A neo-institutional view of the transaction cost drivers of construction supply chain risk management

Abstract

PurposeIn a departure from the efficiency theory assumptions implicit in most supply chain risk management (SCRM) literature, this study aims to explore the role that external neo-institutional pressures play in shaping the risk management strategies deployed to mitigate transaction cost risks in construction supply chains (CSC).Design/methodology/approachA theory-elaborating case study is used to investigate how regulatory, normative and mimetic neo-institutional pressures underpin SCRM strategies in state-led and private-led CSC in China.FindingsThe study finds that institutionalized Confucianist networks serve as proxies for regulatory accountability and thereby create a form of dysmorphia in the regulatory, normative and mimetic drivers of SCRM strategies in state-led and private-led CSC in China.Originality/valueThe findings reveal that relational costs such as bargaining, transfer and monitoring costs underpin SCRM in state-led CSC. Behavioral costs associated with search, screening and enforcement are the core drivers of SCRM in private-led CSC. These differences in transaction cost drivers of SCRM arise from the risk-buffering effect of personalized Guanxi networks, creating variants of institutional pressures on actors' risk analysis, identification and treatment strategies in China. Considering China's global hegemony in construction and related industries, this study provides valuable insights for practitioners and researchers on the need for a constrained efficiency view of SCRM in global CSC.