The Real Effects of Relational Contracts
- (pp. 452-56)
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.p20151002Additional 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