Trust is full of puzzle and paradox.Trust is both rational and emotional. Trust can go beyond calculative self-interest, but has its limits.People may want to trust, while they may also feel threatened by it.If trust is not in place prior to a relationship, on the basis of institutions, prior...

In this article we provide an empirical illustration of hypotheses, developed in the literature, on the role of density and strength of ties in innovation networks.We study both exploration and exploitation networks in the Dutch multimedia and pharmaceutical biotechnology industry.We find...

Outsourcing of non-core activities by firms is nowadays a common business strategy. This paper provides a theoretical framework for analyzing a firms’ incentive to follow such a strategy and its consequences for macroeconomic variables like growth and product variety. We divide production...

This article connects theory of learning with theory of governance, in the context of inter-firm relations.It recognizes fundamental criticism of transaction cost economics (TCE), but preserves elements from that theory.Two kinds of relational risk are identified: hold-up and spillover risk.For...

This paper analyses the risk control trade o$ in corporate ownership. It presents a simple model in which large shareholders decide their share depending on their risk aversion, risk-neutral effects attached to rm size and the e$ectiveness of di$erent (external and internal) mechanisms for...

We study how institutional design in influences moral transgression. People are heterogeneous in their feelings of guilt and can share guilt with others. Institutions determine the number of supporters necessary for immoral outcomes to occur. With more supporters required, every supporter can...

This paper contrasts the recent European initiatives on regulating corporate groups with alternative approaches to the phenomenon. In doing so it pays particular regard to the German codified law on corporate groups as the polar opposite to the piecemeal approach favored by E.U. legislation. It...

We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we...

This paper studies a principal-agent relation in which the principal's private information about the agent's effort choice is more accurate than a noisy public performance measure. For some contingencies the optimal contract has to specify ex post inefficiencies in the form of inefficient...

We study how institutional design influences moral transgression. People are heterogeneous in their feelings of guilt and can share guilt with others. Institutions determine the number of supporters necessary for immoral outcomes to occur. With more supporters required, every supporter can share...