Influence of Project Governance on Opportunistic Behavior: Taking a Dynamic Perspective

Abstract

The importance of project governance in curbing opportunistic behavior (OB) has been clearly established in the project literature. Although contract governance and trust are considered critical factors that explain project governance, there is a lack of understanding regarding their interplay at various stages of project development. The current study takes a dynamic perspective and breaks down contract governance into contract completeness (CC) and contract enforcement (CE), while differentiating ex-ante trust from ex-post trust. As such, the current study takes a dynamic perspective and the Grossman-Hart-Moore (GHM) model, which aims to investigate how each of the two facets of contract governance and trust intertwine during the management of construction projects as well as their effects on OB. We undertook a questionnaire survey of individuals involved in 342 construction projects in China, and our research results show that, first of all, governance mechanisms at different stages have different inhibitory effects on OB. Taking contract-signing as the boundary, the governance effect of a contract is gradually enhanced, while the governance effect of trust is gradually reduced. Second, ex-ante trust is more important than ex-post trust: the former moderates not only the relationship between CE and OB, but also the influence of CC on OB. Finally, a contract that is overly complete is not conducive to precluding OB, as such completeness can give the contract parties a sense of security that is guaranteed. The current study not only garners insights into project governance research but also provides implications for architectural practitioners in deploying resources that relate to governance mechanisms.