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Contracts, Negotiation, and Learning: An Examination of Termination Provisions

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  • Africa Ariño
  • Jeffrey J. Reuer
  • Kyle J. Mayer
  • Juan Jané

Abstract

Taking a temporal view of learning in partnerships, we argue that learning to contract from prior relationships can be manifested not only in an increase in the level of contractual detail but also in a decrease in negotiation time for a given level of contractual detail. We analyse the influence that the length of prior relationships and the detail of termination provisions have on negotiation time, or the time period that it takes for partners to reach a mutually acceptable agreement. We find that: (1) the length of prior relationships has a curvilinear, U-shaped effect on negotiation time, suggesting the possibility of diverse learning mechanisms as the relationship unfolds; (2) the impact of the detail of termination provisions on negotiation time varies across different types of termination provisions; and (3) it takes a shorter time to negotiate certain types of termination provisions when partners have longer prior relationships. Beyond suggesting the need to investigate the consequences of contractual provisions for collaborators, our study proposes negotiation time as an additional indicator of a learning-to-contract effect that complements existing ones.

Suggested Citation

  • Africa Ariño & Jeffrey J. Reuer & Kyle J. Mayer & Juan Jané, 2014. "Contracts, Negotiation, and Learning: An Examination of Termination Provisions," Journal of Management Studies, Wiley Blackwell, vol. 51(3), pages 379-405, May.
  • Handle: RePEc:bla:jomstd:v:51:y:2014:i:3:p:379-405
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    File URL: http://hdl.handle.net/10.1111/joms.12069
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    References listed on IDEAS

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    Cited by:

    1. van den Hurk, Martijn & Verhoest, Koen, 2017. "On the fast track? Using standard contracts in public–private partnerships for sports facilities: A case study," Sport Management Review, Elsevier, vol. 20(2), pages 226-239.
    2. Martinez-Noya, Andrea & Narula, Rajneesh, 2018. "What more can we learn from R&D alliances? : A review and research agenda," MERIT Working Papers 022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Miranda Sarmento, J.J. & Renneboog, Luc, 2017. "Renegotiating Public-Private Partnerships," Discussion Paper 2017-014, Tilburg University, Center for Economic Research.
    4. Martijn Hurk, 2016. "Learning to contract in public–private partnerships for road infrastructure: recent experiences in Belgium," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(3), pages 309-333, September.

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