The Contractual Governance of Transactions Within Firms

• 成果类型: Article
• 署名作者: Magelssen, Catherine; Rich, Beverly; Mayer, Kyle
• 署名单位: University of London; London Business School; Utah System of Higher Education; University of Utah; University of Southern California
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.2021.1536
• 发表日期: 2022
• 页码: 2226-2249
• 关键词: Contracting; internal transactions; intra-firm; FORMAL CONTRACTS; governance; fiat; Organizational economics; property rights; organizational units; intra-firm contracting

摘要

A central theoretical premise is that firms internalize transactions that are not suited for formal contracting. Yet, there is growing evidence that firms rely on formal contracts to govern some of their transactions within the firm. This paper discusses why firms use formal contracts between units within the firm and develops propositions for when formal contracts arise. Internalization does not eliminate transactional problems, and informal agreements for transactions between units often suffer from problems in understanding what the other unit will do and whether it will do what it promises. We argue that many of the features that make formal contracts valuable tools for market exchange are beneficial within firms, even if court enforcement of the contract is not possible. We suggest that formal contracts between units serve as communication and commitment devices that address coordination and incentive problems within the firm by providing clarity and credibility on the rights allocated to the units in the transaction.