Contraction Function Research Articles

Effect of contractual functions on contractors’ consummate performance behaviors in construction projects

Effect of contractual functions on contractors’ consummate performance behaviors in construction projects

Revisiting the Relationship Between Contract Governance and Contractors’ Opportunistic Behavior in Construction Projects

Contracts are crucial for curbing opportunism, a common phenomenon in construction projects. This article differentiates among the contractual mechanisms of obligatoriness, monitoring, and coordination, and studies the relationships between the complexity of the above functions and different types of opportunistic behavior. Using data from 262 clients (i.e., the parties issuing contracts) in the Chinese construction industry, this article reveals that contractual obligatoriness has a negative effect on strong-form opportunistic behavior. At the same time, contractual monitoring and coordination have positive and negative effects, respectively, on weak-form opportunistic behavior. Furthermore, we find that goodwill trust mediates contractual coordination's effect on weak-form opportunistic behavior. This article contributes to both the contract management literature and the interorganizational relationship governance literature by providing more nuanced findings that speak to the debate surrounding the relationship between contractual governance and opportunistic behavior, elaborate the mediation mechanism, and provide insights into the contractual function view.

Chinese Narrotologies

Chinese Narrotologies

Tensions in governing megaprojects: How different types of ties shape project relationship quality?

Faced with increasing governance tensions to cope with conflicts and risks associated with megaprojects, relationship management is seen as an essential aspect for improving relationship quality and achieving project success. Drawing upon transaction cost theory, this study investigated the effects of two types of ties (relational ties and structural ties) on relationship quality. Data from 212 megaproject practitioners were analyzed by structural equation modeling (SEM) and fuzzy-set qualitative comparative analysis (fsQCA). The SEM revealed the indirect effects of two types of ties on relationship quality and the mediating role of contractual functions in the management of relationships. Through the lens of symbiosis, the fsQCA revealed three types of configurations that were sufficient for shaping relationship quality. This study provides a systematic and nuanced distinction between multi-dimensional strengths of ties and contractual functions in project management. Such knowledge would allow megaproject managers to develop effective interventions aimed at enhancing relationship quality.

Information Technology Governance and the individuals' behavior: A cross-sectional study

Information technology (IT) is increasingly important to organizations and has become essential to the development of sustainable business growth. It is therefore necessary to adopt IT governance (ITG) mechanisms to ensure better solutions, sustainable growth, and better decision-making. As employee behavior is a competitive differential, this work focuses on the behavioral expression of ITG. It aims at analyzing ITG institutionalization's effect on the main dimensions of Organizational Citizenship Behavior (OCB) in Portugal. OCB describes individuals' voluntary commitment to an organization, including attitudes outside of their contractual functions. A descriptive-confirmative ex post facto research was conducted through survey research to 112 employees of IT-related departments and divisions from companies of all sizes in Portugal. The partial least square-structural equation modeling (PLS-SEM) method was used to test the overall model. The general hypothesis was confirmed, showing that ITG institutionalization positively affects individuals' OCBs in Portuguese organizations. In practical terms, it is possible to show organizations that by implementing their ITG Mechanisms, they are increasing employees' OCBs and, consequently, organizational effectiveness.

Enhancing Trust Between PPP Partners: The Role of Contractual Functions and Information Transparency

Contracts are essential for managing the relationship among public–private partnership (PPP) partners. However, the impact of contracts on the trust between partners is unclear, especially in PPP projects. From the multifunctional perspective of contracts, this study aims to investigate how different dimensions of contractual functions affect distinct types of trust and the moderating role of information transparency between them. The empirical results of the data collected from Chinese PPP professionals show that the three dimensions of contractual functions have positive effects on trust, including goodwill trust and competence trust. However, contractual adaptation has the strongest impact. Moreover, information transparency positively moderates the relationship between contractual control, adaptation, and trust. This study provides new insights on contracts and trust in PPP projects. It can guide PPP project partners to value the process of contract design and information disclosure to cultivate specific types of trust.

Effect of Inventory Conversion Period on Liquidity of Equity Securities of Companies at Nairobi Securities Exchange

Investors consider Liquidity of assets as an avenue of finances to the organizations. Illiquidity has led most of the listed companies to run insolvent in that considerable managerial obligations in firms fail to be honoured. Liquidity is considered as the capability with which a security could either be sold or bought at securities exchange. Inventory Conversion period, arises from Working Capital elements which is preferred as relevant on determining the level of cash cycle conversion period which is vital for the organization’s contractual functions both internally and externally. Inventory Conversion Period is an internal function of the organization that provides in-house financial information that assist investors to make decisions over the existence of a firm and how such a firm can be recognized by external investors who would like to associate themselves with the firm. The objective of the study was to examine the effect of Inventory Conversion Period on Liquidity of Equity Securities of Firms listed at Nairobi Securities Exchange. This study considered target population of the entire listed sixty one firms during the closing of the financial year 2016 and embraced a study period of ten years. The study applied panel data that consisted of secondary information for all companies found from publicized audited financial reports. Census technique was used on entire population of companies since it was comparatively moderate and manageable. This study used Descriptive research design anchored on pragmatism philosophy since the design could depict and describe the situation of the population the way it really was. E-views software was applied for descriptive and inferential statistical analysis and on panel data for regression analysis. Findings on Inventory Conversion Period indicated a positive and significant effect on Liquidity of Equity Securities at Nairobi Securities Exchange. This study embraced for proper management of inventory conversion period since improves on Liquidity of Equity Securities of companies listed at Nairobi Securities Exchange. The study recommended for further research on the Inventory Conversion Period and Liquidity of Equity Securities since it was just but one of components of working capital components, hence results could be different when combined with other independent variables and the regressed on Liquidity of equity securities at the securities exchange market. Keywords : Liquidity, Inventory Conversion Period, Firm Size, Liquidity DOI : 10.7176/RJFA/11-22-09 Publication date : November 30th 2020

Features of Implementation of the Regulatory Function of Family Law Agreements

The paper analyzes the peculiarities of implementation of the regulatory function of family law agreements, identifies the factors influencing this process. The use of a functional approach in legal research is very traditional and justifiable because it allows to understand more about the meaning of a legal matter, to identify the essential characteristics (properties) of legal phenomena, as well as internal and external interrelations of the legal objects under consideration. The doctrine presents a functional analysis of agreements as a whole, provides scientific developments concerning certain contractual functions, as well as the functional characteristics of certain types and categories of agreements. However, a manifestation of a function may vary depending on the scope of application of the agreement, its legal nature, type, category and other parameters: some functions may be strongly expressed, and others demonstrate weaker manifistations. Such a balance shift in the system of functions of agreements acts as an expression of its direct instrumental nature.The author concludes that the regulatory function is inherent in all family law agreements, the result of which is an individually-defined model of behavior of the parties, fixed by the terms of the family law agreements. The regulatory function manifistation in contracts depends on such interrelated factors as: 1) the balance between private and public components in certain contractual constructions in the are of family law (the greater the public nature in the contractual legal relationship, the stronger contractual freedom depends on regulatory prescriptions); (2) the degree of detail of the normative regulation of the contractal relationship, the existence of legal gaps or intentional non-interference of the legislator in the strictly personal private sphere of the family (the less detailed the relations between the parties to the family agreement are regulated by regulatory legal acts, the more manifested the regulatory function of family law agreement is).

Globally convergent method for designing twice spline contractual function

To design a quadratic spline contractual function in the case of discretely unknown nodes, a modified constraint shifting homotopy algorithm for solving principal–agent problems is constructed in the paper. Then the existence of globally convergent solution to KKT systems for the principal–agent problem with spline contractual function is proved under a much weaker condition. The proposed algorithm only requires that any initial point is in the shifted feasible set but not necessarily in the original feasible set.

Connection between Relationship Quality and Megaproject Success: Moderating Role of Contractual Functions

Relational governance is critical to project success. The present study on relational governance fails to elaborate on the relation between relationship quality and project success. In line with social exchange theory, this paper presents an empirical research of Chinese megaprojects to explore the effect of social exchange factors on relationship quality. Particularly, this research investigated how mianzi (face) as a factor variable affects relationship quality in megaprojects. This work also divided contract functions into control, coordination, and adaptation to investigate the impact of these functions on the relationship between social exchange factors and mianzi (face) with relationship quality. Results corroborate the following points: (1) relationship quality has a significant effect on project success; (2) relationship quality is also significantly influenced by trust, reciprocity, commitment, and mianzi; and (3) regarding the moderating effects of contractual functions, the contractual control function has a positive influence on the relationship between trust, commitment, and relationship quality and has a negative influence on the relationship between mianzi and relationship quality. However, contractual control has no apparent effect on the relationship between reciprocity and relationship quality. The contractual coordination function has a positive effect on the relationship between trust, commitment, and relationship quality. The contractual adaptation function has a significant positive effect on the relationship between trust and relationship quality. These findings provide new insights into relationship governance, and suggestions for contractual function design are provided.

Addressing Project Complexity: The Role of Contractual Functions

Addressing Project Complexity: The Role of Contractual Functions

Formal and relational contracts between organizations: proposal of a model for analysis of the transactional and governance structure characteristics of comparative cases

The literature indicates that the use of formal and relational governance structures have a fundamental role in the conduct and maintenance of inter-organizational relationships. Nevertheless, there are possibilities for discussions about the composition and function of these structures in the presence of different transactional characteristics. Thus, a model based on the literatures of formal contracts, inter-organizational relationships, Relational Contract Theory, and Transaction Cost Economics is proposed. Since this is a qualitative exploratory research, six structured interviews were carried out and interpreted by means of Content Analysis for case comparison and discussion of theoretical propositions. It was observed that some transactional characteristics, when present with greater intensity in the context of a transaction, tend to corroborate the theoretical propositions of formal contractual function, demonstrating that the intensity of these characteristics is a relevant factor for analyzing the adequacy of governance structures. Likewise, the use of different relational norms presents variations within each characteristic analyzed. Other aspects explored in the Content Analysis are suggested in the composition of the analysis model. The propositions explored regarding the composition of the transaction context and the complementarity of governance structure of inter-organizational relationships are also discussed.

Governing Collaborative New Product Development: Toward a Configurational Perspective on the Role of Contracts

This study inductively explores the interplay among different contractual functions and their impact on project performance in collaborative new product development (NPD) projects. Applying a configurational perspective, contracts are conceptualized as bundles of different functions. In line with the notion of discriminating alignment, an explicit distinction is made between different contextual settings in terms of innovation objectives (i.e., incremental versus radical) and relational embeddedness (i.e., presence versus absence of prior collaboration) in the exploration of the project performance implications of different contractual configurations. Fuzzy set qualitative comparative analyses on a sample of 125 collaborative NPD projects helped to generate propositions on the interplay between different contractual functions across different contextual settings. The results indicate that the contractual coordination function is an important function in achieving high project performance in collaborative NPD projects. However, the research findings demonstrate that it is not a sufficient condition and needs to be complemented with discrete safeguarding functions depending on the particular context. Together, these findings provide new insights into how particular combinations of contractual functions can help address the core governance challenges of collaborative NPD. They also point to the relevance of applying a configurational perspective to the study of the role of contracts in management research. Finally, they provide practitioners with specific recommendations concerning the design of contracts for collaborative NPD projects.

The Double-Edged Effect of Contracts on Alliance Performance

Despite substantial scholarly interest in the role of contracts in alliances, few studies have analyzed the mechanisms and conditions relevant to their influence on alliance performance. In this paper, we build on the information-processing view of the firm to study contracts as framing devices. We suggest that the effects of contracts depend on the types of provisions included and differentiate between the consequences of control and coordination provisions. Specifically, control provisions will increase the level of conflict between alliance partners, whereas coordination provisions will decrease such conflict. Conflict, in turn, reduces alliance performance, suggesting a mediated relationship between alliance contracts and performance. We also contribute to a better understanding of contextual influences on the consequences of contracts and investigate the interactions of each contractual function with both internal and external uncertainties. Key informant survey data on 171 alliances largely support our conceptual model.

Globally convergent homotopy algorithm for solving the KKT systems to the principal-agent bilevel programming

In this paper, a constraint set swelling homotopy (CSSH) algorithm for solving the single-level non-convex programming problem with designing piecewise linear contractual function which is equivalent to the principal-agent model with integral operator is proposed, and the existence and global convergence is proven under some mild conditions. As a comparison, a piecewise constant contract is also designed for solving the single-level non-convex programming problem with the corresponding discrete distributions. And some numerical tests are done by the proposed homotopy algorithm as well as by using fmincon in Matlab, LOQO and MINOS. The numerical results show that the CSSH algorithm is robust, feasible and effective.

Asset protection in R&D alliances: asset type and contract functions

Little is known about the how contractual functions protect different types of assets. By analyzing contract functions and by distinguishing between property- and knowledge-based assets, this paper investigates how contracts can reduce contractual hazards linked to the leakage risk and help firms protect these assets. The empirical analysis is based on survey data on R&D alliances in the U.S. biotechnology sector. The results show that differences in the ability of the alliance partners to protect their own assets may be attributable to the matching of asset types with appropriate contract function.

Sorting out the essence of owner–contractor collaboration in capital project delivery

Despite the relatively widespread recognition of relational-based contracting in engineering and construction projects, literature indicates a range of paradoxical issues in practice. This study attempts to reconstruct project practitioner's perspectives regarding the essence of collaborative relationships. Applying Q-methodology, subjective opinions and reflections of 30 project practitioners from 19 owner and engineering-construction firms were systematically analyzed. The result suggests four distinct perspectives towards effective working relationships, namely a) shared team responsibility, b) execution focused team, c) joint capability and structure; and d) senior leadership pair. Across perspectives, all practitioners shared a belief that an effective owner–contractor relationship should be based on affective trust, shared vision, and mutual attitudes such as open and honest communication, solution seeking instead of blaming, and senior management leadership. In contrast to prior research, long-term orientation and contractual functions were perceived to play a relatively limited role in improving owner–contractor relationships.

The Double-Edged Effect of Contracts on Alliance Performance

We investigate how and when contracts matter to alliance performance. Despite the substantial scholarly interest in the role of contracts in alliances, few studies analyze the mechanisms and conditions relevant to their influence on alliance performance. Drawing upon recent contract literature suggesting that alliance contracts may have multiple functions, we suggest that the effects of contracts depend on the types of provisions included and differentiate between the consequences of control and coordination provisions. Specifically, we argue that control provisions will increase the level of conflict between alliance partners whereas coordination provision will decrease such conflict. Conflict, in turn, reduces alliance performance, suggesting a mediated relationship between alliance contracts and performance. We also contribute to a better understanding of contextual influences on the consequences of contracts and investigate the interactions of each contractual function with both internal and external ...

Globally convergent homotopy method for designing piecewise linear deterministic contractual function

In this paper, to design a piecewise linear contractual function, weconsider to solve the single-level nonconvex programming withintegral operator which is equivalent to the principal-agent bilevelprogramming model with continuous distribution. A modifiedconstraint shifting homotopy method for solving theKarush-Kuhn-Tucker system of the discrete nonconvex programming isproposed and the global convergence from any initial point inshifted feasible set is proven under some mild conditions. A simplehomotopy path tracing algorithm is given and is implemented inMatlab. For some typical risk averse utility functions and thetypical distribution functions which simultaneously satisfy monotonelikelihood ratio condition and convexity of the distributionfunction condition, some numerical tests to design the piecewiselinear contract are done by our homotopy method as well as by using fmincon in Matlab, LOQO and MINOS and, as a comparison, thepiecewise constant contracts are also designed by solving thesingle-level nonconvex programming which is equivalent to theprincipal-agent bilevel programming model with correspondingdiscrete distributions. Numerical tests show that: to design apiecewise linear contract, which is much better than a piecewiseconstant contract, it needs only to solve a much lower dimensionaloptimization problem and hence needs much less computing time.Numerical experiences also show that the modified constraintshifting homotopy method is feasible and robust.

What drives contract design in alliances? Taking stock and how to proceed

We collect and assess prior empirical evidence on contract design in alliances that has been published since Parkhe’s (1993) seminal study on inter-firm contracts. We elaborate on the effects of transaction-related factors, experience gained from prior relationships, and deliberate learning efforts on contracts. Our paper offers three contributions. First, we systematically review the existing literature on alliance contracts and summarize our findings. Second, while prior research has traditionally focused on contractual complexity, we place the content of contracts center stage and identify three contractual functions. While existing studies on contractual functions predominantly refer to safeguarding as a response to appropriation concerns, we also consider coordination and contingency adaptability as outcomes of adaptation concerns. Third, we disentangle the differential influences of previous experiences on distinct contractual functions and show that experience gained from prior relationships has different effects on safeguarding and contingency adaptability than on coordination. Overall, we add to the systematization of the current debate on alliance contract design and trace promising avenues for future research on the impact of transaction- and experience-related factors on the complexity and content of alliance contracts.