Contract Softening And Two Effects Of Relationship The Informal Economy

This article is based on a case study of the process of contract interaction between a family workshop and different customers,trying to explain why the contract under the informal economy produces different results among different customers.According to the existing research literatures,incomplete long-term contracts need to be governed,but the classical contract governance studies do not consider the implementation differences arising from multiple contracts.Shiding Liu revised the classic framework based on comprehensive the elements of contract deviations and clearly put forward the concept of "contract softening".Therefore,this paper expands Liu Shiding's ideas and studies of the contractual differences in the informal economy.We have found that there are differences in the role of asset specificity and social relations at different stages of the contract.In the daily govern of the contract,asset specificity and the trust mechanism of social relations work together to cause the contract to soften.In this process,the interrelationship between the two is not static,Sometimes it is manifested as complementation and sometimes as alternative.Social relations play a role in the entire contract process and asset specificity only works in some stages.At the event and coordination of contract,the reciprocity of social relations plays a positive and negative role in the contract process but it is all to make the cooperation continue.At the same time,we also found that there are four different customer types based on the degree of asset specificity and intimacy of social relationships.The four types are ranked in order of importance:the high transaction amount and general relation,the high transaction amount and close relation,the low transaction amount and close relation,the low transaction amount and general relationship.The corresponding attitudes of these four types are:patience,reciprocity,tolerance,and observation.In this structure,the degree of intimacy of social relations actually played two roles.In the customer with a high transaction amount,the existence of reciprocal social relations actually weakens the entrenched nature of the investment in customer assets.But in the customer with a low transaction amount,the reciprocity of social relations enhances the customer's trading status.Therefore,in the combination of asset specificity and degree of reciprocity in social relations,there is also another form of structural friction in bilateral cooperation contracts.