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Contracts, Negotiation, and Learning: An Examination of Termination Provisions

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  • Africa Ariño
  • Jeffrey J. Reuer
  • Kyle J. Mayer
  • Juan Jané

Abstract

Taking a temporal view of learning in partnerships, we argue that learning to contract from prior relationships can be manifested not only in an increase in the level of contractual detail but also in a decrease in negotiation time for a given level of contractual detail. We analyse the influence that the length of prior relationships and the detail of termination provisions have on negotiation time, or the time period that it takes for partners to reach a mutually acceptable agreement. We find that: (1) the length of prior relationships has a curvilinear, U-shaped effect on negotiation time, suggesting the possibility of diverse learning mechanisms as the relationship unfolds; (2) the impact of the detail of termination provisions on negotiation time varies across different types of termination provisions; and (3) it takes a shorter time to negotiate certain types of termination provisions when partners have longer prior relationships. Beyond suggesting the need to investigate the consequences of contractual provisions for collaborators, our study proposes negotiation time as an additional indicator of a learning-to-contract effect that complements existing ones.

Suggested Citation

  • Africa Ariño & Jeffrey J. Reuer & Kyle J. Mayer & Juan Jané, 2014. "Contracts, Negotiation, and Learning: An Examination of Termination Provisions," Journal of Management Studies, Wiley Blackwell, vol. 51(3), pages 379-405, May.
    • Handle: RePEc:bla:jomstd:v:51:y:2014:i:3:p:379-405
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    References listed on IDEAS

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    3. Antonio Juan Briones-Peñalver & Juan Andrés Bernal-Conesa & Carmen Nieves Nieto, 2020. "Knowledge and innovation management model. Its influence on technology transfer and performance in Spanish Defence industry," International Entrepreneurship and Management Journal, Springer, vol. 16(2), pages 595-615, June.
    4. Frédéric Perdreau & Marc Fréchet, 2022. "Learning, contractual capabilities, and contract duration changes in franchise networks," Post-Print hal-04692638, HAL.
    5. Martinez-Noya, Andrea & Narula, Rajneesh, 2018. "What more can we learn from R&D alliances? : A review and research agenda," MERIT Working Papers 2018-022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Antonio Juan Briones-Peñalver & Juan Andrés Bernal-Conesa & Carmen Nieves Nieto, 0. "Knowledge and innovation management model. Its influence on technology transfer and performance in Spanish Defence industry," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-21.
    7. Robert C. Bird & Vivek Soundararajan, 2020. "The Role of Precontractual Signals in Creating Sustainable Global Supply Chains," Journal of Business Ethics, Springer, vol. 164(1), pages 81-94, June.
    8. Pereira, Vijay & Patnaik, Swetketu & Temouri, Yama & Tarba, Shlomo & Malik, Ashish & Bustinza, Oscar, 2021. "A longitudinal micro-foundational investigation into ambidextrous practices in an international alliance context–A case of a biopharma EMNE," International Business Review, Elsevier, vol. 30(1).
    9. Ali Shamsollahi & Danielle A. Chmielewski-Raimondo & Simon J. Bell & Reza Kachouie, 2021. "Buyer–supplier relationship dynamics: a systematic review," Journal of the Academy of Marketing Science, Springer, vol. 49(2), pages 418-436, March.
    10. Anindya Ghosh & Thomas Klueter, 2022. "The Role of Frictions due to Top Management in Alliance Termination Decisions: Insights from Established Bio‐Pharmaceutical Firms," Journal of Management Studies, Wiley Blackwell, vol. 59(5), pages 1315-1353, July.
    11. van den Hurk, Martijn & Verhoest, Koen, 2017. "On the fast track? Using standard contracts in public–private partnerships for sports facilities: A case study," Sport Management Review, Elsevier, vol. 20(2), pages 226-239.
    12. Sarmento, Joaquim Miranda & Renneboog, Luc, 2021. "Renegotiating public-private partnerships," Journal of Multinational Financial Management, Elsevier, vol. 59(C).
    13. Vanesa Solís-Rodríguez & Manuel González-Díaz, 2019. "Prior interactions and contractual completeness in Spanish franchising," Small Business Economics, Springer, vol. 53(3), pages 795-812, October.
    14. Nullmeier, Fabian & Wynstra, Finn & van der Valk, Wendy, 2019. "Mitigating shirking: Contracting performance in buyer-initiated service triads," Other publications TiSEM cebcb590-5a85-4906-b8ec-1, Tilburg University, School of Economics and Management.
    15. Ghosh, Anindya & Klueter, Thomas, 2022. "The role of frictions due to top management in alliance termination decisions: Insights from established bio-pharmaceutical firms," Other publications TiSEM 9faa19d2-d1a8-4490-befb-d, Tilburg University, School of Economics and Management.
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