Entrepreneurial and established firms need different contracting strategies because they operate in different environments. Established firms operate in an environment of economic equilibrium, whereas entrepreneurial firms operate in an environment of economic disequilibrium. A general contracting model is developed that takes into account risk, environmental context, governance structure, safeguards, transaction costs, and transaction justice. The model is used to develop hypotheses about how entrepreneurial and established firms’ contracting strategies differ and how contracting strategies lead to firm success or failure.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.