Procurement Effects on Coopetition in Client-Contractor Relationships
Publication: Journal of Construction Engineering and Management
Volume 134, Issue 2
Abstract
Client-contractor relationships are often criticized for being competitive and adversarial, rather than cooperative. The main purpose of this paper is to examine how construction clients’ procurement procedures affect the balance between cooperation and competition (i.e., coopetition) in client-contractor relationships. The empirical results, based on a survey to 87 Swedish construction clients, show that clients’ procurement procedures facilitate a focus on competition. It was also found that clients’ earlier experience of a certain procedure heavily affects their procurement choices, thereby preserving old behaviors. Although two-thirds of the clients wish to increase cooperation with contractors, this does not affect their procurement decisions. This study therefore concludes that the theoretical framework, based on transaction cost economics, is correct in prescribing more cooperation than is empirically observed in the construction sector. The theoretical framework can increase clients’ awareness of how procurement affects cooperation and competition, thereby serving as a basis for more unbiased and systematic procurement decisions, facilitating cooperation-based coopetition.
Get full access to this article
View all available purchase options and get full access to this article.
References
Akintoye, A., McIntosh, G., and Fitzgerald, E. (2000). “A survey of supply chain collaboration and management in the UK construction industry.” European J. Purchasing and Supply Management, 6, 159–168.
Anderson, E., and Oliver, R. (1987). “Perspectives on behavior-based versus outcome-based salesforce control systems.” J. Marketing, 51(4), 76–88.
Aulakh, P., and Gencturk, E. (2000). “International principal-agent relationships: Control, governance and performance.” Ind. Mark. Manage., 29(6), 521–538.
Aulakh, P., Kotabe, M., and Sahay, A. (1996). “Trust and performance in cross-boarder marketing partnerships: A behavioral approach.” J. Int. Business Stud., 27(5), 1005–1032.
Barlow, J., Cohen, M., Jashapara, A., and Simpson, Y. (1997). Towards positive partnering, The Policy Press, Bristol.
Bradach, J., and Eccles, R. (1989). “Price, authority, and trust: From ideal types to plural forms.” Annu. Rev. Sociol., 15, 97–118.
Brandenburger, A., and Nalebuff, B. (1996). Co-opetition, Doubleday/Currency, New York.
Bresnen, M., and Marshall, N. (2000). “Building partnerships: Case studies of client-contractor collaboration in the UK construction industry.” Constr. Manage. Econom., 18(7), 819–832.
Chan, A., Chan, D., and Ho, K. (2003a). “An empirical study of the benefits of construction partnering in Hong Kong.” Constr. Manage. Econom., 21(5), 523–533.
Chan, A., Chan, D., and Ho, K. (2003b). “Partnering in construction: Critical study of problems for implementation.” J. Manage. Eng., 19(3), 126–135.
Cheung, S., Ng, T., Wong, S.-P., and Suen, H. (2003). “Behavioral aspects in construction partnering.” Int. J. Proj. Manage., 21(5), 333–343.
Cheung, S.-O., Lam, T.-I., Leung, M.-Y., and Wan, Y.-W. (2001). “An analytical hierarchy process based procurement selection method.” Constr. Manage. Econom., 19(4), 427–437.
Collin, S.-O. (1993). “The brotherhood of the Swedish sphere: A third institutional form for economic exchange.” International Studies of Management & Organization, 23(1), 69–86.
Das, T., and Teng, B.-S. (1998). “Between trust and control: Developing confidence in partner cooperation in alliances.” Acad. Manage. Rev., 23(3), 491–512.
Das, T., and Teng, B.-S. (2001). “Trust, control, and risk in strategic alliances: An integrated framework.” Organ. Stud., 22(2), 251–283.
Dubois, A., and Gadde, L.-E. (2002). “The construction industry as a loosely coupled system: Implications for productivity and innovation.” Constr. Manage. Econom., 20(7), 621–632.
Dyer, J. H. (1996). “Does governance matter? Keiretsu alliances and asset specificity as sources of Japanese competitive advantage.” Org. Sci., 7(6), 649–666.
Egan, J. (1998). “Rethinking construction.” Department of the Environment, Transport and the Regions and HMSO, London.
Eisenhardt, K. (1985). “Control: Organizational and economic approaches.” Manage. Sci., 31(2), 134–149.
Eriksson, L. E. (2002). Skärpning gubbar, SOU2002:15, Byggkommissionen, Stockholm.
Eriksson, P. E. (2006). “Procurement and governance management—Development of a conceptual procurement model based on different types of control.” Management Revue, 17(1), 30–49.
Eriksson, P. E., Dickinson, M., and Khalfan, M. (2007). “The influence of partnering and procurement on subcontractor involvement and innovation.” Facilities, 25, 203–214.
Fortune, C., and Setiawan, S. (2005). “Partnering practice and the delivery of construction projects for housing associations in the UK.” Eng., Constr., Archit. Manage., 12(2), 181–193.
Gencturk, E., and Aulakh, P. (1995). “The use of process and output controls in foreign markets.” J. Int. Business Stud., 26(4), 755–786.
Ghoshal, S., and Moran, P. (1996). “Bad for practice: A critique of the transaction cost theory.” Acad. Manage. Rev., 21(1), 13–47.
Gidado, K. I. (1996). “Project complexity: The focal point of construction planning.” Constr. Manage. Econom., 14(3), 213–225.
Grandori, A. (1997). “An organizational assessment of interfirm coordination modes.” Organ. Stud., 18(6), 897–925.
Hagen, J., and Choe, S. (1998). “Trust in Japanese interfirm relations: Institutional sanctions matter.” Acad. Manage. Rev., 23(3), 473–490.
Heide, J. B., and John, G. (1990). “Alliances in industrial purchasing: The determinants of joint action in buyer-supplier relationships.” J. Mark. Res., 27(1), 24–36.
Heide, J. B., and John, G. (1992). “Do norms matter in marketing relationships?” J. Marketing, 56(1), 32–44.
Hennart, J.-F. (1993). “Explaining the swollen middle: Why most transactions are a mix of market and hierarchy.” Org. Sci., 4(4), 529–547.
Kadefors, A. (2004). “Trust in project relationships—Inside the black box.” Int. J. Proj. Manage., 22(3), 175–182.
Korczynski, M. (1996). “The low-trust route to economic development: Inter-firm relations in the UK engineering construction industry in the 1980s and 1990s.” J. Manage. Stud. (Oxford), 33(6), 787–808.
Lado, A., Boyd, N., and Hanlon, S. (1997). “Competition, cooperation, and the search for economic rents: A syncretic model.” Acad. Manage. Rev., 22(1), 110–141.
Laedre, O., Austeng, K., Haugen, T., and Klakegg, O. (2006). “Procurement routes in public building and construction projects.” J. Constr. Eng. Manage., 132(7), 689–696.
Larson, E. (1995). “Project partnering: Results of study of 280 construction projects.” J. Manage. Eng., 11(2), 30–35.
Lingard, H., and Rowlinson, S. (2006). “Letter to the editor.” Constr. Manage. Econom., 24(11), 1107–1109.
Luo, Y. (2004). Coopetition in international business, Copenhagen Business School Press, Copenhagen.
Macneil, I. (1974). “The many futures of contracts.” South. Calif. Law Rev., 47(3), 691–816.
Macneil, I. (1978). “Contracts: Adjustments of long-term economic relations under classical, neoclassical and relational contract law.” Northwestern University Law Review, 72(6), 854–905.
Masten, S. (1993). “Transaction costs, mistakes, and performance: Assessing the importance of governance.” Manage. Dec. Econ., 14(2), 119–129.
Naoum, S. (2003). “An overview into the concept of partnering.” Int. J. Proj. Manage., 21(1), 71–76.
Ng, T., Rose, T., Mak, M., and Chen, S. E. (2002). “Problematic issues associated with project partnering—The contractor perspective.” Int. J. Proj. Manage., 20(6), 437–449.
Noordewier, T., John, G., and Nevin, J. (1990). “Performance outcomes of purchasing arrangements in industrial buyer-vendor relationships.” J. Marketing, 54(4), 80–93.
Ouchi, W. (1979). “A conceptual framework for the design of organizational control mechanisms.” Manage. Sci., 25(9), 833–848.
Rahman, M., and Kumaraswamy, M. (2002). “Joint risk management through transactionally efficient relational contracting.” Constr. Manage. Econom., 20(1), 45–54.
Spekman, R. (1988). “Strategic supplier selection: Understanding long-term buyer relationships.” Business Horizons, 31(4), 75–81.
Stump, R. (1995). “Antecedents of purchasing concentration: A transaction cost explanation.” J. Bus. Res., 34(2), 145–157.
Tang, W., Duffield, C., and Young, D. (2006). “Partnering mechanism in construction: An empirical study on the Chinese construction industry.” J. Constr. Eng. Manage., 132(3), 217–229.
Teece, D. (1992). “Competition, cooperation, and innovation—Organizational arrangements for regimes of rapid technological progress.” J. Econ. Behav. Organ., 18(1), 1–25.
Thompson, P., and Sanders, S. (1998). “Partnering continuum.” J. Manage. Eng., 14(5), 73–78.
Uzzi, B. (1997). “Social structure and competition in interfirm networks: The paradox of embeddedness.” Adm. Sci. Q., 42(1), 35–67.
Williamson, O. (1985). The economic institutions of capitalism, The Free Press, London.
Williamson, O. (1996). The mechanisms of governance, Oxford University Press, New York.
Wong, S.-P., and Cheung, S. (2005). “Structural equation model of trust and partnering success.” J. Manage. Eng., 21(2), 70–80.
Woolthuis, R., Hillebrand, B., and Nooteboom, B. (2005). “Trust, contract and relationship development.” Organ. Stud., 26(6), 813–840.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 134 • Issue 2 • February 2008
Pages: 103 - 111
Copyright
© 2008 ASCE.
History
Received: Feb 9, 2007
Accepted: Jun 1, 2007
Published online: Feb 1, 2008
Published in print: Feb 2008
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.