Research Summary

Relational Contracts

by George P. Baker

Description

George Baker is exploring (with Robert Gibbons of MIT and Kevin Murphy of the USC) how relational contracts--contracts secured by reputation and trust, rather than by legal enforcement--affect the performance and boundaries of firms. Such relational contracts are ubiqitous, and constitute some of the most important instruments that managers have to influence both internal and external stakeholders. Their research explores the role of relational contracts in performance measurement and compensation, in delegation, in outsourcing, and in strategic alliances.