Contractual Norms Research Articles

Explaining Outsourcing Performance in Uganda’s Commercial Banks

This study aimed at investigating outsourcing performance in Uganda’s commercial banks basing on the variables of contract, relational norms, trust and commitment. It was motivated by the fact that where as outsourcing has been identified as a global trend in this millennium and a competitive strategy for the contemporary business, there were limited (if any) empirical studies on outsourcing performance in Uganda. Besides, previous studies conducted outside Uganda have provided conflicting views on whether or not contract and relational norms can be used concurrently to enhance outsourcing performance. The study was also intended to contribute to this debate by establishing the extent to which the variation in outsourcing performance was explained by the model that was developed. Findings revealed that the only significant predictor of outsourcing performance was contract and the model accounted for 40.1% of the variation in outsourcing performance. The findings present implications for commercial bank management in the area of contracting and contract management, which have to be addressed if outsourcing performance is to be enhanced and competitiveness in the banking sector improved.

Islamic Banking and Finance: Social Failure

The phenomenal growth of the Islamic banking and finance (IBF) industry has been remarkable since it came into existence just over thirty years ago. However, a closer reading of this positive development indicates that IBF industry does not necessarily shares the aspirations or the foundational claims of Islamic moral economy (IME), an authentic value system for human-centred economic development and social justice. Despite its contribution in expanding the financial base in the Muslim countries and overcoming financial exclusion through product diversification, IBF, in responding to the realities of the international financial system has converged towards conventional notion of managing wealth, resulting in tensions with the foundational axioms upon which an Islamo-ethical financial system was intended to be built. In such transformation, the identity of IBF is reduced to the mere removal of riba and conducting financial activity in contractual norms derived from the Shari’ah. The result, therefore, has been the divergence between the aspirations of IME, and IBF as an instrument of that system.

Trust and control in fixed duration alliances

What happens to the development of trust in an alliance with a known end date? This study found that, even in such alliances, detailed and well known contracts, industry norms for appropriate behaviour and positive initial encounters can facilitate the development of trust. This trust can take two forms. One is the traditional personal trust resulting in learning and high performance. This trust replaces other forms of governance and therefore entails risks of opportunism. The other form of trust is inter-organisational, founded on the contract and industrial norms and initiated from favourable initial encounters. This form of trust allows smoother and faster processes throughout the cooperation exposing the firms to relatively low risks. We call it contractual trust. As the contract proceeds towards termination, the benefits of opportunism may be too tempting, resulting in mistrust.

Normative conflicts in electronic contracts

We are concerned with normative conflicts that arise for agents engaging in electronic contracting within an electronic marketplace. We identify a set of primitive conflict patterns, examine other analyses of conflicts found in the literature of distributed systems, legal reasoning and multi-agent interaction, and show how these may be seen as instances of primitive patterns. We also present additional patterns that have not been identified previously. Moreover, this work proposes and illustrates the representation of e-contracts in default logic, and argues that such a representation of contract norms as default rules facilitates the detection, prediction and resolution of normative conflicts.

First Approaches Towards Relational Contracts

This paper presents a comprehensive literature review of relational contracts theory. The major focus of the paper is on the legal aspect of relational contracts theory and mainly on MacNeil work, especially referring to contractual and relational norms. However, we do not neglect the impact of this theory on management science and its interaction with other approaches of managerial science. Moreover, the paper analyses the content and the scope of each of MacNeil's norms and highlights their central and significant position in relational contacts theory key literature. We also presents the gradual conceptual evolution and cohesion between the different arguments and aspects of relational contracts literature. Finally, the paper comments on the theory's acceptance, value and practicality, also suggesting that a more comprehensive and shorter model of norms would be useful.

Protecting relational assets: a pre and post field study of a horizontal business combination

A variety of theoretical frameworks including social exchange theory, relational exchange theory, and contracting theory are used to investigate how to protect relational assets in a marketing channel when an upstream horizontal business combination between key suppliers arises. In this study, we ascertain downstream channel members’ perceptions of a supplier’s horizontal business combination both prior to and after such a combination. Our findings indicate that a normative contract breach resulting from a horizontal business combination influences downstream channel members by reducing their performance, decreasing their satisfaction, and increasing their likelihood of exiting the channel. Consequently, both the relational assets of the upstream supplier and their downstream customers are harmed. Importantly, these influences can be partially offset through the moderating effect of channel identification.

The Role of Task-Oriented Versus Relationship-Oriented Leadership on Normative Contract and Group Performance

In this paper we examine how groups develop normative contracts based on beliefs about the obligations other members of the group must fulfil in order to achieve group goals. The role played by perceived leadership – task- or relationship-oriented – was analyzed in relation to the development of relational normative contract and group performance. The study sample comprised 72 participants (24 groups of 3 members). A member of each team received training to be a group leader (task- or relationship-oriented leader). All groups worked on a simulation program: a complex decision-making managerial task. Group regulatory variables and group processes were evaluated during the simulation. Results showed that task-oriented leaders effected higher group efficacy and positivism among members of the group. In contrast, relationship-oriented leaders effected greater cohesion between the group's members. The final group performance is explained from the perspective of group efficacy and the relational normative contract.

Can Cognitive Mapping Enrich Our Understanding of Macneil's Contractual Norms? The Specific Case of Role Integrity

ABSTRACT Pursuing research into Macneil's contractual norms could lead to an enriched understanding of role integrity. Recent studies have highlighted that this norm is typical of the phenomenon of interaction and has considerable impacts on business relationships. However, this norm is currently not the subject of any specific research, and the traditional tools used for data collection have provided only limited insights into the understanding of this norm. This investigation shows how the use of cognitive mapping can help with its understanding. Results provide a first and rather encouraging answer regarding the relevance of this methodology in studying Macneil's norms.

Special Charges – a Gap in European Competition Law?

Whilst the prohibition of tax relief in favour of “certain undertakings or the production of certain goods” as stipulated in Art.87(1) EC Treaty has attracted considerable institutional attention, the treatment of fiscal special charges to the disadvantage of “certain undertakings or the production of certain goods” has neither been regulated in the EC Treaty, nor has it been in the focus of the European Commission and the European Court of Justice. The recent Court of Justice’s judicature revealed first signs of a tendency to regard special charges as the logical counter piece of state aids and to expand the constituent elements of this norm to include a comprehensive control of “differences in burden”. However, following the jurisprudence on Art.4 lit.c ECSC from 1951, which expressly acknowledged the common features of subsidies and aids on the one hand and special charges on the other hand, it seems methodically more coherent to differentiate between state aids and special charges and to define these as advantageous or disadvantageous divergences from the “standard measure” of taxation. Against this background, the article examines whether and to which extent the existing EC-prescriptions are opposed to such disadvantageous fiscal charges. As the analysis reveals, special charges can neither be seen as a distortion of the Common Market under Art.96 et seq. EC, nor does the methodical differentiation between state aids and special charges leave room for an immediate application of Art.87(1) EC. However, there are good reasons to draw an analogy: An interpretation of Art.87(1) EC in the light of the fundamental concepts of Community Law as laid down in Art.2 et seq. EC, which aim at ensuring that “competition in the internal market is not distorted within the single market”, suggests that a “judicial extension is of the law” is possible as long as one is sympathetic to the “effet utile” of the contractual norms and their dynamic interpretation.

Comparing New Theory with Prior Beliefs: Market Civilization and the Democratic Peace

Stuart Bremer counseled against the falsificationist convention of testing new models against the null hypothesis of no model. Instead, new models should be compared against prior beliefs, and theories should compete, whenever possible, on a field of equivalent test conditions. This article applies Stuart Bremer's notion of comparative theory testing by comparing a new model of contract norms with the prior institutionalist model of democratic peace. On a field of equivalent test conditions it is found that the hypothesis for contract norms (that the democratic peace is contingent upon economic development) is thousands of times more likely to be true than the hypothesis for institutionalist theory (that democracy pacifies all dyads regardless of economic conditions). Democracy appears to be a significant force for peace only in dyads that are above the median income: the richest 45%. The results indicate that scholars of war should update the widespread prior belief that democracy, alone, causes peace.

An investigation into commitment in non-Western industrial marketing relationships

This paper reports an investigation into the antecedents of commitment in non-Western industrial marketing relationships. The authors draw the antecedents from extant literature and posit that commitment is related to trust (integrity and reliability), communication quality, conflict, and similarity (social, ethnic, and economic). It is further argued that trust mediates the effects of communication, conflict, and similarity on commitment. As an extension, the authors examine the moderating effects of normative contracts (an implicit understanding of roles and responsibilities) on the construct interrelationships. The hypotheses are tested using data collected from approximately 150 industrial marketing relationships sampled from overseas Chinese firms. The results generally support the authors' framework; however, the mediating hypotheses are not supported. There is evidence of systematic differences in the effects of the studied antecedents on commitment and trust. Furthermore, a multigroup analysis provides evidence of significant moderating effects due to contracting mode. The study provides new insights into the theory and practice of industrial marketing.

From Metaphor to Reality in Corporate Law

This essay is in response to a commentary by Professor David Millon, who ably argues in the same journal that a dependence on metaphor drives much of the debate within corporate law jurisprudence and corporate law scholarship. This essay joins Millon in his criticism. For decades, scholars have used metaphors ? corporation as person, corporation as creature of the state, corporation as property, corporation as contract, corporation as community, to name the most prominent ? as justifications for the imposition of, or freedom from, legal and ethical requirements. The metaphors are often taken as self-evident. The legal and ethical arguments then flow quite naturally. Currently, the dominant metaphors in corporate law spring from the rights-based common law of contract and property. Arguments that corporations have obligations to stakeholders other than shareholders are deemed inconsistent with property or contract norms. It is no coincidence that those who oppose more socially responsible corporate governance regimes choose metaphors from the common law. Common law rights have long had significant rhetorical power. Much of this persuasiveness is based on the fact that they are seen as neutral, pre-political, and pre-legal. Corporate law is private law, defined by common law principles, and therefore neutral. To change it is impermissible. These rights-based metaphors used to explain corporate law harken back to Lochner v. New York, and are subject to some of the same criticisms. Even the so-called laissez-faire marketplace is shot through with government, and even the most basic common law entitlements are functions of legal rules. Contract and property law are no more neutral, private, or pre-legal than statutory law. One cannot justify the present make-up of corporate law as non-political or pre-legal because it is based on common law principles any more than Lochner could justify common law itself as non-political or pre-legal. This essay suggests that our thinking about corporate law would be improved if we jettisoned the metaphors of private law and instead considered corporate law as regulation. That is, corporate law should be subject to the same analysis as environmental law, labor law, tax law, communications law, and the like. At a high level of generality, the analysis with regard to corporate law rules should be the same as the analysis for other kinds of statutes and regulations. One should ask what we want our society to look like and then seek to craft a bundle of legal rules and regulatory programs that are likely to move us in that direction.

The Law and Economics of Agreements to Arbitrate Employment Claims

This paper presents an economic analysis of arbitration agreements in the employment context. The goal of this analysis is first to set out, clarify, and illuminate the economics of waiver and arbitration agreements in the employment context. The fundamental economic benefits from employment arbitration can be placed in either of two categories: deterrence benefits and dispute-resolution cost savings. Arbitration enhances the deterrence benefit to the extent that it encourages greater compliance with legal and contractual employment norms. Arbitration obviously has the potential to reduce dispute resolution costs by adopting less formal mechanisms. The second goal of this analysis is to answer the normative question, should predispute arbitration agreements be enforced? I conclude they should be enforced, provided the employee has knowingly and voluntarily waived his rights.

Marketers' norms and personal values: An empirical study of marketing professionals

This study explores the relationships among marketers' deontological norms and their personal values. Based on the review of theoretical works in the area of marketing, hypotheses concerning the relationships among marketers' norms and their personal values were developed and tested. Data were collected from 249 marketing professionals. Results from canonical correlation analysis generally indicate that marketers' norms can be partly explained by personal values. Marketers' pricing and distribution norms, information and contract norms, and norms pertaining to marketers' honesty and integrity were significantly related to the personal values emphasizing "excitement," "warm relationships with others," "fun and enjoyment in life," and "a sense of accomplishment."

Relational contract norms and the effectiveness of commercial banking relationships

Bases the present study, on Macneil’s relational contract theory and illustrates the conceptual and managerial importance of relational norms in a business‐to‐business service context. Demonstrates a clear link between the client’s perception of the strength of the bank‐client relationship, as measured by relational norms, and the client’s intention to continue to purchase financial services and to purchase new financial services, willingness to recommend both the account manager and the bank to business colleagues and, assessment of satisfaction and judgement of service quality. Finds significant differences between the assessment of the strength of the relationship by account managers and client‐company representatives; these differences would have important managerial implications in the context of commercial banking.

The Relational Contracting Model and Franchising Research:

The relational contracting model is becoming one of the primary building blocks for franchise theory and research, but piecemeal application of its constructs disrupts the original model's nomological structure, and thereby its predictive and explanatory power. This article argues that models incorporating the contract norms must also take the exchange context into account due to the interdependent relationship between the contract norms and the exchange context. We find empirical support for a potential confound between the exchange context and several of the contract norms in a franchise system of distribution.

Elegant Models, Empirical Pictures, and the Complexities of Contract

Studies in nations with different social and economic systems indicate that the norms of contract law are seldom applied through the litigation process and that disputes are avoided or settled where there is a long-term relationship between the parties. Yet legal scholarship, as well as many proposals for reform, continue to be based on a picture of the contracts lawsuit, to a great extent. It is likely that this distortion is prompted by overgeneralization from a nonrepresentative sample of possible and actual disputes, and by the indirect influence of legal norms; it may also express the needs of legal scholars and reformers. It is questionable whether capitalist, socialist, or mixed economic systems would benefit if more disputes were resolved by the application of officially sanctioned contract norms.

Contract Formation and Overt Power: A Reexamination

Contract Formation and Overt Power: A Reexamination

The Effects of Coalition Strength on the Formation of Contractual Norms

This study investigated the effect of coalition strength on the enactment of contractual norms restricting the usage of power tactics. Male subjects, participating in three-person groups, bargained over the division of rewards in a mixed-motive situation. This situation enabled two subjects to form a coalition against the third. The experimental design manipulated coalition strength by varying the extent to which the coalitional dyad could damage the third party's interests. Results indicate that the propensity to form regulatory contracts increased with coalition strength, as did the severity of the sanctions attached to the rules. The data also elucidate the importance of interpersonal trust for effective operations by the dyadic alliance. These findings, based on the tactic of coalition formation, extend the previous research on normative emergence, which had been limited to other power tactics. An array of recent studies (Thibaut and Faucheux, 1965; Murdoch, 1967; Thibaut, 1968; Murdoch and Rosen, 1970; Michener and Lawler, 1971) has demonstrated that participants in mixed-motive situations may form contractual agreements as a mechanism to control disruptive behavior that endangers satisfactory outcomes. Each of these studies has varied the amount of power available to participants. Taken together, their findings indicate that the greater the power possessed by individuals, the more likely

The development of contractual norms in bargaining: replication and variation

Although a great deal of research has been done during the past decade and a half on the processes associated with conforming to norms (e.g., Deutsch and Gerard, 1955; Hollander, 1960; and Jones, Jones, and Gergen, 1963), very little work has been done on the prior processes through which the norms come into existence. In understanding these processes and conditions which produce norms it may be useful to begin by inquiring into the ways in which norms provide adaptive solutions or functional advantages that are superior to other forms of social control. Such a functional approach has been suggested by Thibaut and Kelley (1959, pp. 130-42) in discussing the consequences of substituting normative control for control by interpersonal power. For example, in the A-B (dyadic) relationship, suppose A is in the act of exercising power over B. The substitution of normative control for the use of raw power may be advantageous to A as it enables him to regularize and stabilize his control over B. At the same time, the substitution reduces A's costs of surveillance and eliminates the ostentation of his power usage. The advantages to B of this substitution are less apparent but