The Real Effects of Relational Contracts | Zendy

Steven L. Blader | Zendy; Claudine Madras Gartenberg | Zendy; Rebecca Henderson | Zendy; Andrea Prat | Zendy

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The Real Effects of Relational Contracts

Author(s) -

Steven L. Blader,

Claudine Madras Gartenberg,

Rebecca Henderson,

Andrea Prat

Publication year - 2015

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.p20151002

Subject(s) - productivity , assertion , incentive , relational contract , order (exchange) , set (abstract data type) , economics , contract management , field (mathematics) , industrial organization , microeconomics , contract theory , business , computer science , management , finance , macroeconomics , programming language , mathematics , pure mathematics

Does the "soft side" of management matter? Many managers assert that "firm culture" is strongly correlated with productivity, but there are few robust tests of this assertion. In a set of field experiments, we study driver productivity within a large US logistics company that is arguably transitioning from one relational contract to another, while leaving formal practices and incentives unchanged. We find that sites under the new contract are associated with 1/8 percent higher productivity. Our findings suggest that relational contracts have a first-order effect on productivity and that they can be altered over time.

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