Mediating Role of Risk Perception of Trust and Contract Enforcement in the Construction Industry
Publication: Journal of Construction Engineering and Management
Volume 145, Issue 2
Abstract
Contract violations have become common problems in construction projects, yet little of the construction contract literature addresses the question of responses to contract violations (i.e., contract enforcement). This research investigates the effects of trust on contract enforcement in a principal–agent relationship and explores the mediating role of risk perception on those effects. The authors distributed 429 electronic questionnaires and received 280 responses. After deleting responses completed in under 100 s and nonmanager responses, we narrowed the total to 253 valid responses from professionals in the Chinese construction industry. Hierarchical regression analyses were conducted to test the hypotheses in this study, and the findings revealed that goodwill-based trust diminishes the severity of contract enforcement, while perceived relational risk and perceived performance risk increase the severity of contract enforcement. Mediation analyses also support the mediating role of perceived relational risk on the effect of goodwill-based trust on contract enforcement. The findings contribute to contract theory by providing a thorough understanding of contract enforcement and developing a conceptual framework consisting of trust, perceived risk, and contract enforcement. Managers from violating parties may benefit from this article through an understanding of the role of trust and perceived risk in dealing with a contract violation and following the strategies recommended for diminishing the severity of contract enforcement.
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Data Availability Statement
Data generated or analyzed during the study are available from the corresponding author by request. Information about the Journal’s data-sharing policy can be found here: http://ascelibrary.org/doi/10.1061/(ASCE)CO.1943-7862.0001263.
Acknowledgments
This work was supported by the National Natural Science Foundation of China (Grant Nos. 71231006 and 71572124). The authors thank all the respondents and interviewees who participated in the survey. They are also grateful to the editor and three anonymous reviewers for their valuable comments.
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Journal of Construction Engineering and Management
Volume 145 • Issue 2 • February 2019
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©2018 American Society of Civil Engineers.
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Received: Feb 4, 2018
Accepted: Aug 8, 2018
Published online: Nov 29, 2018
Published in print: Feb 1, 2019
Discussion open until: Apr 29, 2019
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