The Inherent Failures of Long-Term Contracts — and How to Fix Them

The Inherent Failures of Long-Term Contracts — and How to Fix Them

Author: Harvard Business Review September 3, 2019 Duration: 21:20
Oliver Hart, Nobel-winning Harvard economist, and Kate Vitasek, faculty at the University of Tennessee, argue that many business contracts are imperfect, no matter how bulletproof you try to make them. Especially in complicated relationships such as outsourcing, one side ends up feeling like they're getting a bad deal, and it can spiral into a tit for tat battle. Hart and Vitasek argue that companies should instead adopt so-called relational contracts. Their research shows that creating a general playbook built around principles like fairness and reciprocity offers greater benefits to both businesses. Hart and Vitasek, with the Swedish attorney David Frydlinger, cowrote the HBR article "A New Approach to Contracts."

Each week, the HBR IdeaCast from Harvard Business Review sits down with experts whose ideas are shaping the world of work. This isn't about abstract theory; it's a conversation focused on practical insights for leaders, managers, and entrepreneurs navigating real challenges. You'll hear from scholars, CEOs, and innovators dissecting topics across management, marketing, and organizational strategy, translating complex research into actionable advice. The discussions get into the nuances of building effective teams, driving growth, making strategic decisions, and understanding the forces transforming industries. By tuning into this podcast, you gain access to the forefront of business thinking, a resource for anyone looking to sharpen their skills and lead more effectively. The consistent, in-depth dialogue provides a valuable perspective that goes beyond headlines, offering a deeper understanding of how to succeed in a competitive landscape. It's a direct line to the ideas that matter, presented through thoughtful conversation designed to provoke reflection and inspire change in your own professional approach.
Author: Language: English Episodes: 100

HBR IdeaCast
Podcast Episodes
Why Work Friends are Worth It [not-audio_url] [/not-audio_url]

Duration: 26:40
Shasta Nelson, relationship expert and author, says that work friendships are critical to individual and organizational success but acknowledges that it's not always easy to build these personal -- but still professional…
Breaking Down Bureaucracy and Building Up Workers [not-audio_url] [/not-audio_url]

Duration: 27:33
Gary Hamel and Michele Zanini, cofounders of the consultancy Management Lab, say that even though we all lament how rigid, parochial, and time sucking bureaucracies can be, they still seem inescapable. The managers who’v…
Mastering the Art of Persuasion [not-audio_url] [/not-audio_url]

Duration: 27:09
Jonah Berger, professor at the Wharton School of the University of Pennsylvania, says that most of us aren’t approaching persuasion the right way. Pushing people to behave how you’d like them to or believe the same thing…
Adapting Negotiations to a Remote World [not-audio_url] [/not-audio_url]

Duration: 23:21
Leigh Thompson, professor at Kellogg School of Management at Northwestern University, studies negotiations to understand the path to the "sweet spot" where all sides of the table come away happy. And she says there are m…
Future-Proofing Your Strategy with Scenario Planning [not-audio_url] [/not-audio_url]

Duration: 25:57
Peter Scoblic, cofounder and principal of the consultancy Event Horizon Strategies, says that too many companies are short-sighted in their strategy-making and don't effectively plan for different potential futures. Usin…
Every Business Can Be a Subscription Business [not-audio_url] [/not-audio_url]

Duration: 26:59
Robbie Kellman Baxter, a strategy consultant, says that subscriptions aren’t just for newspapers and Netflix. She says they can help companies from local retailers to giant industrial manufacturers earn more consistent r…
Helping People Move from Trauma to Growth [not-audio_url] [/not-audio_url]

Duration: 24:20
Richard Tedeschi, a psychology professor and distinguished chair of the Boulder Crest Institute, says that crises like the Covid-19 pandemic and its economic fallout as well as the recent racial violence and social unres…
Pricing Strategies for Uncertain Times [not-audio_url] [/not-audio_url]

Duration: 21:15
Rafi Mohammed, founder of the consulting firm Culture of Profit, says a crisis or recession is not the time to panic and slash prices. He says leaders should instead reevaluate their price strategy — or develop one for t…
AB InBev CEO on Adapting in the Face of Crisis [not-audio_url] [/not-audio_url]

Duration: 22:57
Carlos Brito, the CEO of Anheuser-Busch InBev since 2008, has worked to build a culture of adaptability and customer centricity at the global brewer. Many of his leadership principles are paying off during the Covid-19 p…
Applying Porter’s Five Forces to Fix U.S. Politics [not-audio_url] [/not-audio_url]

Duration: 22:52
Katherine Gehl, a former CEO and the founder of the Institute for Political Innovation, and Michael Porter, a professor at Harvard Business School, apply his Five Forces framework to explain why U.S. politics are dysfunc…