Abstract

Many cooperative organizations must solve monitoring, enforcement, decision-making, and membership problems that are only imperfectly governed by formal contracts. This paper studies how firms accumulate, transmit, and selectively reuse governance mechanisms. The empirical setting is the Swedish cartel register, which records detailed written cartel agreements before 1993, when cartels were legal but obliged to register. This setting is useful because it provides rare direct evidence on the internal governance of sustained cooperation. We show that governance is not merely contractual "decoration": more sophisticated governance is associated with longer cartel survival. Governance practices diffuse through firms rather than simply through industries or over time. Firms exposed to specific mechanisms in previous agreements are more likely to use those mechanisms again, while repeated interaction among the same partners reduces reliance on formal provisions. These patterns suggest that firms accumulate governance capital: they reuse governance templates when valuable and economize on explicit rules when relational familiarity substitutes for formal design.