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
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