Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability

• Published in: Journal of international business studies Vol. 41; no. 5; pp. 861 - 881
• Main Authors: Zhou, Kevin Zheng, Poppo, Laura
• Format: Journal Article
• Language: English
• Published: London Palgrave Macmillan 01.06.2010; Palgrave Macmillan UK
• Series: Journal of International Business Studies
• Subjects: Business and Management; Business contracts; Business operations; Business Strategy/Leadership; Business structures; China; Commercial law; Contract enforcement; Contracts; Corporate governance; Cultural heritage; Economic development; Economic law; Economic reform; Economic theory; Efficiency; Emerging markets; Governance; Institutionalism; Institutioneller Wandel; International Business; Jurisdiction; Law; Law enforcement; Legal systems; Local government; Management; Organization; Personal relationships; Politics; Prior convictions; Property rights; Public officials; Reforms; Regional government; Reliability; Risk; Studies; Supply chains; Transaction costs; Transaktionskosten; Uncertainty; Vertragsrecht; Vertrauen; China; trust; legal enforceability; institutional change; contracts; China; transaction cost economics

Building on institutional and transaction cost economics, this article proposes that legal enforceability increases the use of contract over relational reliability (e.g., beliefs that the other party acts in a non-opportunistic manner) to safeguard market exchanges characterized by non-trivial hazar...