Learning to contract differently: how a multinational corporation adapted its contracting capabilities to local requirements
University of Bath, UK
Prior management studies have explored the role of governance mechanisms in governing inter-organisational relationships. The broad consensus in this stream of literature is that when a multinational corporation (MNC) moves from a more mature legal system (i.e. where contracts are more enforceable) to a less mature legal system, the company tends to rely on more relational governance mechanisms rather than contracts to govern its relationships. This literature, however, has ignored how MNCs move from one mature legal system to another.
In mature legal systems, MNCs customise contract boilerplates (consisting of a set of standard legal clauses created and issued by trade associations) to their requirements before beginning the negotiation process with their partners. Extant literature on contract design has paid scant attention to the design of contract boilerplates, thus offering an incomplete understanding of an MNC’s contracting approach and subsequent relationship management approach. We address these gaps by addressing the following question: How does an MNC modify its contracting boilerplates based on Civil Law to include standards consistent with Common Law to adapt to local requirements in the new country they enter?
We content analysed eight contract boilerplates (totalling 1,119 pages), conducted 35 interviews with managers and legal professionals, and observed 60 hours of meetings, as well as analysed rich archival. Drawing on framing and attention-based views, we develop an understanding of how an MNC takes its learning from one context and develops it into another context.
Jens Roehrich is the HPC Chair in Supply Chain Innovation and the Director of the HPC Supply Chain Innovation Lab at the School of Management, University of Bath, UK.
Please click here to register.
Department of Management, Economics and Industrial Engineering
Building BL26/B – Room 0.2 – ground floor
Via Lambruschini 4/B, Milano