and impersonal institutions but between (i) bilateral and third-party solutions, and (ii) the partial or comprehensive use of institutions.
TypeConference or Workshop Item
Mike, Károly and Kiss, Gábor (2016) How do firms actually combine personal and impersonal institutions to safeguard their contracts? In: World Interdisciplinary Network for Institutional Research, Annual Conference 2016, 2016. 09. 02-05., Boston. (Unpublished)