Relational contract

About: Relational contract is a research topic. Over the lifetime, 454 publications have been published within this topic receiving 24079 citations.

The relations between work centrality, psychological contracts, and job attitudes: the influence of age

Abstract: The current study sought to explain a largely overlooked theme in psychological contract literature, that is, how individual factors are related to formation of psychological contract. It investigated the relationship between work centrality, psychological contracts, and job attitudes. It was expected that people with higher work centrality would be less likely to have a transactional contract and more likely to have a relational contract. Furthermore, it was expected that psychological contract mediates the relations between work centrality and job attitudes. Finally, we expected age to moderate the relations between work centrality and the psychological contract, with stronger relations for older workers than for younger workers. Based on life span psychology, it was argued that work centrality becomes an important factor for older workers in deciding whether or not to invest in the relationship with the organization. The study was conducted among 465 employees in a Dutch health care organization. Struc...

The Relationship Advantage: Information Technologies, Sourcing, and Management

Abstract: The relationship in information technology (IT) outsourcing determines the difference between a successful, a less successful, and a failing outsourcing deal. IT managers will commonly spend seventy per cent of their time on making the client-supplier relationship work, while thirty per cent of of their time will focus on the contract, personnel, and problem issues. Longitudinal research into Xero's global, British Aerospace's total, ESSO's selective, British Petroleum's alliance, and the UK Inland Revenue's public sector outsourcing deals highlights relationship practices and recurring post-contract management issues that demand careful attention and management. By use of a novel client-supplier relationship framework developed from transaction cost, relational contract, and interorganizational relationship theory, the authors carefully analyse these five longitudinal case studies and identify what the key dimensions of an outsourcing relationship are. Together the framework and the case studies provide a number of unique insights and learning pointers for both practitioners and academics on how to achieve's 'relationship advantage'.

Organizational Governance and Ethical Systems: A Covenantal Approach to Building Trust

Abstract: American businesses and corporate executives are faced with a serious problem the loss of public confidence. Public criticism, increased government controls, and growing expectations for improved financial performance and accountability have accompanied this decline in trust. Traditional approaches to corporate governance, typified by agency theory and stakeholder theory, have been expensive to direct and have focused on short-term profits and organizational systems that fail to achieve desired results. We explain why the organizational governance theories are fundamentally, inadequate to build trust. We advance a conceptual framework based on stewardship theory characterized by “covenantal relationships” and argue that design of governance mechanisms using a covenantal approach is more effective in building trust in organizations. A covenantal relationship is a specialized form of a relational contract between an employee and his or her organization. We argue that regardless of incentives and control mechanisms carefully designed through contractual mechanisms, in the absence of covenantal relationships it is extremely difficult to build trust within organizations. We propose that organizations are more likely to build trust – both at the organizational level and at the interpersonal level – when they create reinforcing and integrated systems that honor implied duties of “covenantal relationships.”

Potential for Implementing Relational Contracting and Joint Risk Management

Abstract: This paper focuses on the outcomes of the second survey in a broad Hong Kong-based study on joint risk management (JRM) through relational contracting (RC). The questionnaire survey itself focused on issues relating to the formation of a coalesced team for JRM at the postcontract stage, comprising owners, consultants, contractors, subcontractors, and suppliers. Results indicate the greater importance of more relational, trust, and joint responsibility-related factors in general, both for selecting different parties and for building a successful relational contract. While some differences in group perceptions emerge, respondents recommend mobilizing project participants at earlier stages of projects, that is, mostly before the contract award, and they strongly support the JRM option for managing various unforeseen risks. Respondents also suggest adjustment/extension of contract provisions for managing unforeseen events, indicating emerging preferences for flexibility in contracts. All these are indicative of a perceived trend toward more RC, teamworking, and collaborative working environments.

Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts

Abstract: This paper studies how agents with conflicting interests learn to cooperate when the details of cooperation are not common knowledge. It considers a repeated game in which one player has incomplete information about when and how her partner can provide benefits. Initially, monitoring is imperfect and cooperation requires inefficient punishment. As the players' common his tory grows, the uninformed player can learn to monitor her partner's actions, which allows players to establish more efficient cooperative routines. Because revealing information is costly, it may be optimal not to reveal all the existing information, and efficient equilibria can be path-dependent. (JEL C73, D82, D83, D86) This paper studies how agents with conflicting interests go about developing a successful cooperative relationship when the details of cooperation are not common knowledge. In cir cumstances where formal contracts are unavailable or inconvenient, agents frequently rely on informal cooperative agreements?or relational contracts?to resolve incentive conflicts. In fact, whenever the interested parties have better information than do outside courts, relational con tracts can outperform formal contracts by allowing agents to adapt their joint behavior to contin gencies that cannot be assessed by third parties.1 The starting point of this paper is to recognize that even when agents have better information than outside courts, this does not mean that the details of how and when cooperation should occur are common knowledge between the parties. For instance, a new plant manager may not have a complete understanding of what her produc tion teams can and cannot do, a firm's CEO may have only partial understanding of how research teams should operate, and so on. The question is then: how do players go about building a com mon agreement? Or, formulated in a slightly different way, how do they go about specifying the contingencies of their relational contract? The model developed in the paper considers two players engaged in an infinitely repeated game with asymmetric information. In each period, player 1 decides to stay (and interact with player 2) or exit (and skip interaction for one period). Staying is costly for player 1 and yields a benefit for player 2. If player 1 stays, player 2 can reciprocate by taking some action from a set of available actions, which is randomly drawn in each period from a countable superset. Player 2 can take actions of two types: unproductive actions that are costless to player 2 but yield zero benefit to