Zhang, S B; Chen, J and Fu, Y (2020) Contract complexity and trust in construction project subcontracting. Engineering, Construction and Architectural Management, 27(9), pp. 2477-2500. ISSN 0969-9988
Abstract
Purpose: The purpose of this paper is to unpack the “black box” of the relationship between contract and inter-organizational trust, both theoretically and empirically. Two mediators, namely perceived safeguard and restriction, are identified to build up two seemingly contrary possible paths between contract and trust from current literature. Both paths are tested in the context of Chinese construction industry due to our access to sample. Design/methodology/approach: A survey of 295 contractor-subcontractor relationships from Chinese construction industry was conducted. A three-step multiple regression model was employed to test the mediating effect of perceived safeguard and restriction. Then, a hierarchical regression model was used to test the possible moderating effect of bilateral transaction-specific investment. Findings: The empirical results support the mediating effect of perceived safeguard between contract and trust in the construction subcontracting industry. Bilateral transaction-specific investments enhance the positive effect of contract on safeguard perception. Originality/value: Theoretically, this study contributes to governance literature by opening up the “black box” of the relationship between contract and trust. It provides a better understanding of how and when contract complexity impacts trust, instead of simply focusing on whether contract and trust act as complements or substitutes. Practically, this study provides guidelines for construction firms to decide the degree of contract complexity under various degrees of bilateral transaction-specific investments to enhance the other party’s trust, so as to improve performance outcomes.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bilateral transaction-specific investment; contract; psychological perception; the Chinese construction industry; trust |
| Index terms: | construction industry, governance, performance outcome, multiple regression model, regression model, mediator, subcontracting, construction project, methodology, complexity, contractor-subcontractor relationship, survey, construction firm |
| Subjects: | data collection methods, business, organization, value management, dispute resolution, industry analysis, systems engineering, statistical analysis, research methods, production management, contract management |
| Topics: | Project Management, Research Practice, Engineering Principles, Business Strategy, Governance, Supply Chain Management, Legal Issues, Contract Administration |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here