The role of relationship scope in sustaining relational contracts in interfirm networks

Research summary A key strategic decision for many firms is the scope of their relationships with partners. Existing theories of relationship scope are limited in that they disregard the facts that: (a) most firms transact within networks of multiple partners, and (b) these partnerships often involve two‐sided moral hazard. We develop a theory of partnership scope in interfirm networks that addresses these deficiencies. We show how, by...