Understanding the Relationship between Asset Specificity and Governance Choices in Construction Projects: Moderating Role of Uncertainty
Publication: Journal of Construction Engineering and Management
Volume 149, Issue 3
Abstract
In previous research, it has been debated whether uncertainty moderates the relationship between asset specificity and governance mechanisms. The relationship between the owner and contractor is a typical interorganizational collaborative relationship, with contractual and relational governance as key mechanisms. Based on transaction cost theory and relational exchange theory, this paper establishes a competitive conceptual model of construction project transaction characteristics on contractual and relational governance to test the moderating role of uncertainty in interorganizational relationships. The questionnaire data were analyzed with partial least-squares structural equation modeling (PLS-SEM) to verify the theoretical hypotheses. This paper finds that there is a significant positive correlation between asset specificity and both contractual governance and relationship governance, with uncertainty as a moderator significantly enhancing the correlation between asset specificity and relational governance. The conclusions of this paper support the predictions of relational exchange theory and transaction cost theory. The findings enhance the understanding of project governance mechanisms and interorganizational collaborative relationships. Faced with high uncertainty, the owner and contractor are advised to adopt relational norms such as trust rather than designing more formal contractual terms to resolve conflicts caused by asset specificity.
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Data Availability Statement
All data and models that support the findings of this study are available from the corresponding author upon reasonable request.
Acknowledgments
The work in this paper was supported by the National Natural Science Foundation of China (No. 71401043).
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Published In
Journal of Construction Engineering and Management
Volume 149 • Issue 3 • March 2023
Copyright
© 2022 American Society of Civil Engineers.
History
Received: May 24, 2022
Accepted: Nov 1, 2022
Published online: Dec 19, 2022
Published in print: Mar 1, 2023
Discussion open until: May 19, 2023
ASCE Technical Topics:
- Asset management
- Business management
- Construction costs
- Construction engineering
- Construction management
- Continuum mechanics
- Contracts and subcontracts
- Correlation
- Dynamics (solid mechanics)
- Engineering fundamentals
- Engineering mechanics
- Financial management
- Mathematics
- Motion (dynamics)
- Owners
- Personnel (type)
- Personnel management
- Practice and Profession
- Project management
- Solid mechanics
- Statistics
- Uncertainty principles
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Cited by
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