Managers’ dispositions toward formal contracts: A cross-country examination

Stefanidis A. Banai M. Newburry W. Fainshmidt S. Richter U.H. Schinzel U. Kong Y. Erkus A. Shakirova S. Ozbek M.F. Goelzner H. Shetach A. Sigri U.
November 2023 Elsevier Inc.

Journal of Business Research
2023 #168

This study integrates institutional and dispositional theories to develop a multilevel model predicting that managers’ endorsement of formal contracts increases with the quality of formal institutions. This effect is contingent upon managerial dispositions of ethical idealism and interpersonal trust, which provide a morally driven override of uncertainty and a substitute source of certainty in business practices, respectively. We test our arguments on hand-collected data from 3,652 manager-negotiators in 16 countries. We find that managers endorse formal contracts when they are embedded in contexts with high quality contract enforcement institutions, but this effect diminishes substantially among ethically idealistic managers. These results suggest that an understanding of managers’ reliance on formal contracts requires multilevel theory informed by how managerial dispositions interact with the formal institutional context.

Ethics , Formal contracts , Institutional quality , Legal institutions , Multilevel modeling , Trust

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The Peter J. Tobin College of Business, St. Johns University, New York, NY, United States
Baruch College, City University of New York, New York, NY, United States
College of Business, Florida International University, Miami, FL, United States
The Hong Kong University of Science and Technology, Hong Kong
UNICAF University, Larnaca, Cyprus
Shandong University of Science and Technology, Qingdao, China
Bahcesehir University, Istanbul, Turkey
Kazakh State Womens Teacher Training University, Almaty, Kazakhstan
Gumushane University, Gumushane, Turkey
Fachhochschule Salzburg, Salzburg, Austria
Max Stern Yezreel Valley College, Emek Yezreel, Israel
OSTIM Technical University, Ankara, Turkey

The Peter J. Tobin College of Business
Baruch College
College of Business
The Hong Kong University of Science and Technology
UNICAF University
Shandong University of Science and Technology
Bahcesehir University
Kazakh State Womens Teacher Training University
Gumushane University
Fachhochschule Salzburg
Max Stern Yezreel Valley College
OSTIM Technical University

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