Contractual and relational enforcement in the aftermath of contract violations: the role of contracts and trust

Abstract

PurposeThe purpose of this paper is to establish an integrated framework of the antecedents of enforcement after contract violations in construction projects and to examine whether contract provisions (control and coordination provisions) and trust (goodwill and competence trust) affect enforcement mechanisms (contractual enforcement and relational enforcement).Design/methodology/approachA survey method was employed to test the hypotheses. The authors collected data from the Chinese construction industry, and general contractor respondents were asked to answer a questionnaire about a contract violation by one of their subcontractors.FindingsControl provisions and competence trust are positively related to contractual enforcement, but goodwill trust is negatively related to contractual enforcement. Relational enforcement is influenced by goodwill trust and competence trust.Research limitations/implicationsThis study treats contract violations as a given variable, and it focuses on contract violations by subcontractors. The cross-sectional design makes it difficult to confirm the causality of the relationships.Practical implicationsOverly strict contractual enforcement can generate disputes and a vicious cycle of retaliation, and overly severe relational enforcement can damage a potentially profitable long-term relationship. In construction projects, the violating party will benefit from this study to avoid excessively contractual enforcement and relational enforcement, thus developing a more collaborative atmosphere on the current project and even establishing a solid long-term relationship.Originality/valueThis study extends the project management literature by investigating the antecedents of enforcement after contract violations, an area not yet fully researched.