Revisiting the Relationship Between Contract Governance and Contractors’ Opportunistic Behavior in Construction Projects

Contracts are crucial for curbing opportunism, a common phenomenon in construction projects. This article differentiates among the contractual mechanisms of obligatoriness, monitoring, and coordination, and studies the relationships between the complexity of the above functions and different types of opportunistic behavior. Using data from 262 clients (i.e., the parties issuing contracts) in the Chinese construction industry, this article reveals that contractual obligatoriness has a negative effect on strong-form opportunistic behavior. At the same time, contractual monitoring and coordination have positive and negative effects, respectively, on weak-form opportunistic behavior. Furthermore, we find that goodwill trust mediates contractual coordination's effect on weak-form opportunistic behavior. This article contributes to both the contract management literature and the interorganizational relationship governance literature by providing more nuanced findings that speak to the debate surrounding the relationship between contractual governance and opportunistic behavior, elaborate the mediation mechanism, and provide insights into the contractual function view. © 2019 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works