Relational Contracts

Abstract

While relational contracts have been vastly studied in Sociology, Law, and Economics, these kinds of contracts represent a rather new stream of research in the Operations and Supply Chain Management literature. Hence, the main objectives of this chapter are to shed light on the concept of relational contracting and to give an overview of recent developments in this field. The first section aims at explaining the general concept of relational contracting. The second section addresses the roots of relational contracts in Economics. The third section presents recent publications in the field of Operations and Supply Chain Management. The last section provides an introduction to the game-theoretic background of relational contracts.

Over the last 25 years, a great deal has been written about relational contracts, especially in Sociology, Law, and Economics. As there are various definitions of what a relational contract is depending on the respective discipline, it is important to clarify that the present treatise refers to the following characterization of relational contracts. Baker et al. (2002) describe relational contracts as “informal agreements and unwritten codes of conduct that powerfully affect the behavior of individuals”, clearly emphasizing the informal nature of the contracts.