A Study Of The Governance Structure Between The General Contractor And Subcontractors In Construction Projects

Subcontracting is a common practice for general contractors(GCs)in construction projects,enabling them to deal with multiple specializations.On the other hand,subcontracting may result in coordination failure and poor performance.The widespread use of subcontracting,as well as associated managerial dilemma,has heightened the need for research on how to govern subcontractors from the GC’s perspective.The governance structure between the GC and subcontractors consists of two parts: first,organizational boundary design,which requires the GC to determine its boundaries with subcontractors and the boundaries between subcontractors;second,interorganizational relationship governance,which requires the GC to input governance rules to ensure project implementation.However,there is still very little scientific understanding of the GC’s organizational boundaries.This research attempts to integrate organizational boundaries and interorganizational relationship governance to fully understand the governance structure between the GC and subcontractors.Firstly,this research refines organizational boundaries into two facets: the degree of subcontracting and subcontracting dispersion.Based on transaction cost economics(TCE)and resource-based view(RBV),this study collects data through questionnaires and empirically examines the impact of the GC’s capabilities on boundaries and the moderating role of uncertainty.The results demonstrate that technological capabilities decrease the degree of subcontracting,while governance capabilities increase the degree of subcontracting and subcontracting dispersion.Uncertainty moderates the effects of governance capabilities on subcontracting.Secondly,this study adopts opportunistic behavior to assess governance efficacy,and it empirically compares the governance efficacy of contract and trust on opportunistic behavior caused by transaction characteristics.The results reveal that contractual complexity is effective on suppressing strong from opportunistic behavior triggered by asset specificity and uncertainty,while trust can prevent weak form opportunistic behavior caused by transaction characteristics.Finally,this paper integrates organizational boundaries and the governance of interorganizational relationships and explores the governance structure configurations to achieve high project performance by using qualitative comparative analysis(QCA).The study identifies the multiple paths for Chinese GCs and American GCs to achieving low growth rate,low schedule growth rate,and high project quality for projects with different levels of uncertainty.This study provides three main contributions to the literature on the GCsubcontractors governance structure in construction projects by investigating the design of organizational boundaries and the governance of interorganizational relationships.Firstly,this study adopts the degree of subcontracting and subcontracting dispersion to depict organizational boundaries,and reveals the different impacts of the GC’s capabilities on organizational boundaries as well as the moderating effects of uncertainty in a more nuanced manner,highlighting the complementarity between RBV and TCE in explaining the GC’s organizational boundaries.Secondly,this study reveals the different governance effectiveness of contract and trust on inhibiting two forms of subcontractors’ opportunistic behavior caused by transaction characteristics.Finally,this paper shapes an integrated framework of the GC-subcontractors governance structure,and proposes configurations of governance structure elements to achieve high project performance.Meanwhile,project managers can benefit from this paper by realizing the importance of shaping organizational boundaries and governing interorganizational relationships.This research offers managerial suggestions for the GC to construct a suitable governance structure.