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Asymmetric contracting capabilities : The effect on contract design, value appropriation, and governance

Hallberg, Niklas Lars LU (2017) Strategic Management Society's Annual Conference
Abstract
I augment transaction cost economics and the learning to contract perspective by outlining the effect of asymmetric contracting capabilities on contract design, value appropriation, and governance structure. According to the learning to contract literature, parties in buyer-supplier relationships adopt the governance structure that best economizes on transaction costs, and then over time learn to govern relationships in an even more efficient manner, thereby further reducing transaction costs. However, this perspective on governance and learning to contract disregards the possibility that firms engaged in complex buyer-supplier relationships will as a result of differential learning and initial endowments develop asymmetrical contracting... (More)
I augment transaction cost economics and the learning to contract perspective by outlining the effect of asymmetric contracting capabilities on contract design, value appropriation, and governance structure. According to the learning to contract literature, parties in buyer-supplier relationships adopt the governance structure that best economizes on transaction costs, and then over time learn to govern relationships in an even more efficient manner, thereby further reducing transaction costs. However, this perspective on governance and learning to contract disregards the possibility that firms engaged in complex buyer-supplier relationships will as a result of differential learning and initial endowments develop asymmetrical contracting capabilities that allows the stronger party in the relationship to appropriate a larger share of created value by externalizing costs and internalizing revenue. This shift in the distribution of payoffs between the contracting parties is likely to give rise to new forms of contractual hazards and shape the parties’ preferences over different contractual forms in ways presently not addressed in the learning to contract literature. (Less)
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author
organization
publishing date
type
Contribution to conference
publication status
published
subject
keywords
Transaction Cost Economics, Organizational capabilities, contract design
conference name
Strategic Management Society's Annual Conference
language
English
LU publication?
yes
id
926693bd-f142-46aa-9364-c66fb71b693a
date added to LUP
2017-11-03 18:17:46
date last changed
2017-11-07 11:31:10
@misc{926693bd-f142-46aa-9364-c66fb71b693a,
  abstract     = {I augment transaction cost economics and the learning to contract perspective by outlining the effect of asymmetric contracting capabilities on contract design, value appropriation, and governance structure. According to the learning to contract literature, parties in buyer-supplier relationships adopt the governance structure that best economizes on transaction costs, and then over time learn to govern relationships in an even more efficient manner, thereby further reducing transaction costs. However, this perspective on governance and learning to contract disregards the possibility that firms engaged in complex buyer-supplier relationships will as a result of differential learning and initial endowments develop asymmetrical contracting capabilities that allows the stronger party in the relationship to appropriate a larger share of created value by externalizing costs and internalizing revenue. This shift in the distribution of payoffs between the contracting parties is likely to give rise to new forms of contractual hazards and shape the parties’ preferences over different contractual forms in ways presently not addressed in the learning to contract literature. },
  author       = {Hallberg, Niklas Lars},
  keyword      = {Transaction Cost Economics,Organizational capabilities,contract design},
  language     = {eng},
  title        = {Asymmetric contracting capabilities : The effect on contract design, value appropriation, and governance},
  year         = {2017},
}