| Contractual power refers to the power vested in the construction project owner by the project contract.The owner’s use of contractual power is of great significance to ensure the project transaction efficiency and the owner’s interests.However,the owner’s use of contractual power may be affected and hindered by some external factors in engineering practice,and the governance effectiveness of power use is still a controversial topic.This study aims to explore the influencing factors and governance effectiveness of the owner’s use of contractual power,then guide the owner to reasonably design the strength of contractual power use in the contract in a manner that maximize the benefits over the project life cycle.Based on transaction cost theory and institutional theory,this study identifies the influencing factors of the owner’s use of contractual power,explores the effect of the power use on transaction efficiency,and establishes a corresponding hypothetical model.A questionnaire survey was conducted to collect data and empirically test the model.The results show that,in terms of influencing factors,as asset specificity increases,an owner tends to increase contractual complexity(including contractual control and coordination),so as to strengthen the use of contractual power(including coercive,reward,and legitimate powers)to manage the contractor and protect specific assets.Different institutional environment elements(including uncertainty,legal enforceability,and the contractor’s reputation importance)have different moderating effects on the relationship among asset specificity,contractual complexity,and the owner’s use of contractual power.In terms of governance effectiveness,contractual coordination has a positive and direct effect on production efficiency,whereas contractual control has an inverted U-shaped effect on transaction efficiency(including negotiation efficiency and production efficiency).To avoid the situation that the contract inhibits the transaction efficiency(i.e.,to avoid the appearance of the right side of the inverted Ushaped relationship),the owner tends to flexibly implement the contract by controlling the use of contractual power,so that the use of coercive and reward powers has a positive effect on transaction efficiency.In terms of contract design,this study establishes a dynamic hierarchical game model between the owner and the contractor Based on the empirical results.The model distinguishes the effects of positive incentive(reward power)and the effects of negative incentive(coercive power)on transaction efficiency.By incorporating the owner’s operating income and the contractor’s opportunity cost(factors beyond the empirical research),the model expands the transaction stage to the entire project life cycle.A corresponding example of the model is provided,in which the owner’s optimum design of the power use intensity under different conditions(i.e.,the project is finished on schedule,ahead of schedule or behind schedule)are calculated.The sensitivity of the decisions to factors beyond the empirical research is also examined.This study provides a bridge for the integration of institutional theory and transaction cost theory in understanding the antecedents,effectiveness,and design of owners’ contract governance,making up for the gaps of the two theories.Practically,this study can guide owners to make decisions on contractual design and power use based on the institutional environment in a manner that promotes transaction efficiency. |
