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Shadow of the contract: how contract structure shapes inter-firm dispute resolution

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  • Lumineau, Fabrice
  • Malhotra, Deepak

Abstract

This paper investigates how contract structure influences inter-firm dispute resolution processes and outcomes by examining a unique dataset consisting of over 150,000 pages of documents relating to 102 business disputes. We find that the level of contract detail affects the type of dispute resolution approach that is adopted when conflict arises, and that different approaches are associated with different costs for resolving the dispute. We also find that the effect of contract choice on dispute resolution approach is moderated by the degree of coordination required in the relationship, and that the effect of dispute approach on costs is moderated by the degree of power asymmetry between the parties. Thus, even after controlling for various attributes of the exchange relationship and the dispute, the choice of contracting structure has important strategic implications.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38359.

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Date of creation: 2011
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Handle: RePEc:pra:mprapa:38359

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Related research

Keywords: Contractual Governance; Disputes; Framing; Interest-Based Negotiation and Rights-Based Negotiation; Control and Coordination; Power;

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References

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  1. Vlaar, P.W.L. & van den Bosch, F.A.J., 2006. "Coping with Problems of Understanding in Interorganizational Relationships: Using Formalization as a Means to make Sense," ERIM Report Series Research in Management ERS-2006-034-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
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Cited by:
  1. Basant, Rakesh & Rai, Rajnish, . "Alliance Capability, Governance Mechanisms And Stakeholder Management In Complex Settings," IIMA Working Papers WP2013-05-10, Indian Institute of Management Ahmedabad, Research and Publication Department.
  2. Lumineau, Fabrice & Oxley, Joanne, 2012. "Let’s work it out (or we’ll see you in court): litigation and private dispute resolution in vertical exchange relationships," MPRA Paper 38361, University Library of Munich, Germany.
  3. Fabrice Lumineau & Marc Fréchet & Dominique Puthod, 2011. "An organizational learning perspective of the contracting process," Post-Print halshs-01019320, HAL.
  4. Lumineau, Fabrice & Quelin, Bertrand, 2012. "An Empirical Investigation of Interorganizational Opportunism and Contracting Mechanisms," MPRA Paper 38362, University Library of Munich, Germany.
  5. Lumineau, Fabrice & Henderson, James, 2012. "The influence of relational experience and contractual governance on the negotiation strategy in buyer-supplier disputes," MPRA Paper 38510, University Library of Munich, Germany.
  6. Lumineau, Fabrice & Frechet, Marc & Puthod, Dominique, 2011. "An organizational learning perspective on contract design," MPRA Paper 38360, University Library of Munich, Germany.

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