Facio ut facias: Associational contracts and innovation

This exploratory study takes a look at the puzzle of what types of contracts are suitable for governing innovation, with particular attention to interfirm networks. It employs a conceptual framework that integrates organizational theory of formal coordination with economic perspectives on contracting, and innovates previous analyses in two ways: developing an assessment of alternative contractual forms in terms of knowledge governance and not only in terms of conflict resolution; analyzing contracts according to the intensity at which they incorporate not only market-like mechanisms, but also hierarchical and bureaucratic mechanisms, and a usually neglected array of associational and democratic mechanisms, as related to the level of uncertainty and innovation. A new class of "associational" and "constitutional" contract, resource based rather than action based, is singled out as particularly fit to the governance of innovation. The framework is empirically applied to content-analyze the written agreements regulating interfirm alliances for innovation using a comparative case study approach.