This paper aims at achieving a greater understanding of how contracts operate in practice through a review of recent empirical literature on inter-firm contract design. Our focus on the structure of contractual agreements differentiates this review from others that dedicated ample coverage also to the antecedents of the decision to contract and of the choice of contracting versus integration. Our framework develops Stinchcombe’s (Organization Theory and Project Management, 1985) hypothesis that contracts are an organizational phenomenon. This allows us to uncover considerable but unevenly distributed evidence on a number of organizational processes formalized in relational contracts, which partially overlap with the processes that are observed in integrated organizations. It also enables us to describe contracts in terms of a larger number of dimensions than is commonly appreciated. The paper summarizes the evidence by proposing a general and tentative framework to guide the design of relational contracts, discusses a number of lingering issues, and outlines directions for further research on contracts as an organizational phenomenon. Copyright Springer Science+Business Media, LLC 2007Contracts, Governance, Inter-organizational research, Alliances, Literature review,

This paper discusses the components of contracts adequate for governing innovation, and their microfoundations in the logic of innovative decision processes. Drawing on models of discovery and design processes, distinctive logical features of innovative decision making are specified and connected to features of contracts that can sustain innovation processes and do not fail under radical uncertainty. It is argued that if new knowledge is to be generated under uncertainty and risk, 'relational contracts', as usually intended, are not enough and a more robust type of contracting is needed and it is actually often used: formal constitutional contracts that associate resources, leave their uses rationally unspecified, but exhaustively specify the assignment of residual decision rights and other property rights, and the decision rules to be followed in governance. The argument is supported by an analysis of a large international database on the governance of multi-party projects in discovery-intensive and design-intensive industries.

Most existing theories of relationship formation imply that organizations establish ties to procure complementary resources, and that doing so adroitly generates relational rents.While this entails a responsibility for organizations to recognize and harness complementarity, most theories struggle with ambiguity around the concept of resource complementarity, neglect its power implications, and rely on rules-of-thumb that assign no role to managers' intentions.To explain the formation of ties that successfully combine critical resources, we propose that a positive interplay among resources only exists insofar as organizations use task requirements to guide their combination. As such, a well-matched tie is one that manages task resource interdependence while offsetting imbalances in task-related resources.We test our theory on project-based, inter-organizational partnerships for public construction in Italy. We find that: (1) The probability of tie formation increases with the quality of the match between the task and actors' resources; (2) There are two distinct, task-related dimensions along which this happens: depth and scope; (3) The effect of these dimensions dwarfs the effect found by measures that assess complementarity irrespective of task; and (4) The probability of tie formation decreases when a task calls for resources that potential partners possess in unequal amounts. Keywords: complementarity; power; tasks; resource-dependence theory; networksAcknowledgments: The authors would like to thank Kristina Dahlin, Ranjay Gulati, Steven Postrel, Brian S. Silverman, Giovanni Valentini, and Akbar Zaheer for their valuable comments to earlier versions of this paper. This paper has been supported by the Claudio Dematté Research Division of SDA Bocconi School of Management. Additionally, for their research assistance, we thank Alessandra Zanetti and Riccardo Susigan. We owe thanks too for computer programming to Henk op den Brouw. All errors are ours.

To progress beyond the idea that the value of interfirm collaboration is largely determined by the complementarity of the resources held by partners, we build a theoretical framework that explains under which conditions a set of resources or capabilities can be considered as complementary and resulting in superior value creation. Specifically, we argue that the tasks that an interfirm collaboration has to perform determine complementarities and that complementarities arise from similar and dissimilar resources alike. We capture this relationship in the concept of task resource complementarity. Further, we examine factors that impact on the relevance of this construct as a predictor of partner selection. Finally, we discuss which implications arise for a theory of the firm when tasks are explicitly incorporated into the conceptualization of resource complementarity.