Law, pride, and Contractual Relations
研究了个人主义社会中供应商的自豪感如何影响合同执行，以及法律在高低技术行业中与自豪感的替代或互补关系。
This paper provides theory and evidence on the role of informal institutions in contract enforcement, framed as the forfeiture of pride experienced by individualistic suppliers when they underperform or misappropriate others’ technology, and their interaction with law in shaping the behavior of firms. We demonstrate that achievement-oriented pride and self-esteem, more pronounced in individualistic societies, promote vertical integration in high-technology industries while encouraging outsourcing in low-technology sectors. Formal legal mechanisms mitigate the positive influence of pride on the longevity of business relationships, especially in high-technology sectors, where they act as a crucial substitute for deterring contract violations and infringement in less individualistic societies. For low-tech inputs, stricter law enforcement increases relationship duration up to a threshold level of individualism by compelling proud suppliers to invest despite receiving an insufficient payoff for their superior effort. This effect is more pronounced when their proportion is higher, suggesting a potential complementarity between law and pride in fostering longer-term relationships.