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  3. American Economic Review
  4. May 2015
  5. The Real Effects of Relational Contracts

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Real Effects of Relational Contracts

  • Steven Blader
  • Claudine Gartenberg
  • Rebecca Henderson
  • Andrea Prat
American Economic Review
vol. 105, no. 5, May 2015
(pp. 452–56)
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Abstract

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.

Citation

Blader, Steven, Claudine Gartenberg, Rebecca Henderson, and Andrea Prat. 2015. "The Real Effects of Relational Contracts." American Economic Review 105 (5): 452–56. DOI: 10.1257/aer.p20151002

Additional Materials

JEL Classification

  • D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • D86 Economics of Contract: Theory
  • L92 Railroads and Other Surface Transportation
  • M12 Personnel Management; Executives; Executive Compensation
  • M14 Corporate Culture; Diversity; Social Responsibility
  • M54 Personnel Economics: Labor Management