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Contracting Strategies in Entrepreneurial and Established Firms

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  • Roger L. Hudson
  • Angeline W. McArthur

Abstract

Entrepreneurial and established firms need different contracting strategies because they operate in different environments. Established firms operate in an environment of economic equilibrium, whereas entrepreneurial firms operate in an environment of economic disequilibrium. A general contracting model is developed that takes into account risk, environmental context, governance structure, safeguards, transaction costs, and transaction justice. The model is used to develop hypotheses about how entrepreneurial and established firms’ contracting strategies differ and how contracting strategies lead to firm success or failure.

Suggested Citation

  • Roger L. Hudson & Angeline W. McArthur, 1994. "Contracting Strategies in Entrepreneurial and Established Firms," Entrepreneurship Theory and Practice, , vol. 18(3), pages 43-59, April.
    • Handle: RePEc:sae:entthe:v:18:y:1994:i:3:p:43-59
    DOI: 10.1177/104225879401800304
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    References listed on IDEAS

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    Cited by:

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    5. Saras D. Sarasvathy, 2021. "The Middle Class of Business: Endurance as a Dependent Variable in Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 45(5), pages 1054-1082, September.

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