Abstract
Drawing on institutional theory, this article aims to investigate how owners’ project-based organizations (PBOs) can promote production efficiency and legitimate power under the influence of legal enforceability. Analyzing a sample of Chinese construction projects, we find that PBOs can achieve this goal by designing more complex contracts when legal enforceability increases. The PBOs’ expertise reduces the effect of legal enforceability on contracts and alleviates their dependence on contracts when pursuing efficiency. These results can guide PBOs to design contracts according to their expertise and the legal environment to promote production efficiency and legitimate power.
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