ORGS 4560 Lecture Notes - Lecture 32: Social Contract
28 Apr 2018
School
Department
Course
Professor
ORGS 4560
Lecture 32
Reducing Risk
• Betting isn’t always risk – in some cases it reduces risk by sharing it
among two or more parties
• Creates goodwill
• Contract provides a safety net, limiting loses
• Reduces possibility of one company earning a windfall at the other’s
expense
Motivating Performance
• Driving force behind the use of contingency contracts
• Motivate individuals and companies
Fine Points:
• Contingency contracts require continuing interaction between the
parties
• Negotiators needs to think about the enforceability of a contract
• Contingency contracts require transparency
Fortgang, Lax, & Sebenius “Negotiating the spirit of the deal”
Harvard
Business Review. 2003, 81(2), p.66-75
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