IDEAS home Printed from https://ideas.repec.org/a/bla/jomstd/v51y2014i3p379-405.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/joms.12069
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fabrice Lumineau & Marc Fréchet & Dominique Puthod, 2011. "An organizational learning perspective of the contracting process," Post-Print hal-00962458, HAL.
    2. Shannon W. Anderson & Henri C. Dekker, 2005. "Management Control for Market Transactions: The Relation Between Transaction Characteristics, Incomplete Contract Design, and Subsequent Performance," Management Science, INFORMS, vol. 51(12), pages 1734-1752, December.
    3. Kyle J. Mayer & Nicholas S. Argyres, 2004. "Learning to Contract: Evidence from the Personal Computer Industry," Organization Science, INFORMS, vol. 15(4), pages 394-410, August.
    4. Tarun Khanna, 1998. "The Scope of Alliances," Organization Science, INFORMS, vol. 9(3), pages 340-355, June.
    5. John Hagedoorn & Geerte Hesen, 2007. "Contract Law and the Governance of Inter‐Firm Technology Partnerships – An Analysis of Different Modes of Partnering and Their Contractual Implications," Journal of Management Studies, Wiley Blackwell, vol. 44(3), pages 342-366, May.
    6. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    7. Artz, Kendall W. & Brush, Thomas H., 2000. "Asset specificity, uncertainty and relational norms: an examination of coordination costs in collaborative strategic alliances," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 337-362, April.
    8. Lumineau, Fabrice & Frechet, Marc & Puthod, Dominique, 2011. "An organizational learning perspective on contract design," MPRA Paper 38360, University Library of Munich, Germany.
    9. Yadong Luo, 1997. "Partner Selection and Venturing Success: The Case of Joint Ventures with Firms in the People's Republic of China," Organization Science, INFORMS, vol. 8(6), pages 648-662, December.
    10. Campbell, Elise & Reuer, Jeffrey J., 2001. "International alliance negotiations: legal issues for general managers," Business Horizons, Elsevier, vol. 44(1), pages 19-26.
    11. Raji Srinivasan & Thomas H. Brush, 2006. "Supplier Performance in Vertical Alliances: The Effects of Self-Enforcing Agreements and Enforceable Contracts," Organization Science, INFORMS, vol. 17(4), pages 436-452, August.
    12. Asha Rao & Stuart M Schmidt, 1998. "A Behavioral Perspective on Negotiating International Alliance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(4), pages 665-694, December.
    13. Henri C. Dekker & Alexandra Van den Abbeele, 2010. "Organizational Learning and Interfirm Control: The Effects of Partner Search and Prior Exchange Experiences," Organization Science, INFORMS, vol. 21(6), pages 1233-1250, December.
    14. Bart S. Vanneste & Phanish Puranam, 2010. "Repeated Interactions and Contractual Detail: Identifying the Learning Effect," Organization Science, INFORMS, vol. 21(1), pages 186-201, February.
    15. Maurizio Zollo & Jeffrey J. Reuer & Harbir Singh, 2002. "Interorganizational Routines and Performance in Strategic Alliances," Organization Science, INFORMS, vol. 13(6), pages 701-713, December.
    16. Steven White & Steven Siu‐Yun Lui, 2005. "Distinguishing costs of cooperation and control in alliances," Strategic Management Journal, Wiley Blackwell, vol. 26(10), pages 913-932, October.
    17. Joanne E. Oxley & Rachelle C. Sampson, 2004. "The scope and governance of international R&D alliances," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 723-749, August.
    18. Michael D. Ryall & Rachelle C. Sampson, 2009. "Formal Contracts in the Presence of Relational Enforcement Mechanisms: Evidence from Technology Development Projects," Management Science, INFORMS, vol. 55(6), pages 906-925, June.
    19. Fabrice Lumineau & Marc Fréchet & Dominique Puthod, 2011. "An organizational learning perspective of the contracting process," Post-Print halshs-01019320, HAL.
    20. Thomas Mellewigt & Anoop Madhok & Antoinette Weibel, 2007. "Trust and formal contracts in interorganizational relationships - substitutes and complements," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 833-847.
    21. Anoop Madhok & Stephen B. Tallman, 1998. "Resources, Transactions and Rents: Managing Value Through Interfirm Collaborative Relationships," Organization Science, INFORMS, vol. 9(3), pages 326-339, June.
    22. Candace Young-Ybarra & Margarethe Wiersema, 1999. "Strategic Flexibility in Information Technology Alliances: The Influence of Transaction Cost Economics and Social Exchange Theory," Organization Science, INFORMS, vol. 10(4), pages 439-459, August.
    23. Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(2), pages 387-409, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fabrice Lumineau & Chris Long & Sim B. Sitkin & Nicholas Argyres & Gideon Markman, 2023. "Rethinking Control and Trust Dynamics in and between Organizations," Journal of Management Studies, Wiley Blackwell, vol. 60(8), pages 1937-1961, December.
    2. Perdreau, Frédéric & Fréchet, Marc, 2022. "Learning, contractual capabilities, and contract duration changes in franchise networks," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    3. Beuk, Frederik & Rubin, Eran, 2021. "Data-based negotiator allocation management," Business Horizons, Elsevier, vol. 64(4), pages 537-552.
    4. 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.
    5. Frédéric Perdreau & Marc Fréchet, 2022. "Learning, contractual capabilities, and contract duration changes in franchise networks," Post-Print hal-04692638, HAL.
    6. 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).
    7. Jane Bjørn Vedel & Joana Geraldi, 2023. "How Managers Respond to Paradoxical Control‐Trust Dynamics in Interorganizational Relationships over Time: A Constitutive Approach," Journal of Management Studies, Wiley Blackwell, vol. 60(8), pages 2060-2090, December.
    8. 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.
    9. 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.
    10. 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).
    11. 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.
    12. 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.
    13. 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.
    14. Sarmento, Joaquim Miranda & Renneboog, Luc, 2021. "Renegotiating public-private partnerships," Journal of Multinational Financial Management, Elsevier, vol. 59(C).
    15. 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.
    16. 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.
    17. 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.
    18. Martijn Hurk, 2016. "Learning to contract in public–private partnerships for road infrastructure: recent experiences in Belgium," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(3), pages 309-333, September.
    19. Martijn van den Hurk & Tuna Tasan-Kok, 2020. "Contractual arrangements and entrepreneurial governance: Flexibility and leeway in urban regeneration projects," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3217-3235, December.
    20. van der Valk, Wendy & Lumineau, Fabrice & Wang, Wenqian, 2019. "Research on contracting in supply chain management and related disciplines: A synthesis of scholarly recommendations and a discussion of future opportunities," Other publications TiSEM 55901a88-7fc5-4808-a47a-e, Tilburg University, School of Economics and Management.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Yu & Chen, Yongqiang & Wang, Wenqian & Tang, Yinqiu, 2019. "Differentiating two types of learning in contract design: Evidence from the construction industry," Scandinavian Journal of Management, Elsevier, vol. 35(1), pages 1-11.
    2. Fang, F., 2019. "When performance shortfall arises, contract or trust? A multi-method study of the impact of contractual and relational governances on performance in public – private partnerships," Other publications TiSEM 473840ee-6945-4a93-9326-5, Tilburg University, School of Economics and Management.
    3. Reuer, Jeffrey & Devarakonda, S.V., 2015. "Mechanisms of hybrid governance : Administrative committees in non-equity alliances," Other publications TiSEM 063d9ccc-59c8-4e76-a77d-8, Tilburg University, School of Economics and Management.
    4. Müller, Dirk, 2010. "Alliance Coordination, Dysfunctions, and the Protection of Idiosyncratic Knowledge in Strategic Learning Alliances," EconStor Preprints 41039, ZBW - Leibniz Information Centre for Economics.
    5. Jeffrey J. Reuer & Elko Klijn & Constantinos S. Lioukas, 2014. "Board involvement in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 35(11), pages 1626-1644, November.
    6. Duplat, Valérie & Coeurderoy, Régis & Hagedoorn, John, 2018. "Contractual governance and the choice of dispute-resolution mechanisms: Evidence on technology licensing," Research Policy, Elsevier, vol. 47(6), pages 1096-1110.
    7. 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.
    8. 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).
    9. van der Valk, Wendy & Lumineau, Fabrice & Wang, Wenqian, 2019. "Research on contracting in supply chain management and related disciplines: A synthesis of scholarly recommendations and a discussion of future opportunities," Other publications TiSEM 55901a88-7fc5-4808-a47a-e, Tilburg University, School of Economics and Management.
    10. Shen, Lu & Su, Chenting & Zheng, Xu & Zhuang, Guijun, 2019. "Contract design capability as a trust enabler in the pre-formation phase of interfirm relationships," Journal of Business Research, Elsevier, vol. 95(C), pages 103-115.
    11. Laura Poppo & Kevin Zheng Zhou & Sungmin Ryu, 2008. "Alternative Origins to Interorganizational Trust: An Interdependence Perspective on the Shadow of the Past and the Shadow of the Future," Organization Science, INFORMS, vol. 19(1), pages 39-55, February.
    12. Jochen Schweitzer, 2016. "How Contracts And Culture Mediate Joint Transactions Of Innovation Partnerships," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-33, January.
    13. Martijn Hurk, 2016. "Learning to contract in public–private partnerships for road infrastructure: recent experiences in Belgium," Policy Sciences, Springer;Society of Policy Sciences, vol. 49(3), pages 309-333, September.
    14. Jongkuk Lee & Glenn Hoetker & William Qualls, 2015. "Alliance Experience and Governance Flexibility," Organization Science, INFORMS, vol. 26(5), pages 1536-1551, October.
    15. Shivaram V. Devarakonda & Brian T. McCann & Jeffrey J. Reuer, 2018. "Marshallian Forces and Governance Externalities: Location Effects on Contractual Safeguards in Research and Development Alliances," Organization Science, INFORMS, vol. 29(6), pages 1112-1129, December.
    16. Henri C. Dekker & Alexandra Van den Abbeele, 2010. "Organizational Learning and Interfirm Control: The Effects of Partner Search and Prior Exchange Experiences," Organization Science, INFORMS, vol. 21(6), pages 1233-1250, December.
    17. Liwen Wang, 2023. "The interplay of contracts and trust: untangling between- and within-dyad effects," Post-Print hal-03944358, HAL.
    18. García-Canal, Esteban & Valdés-Llaneza, Ana & Sánchez-Lorda, Pablo, 2014. "Contractual form in repeated alliances with the same partner: The role of inter-organizational routines," Scandinavian Journal of Management, Elsevier, vol. 30(1), pages 51-64.
    19. Laura Poppo & Kevin Zheng Zhou & Todd R. Zenger, 2008. "Examining the Conditional Limits of Relational Governance: Specialized Assets, Performance Ambiguity, and Long‐Standing Ties," Journal of Management Studies, Wiley Blackwell, vol. 45(7), pages 1195-1216, November.
    20. Golonka, Monika, 2015. "Proactive cooperation with strangers: Enhancing complexity of the ICT firms' alliance portfolio and their innovativeness," European Management Journal, Elsevier, vol. 33(3), pages 168-178.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:51:y:2014:i:3:p:379-405. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2380 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.