Fixing the contract after the contract is fixed: a study of incomplete contracts in IT and construction projects

Journal article, 2011

This paper aims to increase our understanding of collective outcomes by exploring both micro- and macro-level strategies for dealing with problems arising from incomplete contracts. By combining theories dealing with risk-sharing under various degrees of uncertainty (financial incentives and long-term relationships) with respect to social influence tactics involved in negotiations concerning additional work and changes, a useful framework was created. Case data regarding Swedish interorganizational development projects from both the construction and IT industries are used to illustrate the theoretical arguments. Findings indicate that social norms and the work-related values and attitudes of key negotiators significantly affect project outcomes. Efforts to increase the sophistication of financial incentives and long-term arrangements (e.g., standardized routines concerning risk-sharing and collaborative initiatives) do not seem to pay-off.