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Severe or lenient contracting with friends: the shadow of the past on contractual governance

Severe or lenient contracting with friends: the shadow of the past on contractual governance The purpose of this paper is to empirically investigate the effects of cooperation history on contractual governance and the moderating effects of dependence asymmetry on those relationships from the perspective of a weaker firm in emergent economies. Drawing from resource dependence theory and contingency theory, this paper develops a conceptual model to investigate the impact of cooperation history on contractual governance.Design/methodology/approachThe authors use data from 188 buyer–supplier relationships in ChinaFindingsThe authors find that cooperation history is positively associated with contractual governance when dependence asymmetry is high but negatively associated with contractual governance when dependence asymmetry is low. Furthermore, the negative moderating effect of dependence asymmetry on the relationship between cooperation history and contractual complexity is stronger than the relationship between cooperation history and contract enforcement.Originality/valueThis study contributes to a better understanding of how cooperation history affects contractual governance with respect to the various levels of dependence on partners by incorporating a contingency view. This study also advances the literature on interfirm governance by distinguishing contractual governance into contractual complexity and contract enforcement. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Baltic Journal of Management Emerald Publishing

Severe or lenient contracting with friends: the shadow of the past on contractual governance

Baltic Journal of Management , Volume 14 (3): 19 – Jun 18, 2019

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1746-5265
DOI
10.1108/bjm-04-2018-0146
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to empirically investigate the effects of cooperation history on contractual governance and the moderating effects of dependence asymmetry on those relationships from the perspective of a weaker firm in emergent economies. Drawing from resource dependence theory and contingency theory, this paper develops a conceptual model to investigate the impact of cooperation history on contractual governance.Design/methodology/approachThe authors use data from 188 buyer–supplier relationships in ChinaFindingsThe authors find that cooperation history is positively associated with contractual governance when dependence asymmetry is high but negatively associated with contractual governance when dependence asymmetry is low. Furthermore, the negative moderating effect of dependence asymmetry on the relationship between cooperation history and contractual complexity is stronger than the relationship between cooperation history and contract enforcement.Originality/valueThis study contributes to a better understanding of how cooperation history affects contractual governance with respect to the various levels of dependence on partners by incorporating a contingency view. This study also advances the literature on interfirm governance by distinguishing contractual governance into contractual complexity and contract enforcement.

Journal

Baltic Journal of ManagementEmerald Publishing

Published: Jun 18, 2019

Keywords: Contract enforcement; Cooperation history

References