Contractual Networks, Inter-Firm Cooperation and Economic Growth

Contractual Networks, Inter-Firm Cooperation and Economic Growth

Edited by Fabrizio Cafaggi

This insightful book presents a legal and economic analysis of inter-firm cooperation through networks as an alternative to vertical integration. It examines comparatively various forms of collaboration, ranging from consortia to multiparty joint ventures and from franchising to dealerships.

Chapter 2: Cooperation, Long-term Relationships and Open-endedness in Contractual Networks

Fernando Gómez

Subjects: business and management, organisational innovation, innovation and technology, organisational innovation, law - academic, commercial law, private international law


* Fernando Gómez** INTRODUCTION 1. Unless the world current economic turmoil and its aftermath forces a reassessment of the situation, there seems to be a growing consensus among economists and organization theorists, based on empirical evidence, that contract has been gaining ground over ownership and authority as a means of organizing economic activity.1 In the old Coasean dichotomy between contract and firm,2 the former appears to be on the increase, though not necessarily in the neo-classical form of arm’s-length contractual exchanges in the short term, but through more complex and extended relationships in which contractual links become components of networks of relationships. These networks may take and operate in different shapes and forms.3 What remains central in contract networks, as with economic exchange more generally, is the need to create a framework favourable to the development of means and tools to induce and sustain cooperation among the different participating agents. In fact, it is the failure to cooperate and the * I am grateful to Fabrizio Cafaggi, and to participants in the workshop at the European University Institute, for helpful discussions of the ideas reflected in this chapter, and to the Spanish Ministry of Innovation and Science for financial support, under grants SEJ2007-60503 and SEJ2005-10041, and to Marian Gili for excellent research assistance. ** Professor of Law and Economics, School of Law, Universitat Pompeu Fabra. Ramon Trias Fargas 25–7, 08005 Barcelona, Spain. E-mail: fernando. 1 The idea is by no means new: see Piore and Sabel (1984); Powell...

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