Facio ut facias: associational contracts and innovation

This study takes a new look at the puzzle of what type of contracts are suitable for governing innovation, with particular attention to inter-firm networks. It employs a conceptual framework that integrates organizational theory of formal coordination with economic perspectives on contracting, providing a new way of analyzing contracts according to the intensity at which they incorporate market-like mechanisms, hierarchical and bureaucratic mechanisms, and a usually neglected array of associational and democratic mechanisms, as related to the level of uncertainty. A new type of ‘associational’ and ‘constitutional’, resource-based rather than action-based contract is singled out as particularly fit to the governance of innovation. The framework is empirically applied to content-analyze the written agreements regulating inter-firm alliances for innovation in a comparative case study approach.