Promoting cooperation in construction projects: an integrated approach of contractual incentive and trust

Yongcheng Fu, Yongqiang Chen, Shuibo Zhang and Wenqian Wang

Construction Management and Economics, 2015, vol. 33, issue 8, 653-670

Abstract: Contractual incentive and trust are two commonly used governance mechanisms that help to promote inter-organizational cooperation. Little is known, however, about the boundary conditions for the complementation of these two governance mechanisms. The aim is to investigate the interaction of contractual incentive and trust in promoting inter-organizational cooperation. A three-staged Stackelberg model was established and then solved by backward induction. Research results indicate that contractual incentive can motivate the contractor's task behaviours, while the effect of trust on relational behaviours is path-dependent. Three levels of factors (intra-organizational, inter-organizational and project factors) would affect the selection of the optimal incentive coefficient. Moreover, when the changing rate of the client's cost of effort is less than or equal to a threshold, contractual incentive and trust can be complementary. The study contributes to theory by offering nuanced insights into the governance mechanisms and addressing the complex contracting issues when mutual trust exists. In addition, this study can help to create favourable circumstances for the complementation between contractual incentive and trust, achieving a better project outcome and relational benefit.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1080/01446193.2015.1087646 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:conmgt:v:33:y:2015:i:8:p:653-670

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RCME20

DOI: 10.1080/01446193.2015.1087646

Access Statistics for this article

Construction Management and Economics is currently edited by Will Hughes

More articles in Construction Management and Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().