Contractual Complexity And Contractors' Opportunistic Behavior In Construction Projects

High level of complexity,asset specificity,and uncertainty have made opportunism common phenomenon in construction projects.Contracts act as the main instrument in dealing with opportunistic behavior.However,contractors' opportunistic behavior occurs every now and then even under the protection of contracts.There are inconsistent findings in previous studies regarding the relationship between contractual governance and opportunistic behavior.This study develops nuanced hypotheses based on existing theory to investigate effects of the complexity of different contractual functions on contractors' opportunistic behavior and the explanatory mechanism of goodwill trust.Using questionnaire data from 262 Chinese project managers acquainted in contract management or project management,this study tests the hypotheses regarding the effects of contractual complexity on opportunistic behavior as well as the mediation effect of goodwill trust.Firstly,it is reported that common method variance is not a serious problem in this study and the measurement has shown good reliability and validity.Secondly,hierarchical regression analysis is used to test the hypotheses,as well as the bootstrapping mediation test method.The results show that the complexity of different contractual functions has various effects on different types of opportunistic behavior.Specifically,negative effects are found between the complexity of contractual obligatoriness and contractors' strong form opportunistic behavior as well as the complexity of contractual coordination and contractors' weak form opportunistic behavior.However,the complexity of contractual monitoring has positive effect on contractors' weak form opportunistic behavior.In addition,goodwill trust mediates the relationship between the complexity of contractual coordination and weak form opportunistic behavior.It has been long discussed how contractual governance influences opportunistic behavior and this study has provided nuanced answer for this question.Taking a nuanced functional view of contractual complexity,this study elaborates the role of contracts and cross validates insights from different studies.This study divides contractual control into two separate functions and enriches related theory of contractual function.Moreover,this study differentiates two forms of opportunistic behavior and analyzes the motivation and capability of such behavior to explain the interplay of contractual complexity and opportunistic behavior and address the mediation effect of goodwill trust.In addition,this study gives advice for contract design to curb opportunism and reduce transaction costs.Managers are advised to be cautious and targeted when designing different contractual functions.