Institutionalizing Industry: The Changing Forms of Contract

A replication of Macaulay's 1963 study of Wisconsin manufacturers shows that manufacturers are using a new type of contract to govern changed transactions and to establish new form of industrial organization. This article seeks to specify these changes and to demonstrate their theoretical significance by constructing an empirically and theoretically informed analytical framework. This framework establishes relations of meaning between discrete contracts, job shop production, and classical contract law; between openterm contracts, mass production, and neoclassical contract law; and between long-term agreements, flexible production, and a "shadow" relational contract law. It demonstrates that long-term agreements constitute a new device for governing exchange, that they are part of a broader change from mass production to flexible production, and that their distinctive features are not recognized by neoclassical contract law.