The Value of Relational Contracts in Outsourcing: Evidence from the 2008 Shock to the US Airline Industry

Gil, Ricard; Kim, Myongjin; Zanarone, Giorgio

doi:10.2139/ssrn.3130748

Cited by 10 publications

(17 citation statements)

References 45 publications

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“…To measure the latter, we use the methodology and data in Gil et al . (). On the methodology side, Gil et al .…”

Section: Illustrative Evidencementioning

confidence: 97%

“…On the methodology side, Gil et al . () show evidence that major airlines allocate the routes with worse weather to the regionals with which they have higher‐value relationships. They do so to ensure that the regional's cost of facilitating adaptation (higher in worse weather routes) is always lower or at par with the relationship value at stake, and, therefore, the incentive compatibility constraint in the relational adaptation contract is satisfied.…”

Section: Illustrative Evidencementioning

confidence: 99%

“…In this section, we use slot exchange data from Gil et al . () to further illustrate the importance of relational contracts in the airline industry. We originally gained access to slot exchange data for February 2016 in all three NYC airports (La Guardia LGA, Newark EWR, JFK) through an FOIA request to the Federal Aviation Administration (FAA).…”

Section: Illustrative Evidencementioning

confidence: 99%

“…Table (excerpt of Table A1 in Gil et al ., ) illustrates two representative examples of slot exchanges between major airlines and their outsourcing regional partners. In the top example, American Airlines (AAL) interacts with Trans States Airlines (LOF) to accommodate a number of its self‐operated flights.…”

Section: Illustrative Evidencementioning

confidence: 99%

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Relational Contracting in Developed Economies: Lessons From Slot Exchanges in the US Airline Industry

2019

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This paper highlights the widespread use of relational contracting in developed economies. While the number of empirical studies on relational practices in developing countries is increasing rapidly, evidence from industries and countries characterised by strong institutions is lagging behind due to data constraints. We argue that technological progress and strong institutions do not diminish the use of relational contracting, and use the US airline industry as a case in point. In particular, we discuss a number of factors (including transaction complexity, existence of collaborative relationships and data availability) that make this industry an ideal setting to study relational contracting in a developed economy. Moreover, we argue that other industries in developed countries share the properties of the US airline industry and, hence, can be used as a basis to investigate relational contracting in future work.

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“…To measure the latter, we use the methodology and data in Gil et al . (). On the methodology side, Gil et al .…”

Section: Illustrative Evidencementioning

confidence: 97%

Section: Illustrative Evidencementioning

confidence: 99%

Section: Illustrative Evidencementioning

confidence: 99%

Section: Illustrative Evidencementioning

confidence: 99%

See 2 more Smart Citations

Relational Contracting in Developed Economies: Lessons From Slot Exchanges in the US Airline Industry

2019

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“…A first approach uses proxy variables for the discount factor δ that may vary either over time within a relationship (Gil & Marion, ; Shelef, ) or across relationships (Corts & Singh, ; Gillan et al., ). A second approach estimates lower bounds for the PDV by measuring the parties’ present temptation to renege on an informal contractual agreement—that is, the right‐hand side of the self‐enforcement condition in the model (Barron et al., ; Gil et al., ; Macchiavello & Morjaria, ).…”

Section: Inferences From Selected Empirical Studies On Informal Contrmentioning

confidence: 99%

On the determinants and consequences of informal contracting

Gil

Zanarone²

2018

Economics Manag Strategy

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As documented by Macauley and others, informal contracts are pervasive in modern economies. Yet, systematic empirical evidence on them is still limited. In this paper, we provide a framework to investigate the determinants and consequences of informal contracting. First, we present an illustrative model that organizes key predictions from the theoretical literature. Next, we discuss selected empirical works that shed light on the model's relevance and testability. Overall, we find combined support for most theoretical predictions from the model, and we observe that significant progress has been made over time at measuring key determinants of informal contracting such as the parties’ discount factor and fallback option. We conclude by discussing strategies for testing theoretical predictions for which conclusive evidence is still missing.

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The role of relationship scope in sustaining relational contracts in interfirm networks

Argyres

Bercovitz

Zanarone

2019

Strategic Management Journal

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Research summary:A key strategic decision for many firms is the scope of their relationships with partners. Existing theories of relationship scope are limited in that they disregard the facts that: (a) most firms transact within networks of multiple partners, and (b) these partnerships often involve two-sided moral hazard. We develop a theory of partnership scope in interfirm networks that addresses these deficiencies. We show how, by broadening the scope of business it conducts with its partners, a firm can reduce externalities between them, and thereby sustain selfenforcing exchange relationships ("relational contracts") in /journal/smj them. We discuss how our model applies to franchising, supply chains, and platform-based ecosystems. K E Y W O R D Sinterfirm cooperation, interfirm networks, interorganizational relationships, relational contracts, relationship scope

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The Value of Relational Contracts in Outsourcing: Evidence from the 2008 Shock to the US Airline Industry

Cited by 10 publications

References 45 publications

Relational Contracting in Developed Economies: Lessons From Slot Exchanges in the US Airline Industry

Relational Contracting in Developed Economies: Lessons From Slot Exchanges in the US Airline Industry

On the determinants and consequences of informal contracting

The role of relationship scope in sustaining relational contracts in interfirm networks

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