The Effect of Contract Control on Contractors’ Cooperative Behavior: The Moderating Role of Owner Power

Abstract

Although extant literature has shown that a contract plays a key role in inter-organizational relationships, how the contract affects cooperation remains controversial, and how contracts and power interact with each other remains unclear. To explain the existing controversy, this study examined the influence of contract control on contractors’ cooperative behavior, namely in-role and extra-role behavior, and the moderating role of owner power in fostering contractor cooperation based on the transaction cost economics theory. A survey was employed and data were collected based on 181 owner-contractor partnerships in the Chinese construction industry. Regression analyses indicate that contract control has a significantly positive impact on contractors’ in-role behavior, while little impact on contractors’ extra-role behavior; and when owner’s expert and coercive power are higher, contract control contributes more to contractors’ in-role behavior. The research findings highlight the importance of contracts and power and are conducive in providing guidelines for owners about how to apply contractual functions and owner power to promote cooperation with contractors.