Banerjee & Duflo (2000)Social Networks11.2Banerjee & Duflo (2000)Reputation effects and the Limits of Contracting: A Study of the IndianSoftware IndustrySoftware industry in India – contracting with Silicon Valley and elsewhere.A complex buyer specific product, i.e., the quality of the product is difficultto pin down and write into a contract that can be externally enforced.Reputational considerations heightened by fact that start-up costs are quitelow. One just needs to lease office space with a few PCs. It is a highly com-petitive market and driven by export orders. Of course, given the distancebetween Silicon Valley and Bangalore, India (where most of the surveyedfirms were based), monitoring is not easy.Indian courts – provide limited ability to enforce contracts. The main in-centive to do a high quality job is the prospect of repeat business.125software companies were surveyed for the paper – there is evidence offrequent renegotiation and significant overruns.There are two kinds of contracts that the surveyed software firms were
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