Title: INTER- ORGANIZATIONAL COST MANAGEMENT: DISCUSSIONS ON THE ROLE OF CONTRACTS AS A LEGAL INSTRUMENT OF THIS APPROACH IN THE LIGHT OF THE TRANSACTION COSTS ECONOMICS AND INTEGRATED SOCIAL CONTRACT THEORY
Abstract: Contracts between companies have dual function, legitimizing and limiting. Among the objectives of this legal instrument, it is highlighted the improvement of the relationship between economic agents, reduce the level of uncertainty and reduce transaction costs. The integrated social contract theory is a multidisciplinary approach that helps managers on attitudes and policy to consider the inter-organizational relationship. The inter-organizational cost management, in turn, is a strategic cost management approach that aims to optimize the use and consumption of resources in the value chain. The contracts are instruments of formalization of this approach, however, there are universal principles that influence and determine their adequacy, known as hipernorms. The legal system is one of those universal principle and, when ignored, can lead to failure in the implementation of contracts and hence the inter-organizational cost management. This theoretical essay discusses the role of contracts in interorganizational relations in the light of integrated social contract theory and transaction costs economics. Among the main propositions of this paper, it is highlighted that the inter-organizational cost management approach can increase transaction costs if the universal principles of integrated social contract theory are not observed so that where there is a predominance of civil law, contracts should be drawn up with more details than in countries with other legal systems. Nevertheless, contract control mechanisms must be emphasized in order to mitigate opportunistic behavior, reduce uncertainty and increase confidence in the relationship.
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: article
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