Law Commons^™

In a study that follows in Macaulay's (1963) footsteps, we asked businesses what role formal contract law plays in managing their external relationships. We heard similar answers to the ones Macaulay obtained fifty years ago from smaller companies that described important but non-innovation-oriented external relationships. But we also uncovered an important phenomenon: companies, large and small, that described innovation-oriented external relationships reported making extensive use of formal contracts to plan and manage these relationships. They do not, however, generate these formal contracts in order to secure the benefits of a credible threat of formal contract enforcement. Instead, like Macaulay's original …