In innovation-driven global markets, resilient and collaborative contractual relationships (with employees, suppliers, and strategic partners) are critical to firms' success. This makes the ability to govern these relationships a key source of firms' competitive advantage and, at a macro level, of economic growth and development. In this lecture I build on contract theory and transaction cost analysis to highlight new research trajectories and opportunities in the economics of governance. I begin by discussing two underexplored dimensions of the classic view of contracts as enforcement mechanisms: (1) the interaction of formal and relational governance, and (2) how governance is affected by the political environment in which firms operate. I then consider novel approaches to contracts and governance, which shift the focus from enforcement to relationship management. In this second part of the lecture, I discuss recent models, cases and evidence that portray (3) contracts as coordination mechanisms, whose purpose is to provide clarity and guiding principles to ongoing collaborations facing new problems. I conclude by suggesting directions for policy-relevant research on contracts and governance.