The role of formal contracts with weak legal enforcement: A study in the Chinese context
通过中国五家企业的案例研究，发现正式合同在弱法律执行环境中通过明确权利义务来强化长期交换中的互惠关系，对理解转型经济中的企业间治理有重要启示。
This article explores in depth the mechanisms through which formal contracts and relational governance complement each other, focusing on the role played by formal contracts in transitional economies characterized by weak legal enforcement and a culture oriented around informal ties. The findings, drawn from case studies conducted at five firms across China, suggest that formal contracts are used even when they are not legally enforceable because by defining the rights and obligations in an exchange, contracts reinforce reciprocity in long-term exchange relationships. Although this role of contracts has not previously been clarified in the literature, it is particularly important in China because its cultural traditions prioritize reciprocity. The findings have implications for developing a theory of inter-firm relationship governance and optimal contracting, particularly in transitional economies.