Winning Legally: The Value of Legal Astuteness

I postulate that “legal astuteness” is a valuable managerial capability that may provide a competitive advantage under the resource-based view of the firm. Law and the tools it offers are an enabling force legally astute management teams can use to manage the firm more effectively. In particular, I propose that legally astute management teams can use formal contracts as complements to relational governance to define and strengthen relationships and reduce transaction costs, protect and enhance the realizable value of resources, use legal tools to create options, and convert regulatory constraints into opportunities.