This paper studies the adoption of formal contracts as a safeguard mechanism in subcontracting agreements in the Spanish electronic industry, examining its relation with specificity, uncertainty, size, and the existence of other safeguards. The analysis of 74 subcontracting agreements confirms that the probability of writing a formal contract is positively related to the contractor's size, and negatively related to the subcontracted activity specificity, to the degree of previous knowledge and confidence between firms, and to the contractor's capacity for substituting the subcontractor. Furthermore, statistically significant differences in the use of formal contracts are also detected, depending on the electronic subsector considered and the nature of the subcontracted activity (goods or services). (Copyright: Fundación Empresa Pública)
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Volume (Year): 26 (2002) Issue (Month): 1 (January) Pages: 87-111 Download reference. The following formats are available: HTML
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Handle: RePEc:iec:inveco:v:26:y:2002:i:1:p:87-111
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Find related papers by JEL classification: L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
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