Enforcement against contract violation in Chinese construction projects: impacts of trust and perceived intentionality

Abstract

Violations happen frequently in construction projects due to opportunistic intentions and/or the lack of awareness of obligations and/or honest attempts to react to unforeseen circumstances. Dealing with contract violations plays an important role in managing projects. The aim of the research is to investigate the impact of trust, analyzed in terms of the goodwill-based and competence-based trust, on both contract and social enforcement after a contract violation. A questionnaire survey, partially based on semi-structured interviews, was used for data collection. All the data is from the Chinese construction industry since it provides a fertile context to explore the research questions. The results show that: 1) reputation is used as social enforcement in practice and the severity of it is reflected by the scope of the disclosure, 2) the two dimensions of trust have opposite influences on the severity of contract and social enforcement via different mediating effects of perceived intentionality. Specifically, goodwill-based trust reduces the severity of enforcement via decreasing perceived intentionality, while competence-based trust increases the severity of enforcement by increasing perceived intentionality. A comprehensive and nuanced understanding for managing contract violation is generated in this research, which will help project managers to manage the contract violation and the interfirm relationships more effectively.