Firms use repeated partnerships to gain the benefits of shared experience such as improved coordination, collaboration, and adaptation. However, there are downsides to partnering repeatedly, including vulnerability to opportunistic partners upon whom the firm becomes dependent, muted efficiency incentives, and overlooking better options. This paper unpacks the effects of repeated partnerships by investigating their impact on two distinct types of performance: revenue and profitability. To understand repeated partnerships, we analyze a unique dataset of 580 partnerships that completed 144 bridge construction projects. Controlling for project attributes that affect the level of outsourcing, we posit that a greater proportion of repeated partners and deeper relationships with these partners will result in greater revenue through winning bids, but that the prime contractor will not necessarily garner higher profits. We find support for these predictions, highlighting the trade-offs of repeated partnerships.
{"title":"Friends and Profits Don't Mix: The Performance Implications of Repeated Partnerships","authors":"Samuel S. Holloway, Anne Parmigiani","doi":"10.5465/AMJ.2013.0581","DOIUrl":"https://doi.org/10.5465/AMJ.2013.0581","url":null,"abstract":"Firms use repeated partnerships to gain the benefits of shared experience such as improved coordination, collaboration, and adaptation. However, there are downsides to partnering repeatedly, including vulnerability to opportunistic partners upon whom the firm becomes dependent, muted efficiency incentives, and overlooking better options. This paper unpacks the effects of repeated partnerships by investigating their impact on two distinct types of performance: revenue and profitability. To understand repeated partnerships, we analyze a unique dataset of 580 partnerships that completed 144 bridge construction projects. Controlling for project attributes that affect the level of outsourcing, we posit that a greater proportion of repeated partners and deeper relationships with these partners will result in greater revenue through winning bids, but that the prime contractor will not necessarily garner higher profits. We find support for these predictions, highlighting the trade-offs of repeated partnerships.","PeriodicalId":360067,"journal":{"name":"ERN: The Partnership Form (Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114027213","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article develops a theory of contracting among founders of a new firm. It asks at what stage founders agree to commit to each other, how they structure optimal founder contracts, and how this affects team formation, ownership, incentives, and performance. The article derives a trade-off between upfront contracting, which can result in teams with ineffective founders, versus delayed contracting, which can enable some founders to appropriate ideas and start their own firms. Delayed contracting becomes more attractive when there are significant doubts about the skills of founders. We show that contingent contracts with vesting of shares may be used to mitigate inefficiencies in the team formation process. We also show that laws that provide protection to implied partnerships may have the unintended effect of encouraging more formal contracting. (JEL D82, D86, K12, L26)
{"title":"Contracting Among Founders","authors":"Thomas Hellmann, Veikko Thiele","doi":"10.2139/ssrn.1968696","DOIUrl":"https://doi.org/10.2139/ssrn.1968696","url":null,"abstract":"This article develops a theory of contracting among founders of a new firm. It asks at what stage founders agree to commit to each other, how they structure optimal founder contracts, and how this affects team formation, ownership, incentives, and performance. The article derives a trade-off between upfront contracting, which can result in teams with ineffective founders, versus delayed contracting, which can enable some founders to appropriate ideas and start their own firms. Delayed contracting becomes more attractive when there are significant doubts about the skills of founders. We show that contingent contracts with vesting of shares may be used to mitigate inefficiencies in the team formation process. We also show that laws that provide protection to implied partnerships may have the unintended effect of encouraging more formal contracting. (JEL D82, D86, K12, L26)","PeriodicalId":360067,"journal":{"name":"ERN: The Partnership Form (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125869178","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates whether individual venture capitalists have repeatable investment skill and to what extent their skill is impacted by the VC firm where they work. We examine a unique dataset that tracks the performance of individual venture capitalists' investments across time and as they move between firms. We find evidence of skill and exit style differences even among venture partners investing at the same VC firm at the same time. Furthermore, our estimates suggest the partner's human capital is two to five times more important than the VC firm's organizational capital in explaining performance.
{"title":"Is a VC Partnership Greater than the Sum of Its Partners?","authors":"M. Ewens, Matthew Rhodes-Kropf","doi":"10.2139/ssrn.2024209","DOIUrl":"https://doi.org/10.2139/ssrn.2024209","url":null,"abstract":"This paper investigates whether individual venture capitalists have repeatable investment skill and to what extent their skill is impacted by the VC firm where they work. We examine a unique dataset that tracks the performance of individual venture capitalists' investments across time and as they move between firms. We find evidence of skill and exit style differences even among venture partners investing at the same VC firm at the same time. Furthermore, our estimates suggest the partner's human capital is two to five times more important than the VC firm's organizational capital in explaining performance.","PeriodicalId":360067,"journal":{"name":"ERN: The Partnership Form (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127702879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Contracting plays a dominant role mostly in large scale and complex projects. Its use in construction projects takes the role of risk transference and governance. Despite the developments taking place in the discipline of project management in general and contracting in specific, projects are still failing. Literature attributes various reasons to these failures; however, a significant body of literature on project seems to attribute failure to poor contracting practice. Contractual failures give rise to situations of litigation and long-running disputes that recursively cause various problems within projects. The effect of poor contracting has often been observed in the various components of the project management triangle (that is, scope, quality, cost, and time). Contracts are pervasive and contractual agreements exist between the project principal and contractors as well as between contractors and sub-contractors; the review of literature presented in this work, however, is focused on the former. This paper presents a discussion from the perspective of the literature pertaining to the softer issues in contracts and provides discussion on how trust and partnering act within the contracts of construction projects.
{"title":"A Review of Literature on the Role of Trust and Partnering in Success of Construction Projects","authors":"Shahnawaz Khan, S. Gul, Attaullah Shah","doi":"10.5897/AJBMX11.024","DOIUrl":"https://doi.org/10.5897/AJBMX11.024","url":null,"abstract":"Contracting plays a dominant role mostly in large scale and complex projects. Its use in construction projects takes the role of risk transference and governance. Despite the developments taking place in the discipline of project management in general and contracting in specific, projects are still failing. Literature attributes various reasons to these failures; however, a significant body of literature on project seems to attribute failure to poor contracting practice. Contractual failures give rise to situations of litigation and long-running disputes that recursively cause various problems within projects. The effect of poor contracting has often been observed in the various components of the project management triangle (that is, scope, quality, cost, and time). Contracts are pervasive and contractual agreements exist between the project principal and contractors as well as between contractors and sub-contractors; the review of literature presented in this work, however, is focused on the former. This paper presents a discussion from the perspective of the literature pertaining to the softer issues in contracts and provides discussion on how trust and partnering act within the contracts of construction projects.","PeriodicalId":360067,"journal":{"name":"ERN: The Partnership Form (Topic)","volume":"405 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131892552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2007-07-01DOI: 10.1016/J.JBUSRES.2007.01.026
Jorge Walter, Christoph Lechner, F. Kellermanns
{"title":"Knowledge Transfer Between and Within Alliance Partners: Private versus Collective Benefits of Social Capital","authors":"Jorge Walter, Christoph Lechner, F. Kellermanns","doi":"10.1016/J.JBUSRES.2007.01.026","DOIUrl":"https://doi.org/10.1016/J.JBUSRES.2007.01.026","url":null,"abstract":"","PeriodicalId":360067,"journal":{"name":"ERN: The Partnership Form (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"118621621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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