Enforcement against contract violation in Chinese construction projects: impacts of trust and perceived intentionality

Violations happen frequently in construction project due to opportunistic intentions and/or the lack of awareness of obligations and/or honest attempts to react to unforeseen circumstances. Dealing with contract violation plays an important role in managing projects. The aim of the research is to investigate the impact of trust, analyzed in terms of goodwill-based and competence-based trust, on both contract and social enforcement after contract violation. Questionnaire survey, partially based on semi-structured interviews, was used for data collection. All the data is from Chinese construction industry since it provides a fertile context to explore the research questions. The results show that: 1) reputation is used as social enforcement in practice and the severity of it is reflected by the scope of disclosure, 2) the two dimensions of trust have opposite influences on severity of contract and social enforcement via different mediating effects of perceived intentionality. Specifically, goodwill-based trust reduces severity of enforcement via decreasing perceived intentionality, while competence-based trust increases severity of enforcement by increasing perceived intentionality. A comprehensive and nuanced understanding for managing contract violation is generated in this research, which will help project managers to manage the contract violation and the interfirm relationships more effectively.