The choice and effects of governance mechanisms for regulating client-contractor relationships in large construction projects

Abstract

A questionnaire survey was conducted in Iran and Australia to study the choice and effects of governance mechanisms in regulating client-contractor relationships in two culturally and legally diverse environments. Data collected from 73 Iranian and 38 Australian client-contractor partnerships were then analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM) method. The contributions of this thesis are threefold; first, it contributes to social capital theory and social exchange theory by revealing that social capital and collaboration play different roles in regulating exchange relationships; for example, the results showed that where there is no substitutive or complementary relationship between social capital and formal contract, collaboration and formal contract complement each other. Second, it contributes to the inter-organizational relationships (IORs) and project management literature by introducing a new construct of ‘project control capability’ and showing the importance of its role in transaction performance; for example, the findings showed that if collaboration is not effectively implemented to enhance ‘project control capability’, its impact on project performance will disappear. Third, this thesis enriches the IORs literature by identifying and elaborating how culture and contract enforceability influence the choice and effects of governance mechanisms. For instance, the findings showed that while collaboration is the main contributor to relationship satisfaction in Australia as an individualistic country with high contract enforceability, social capital is the main motivator for relationship satisfaction in Iran with its collectivistic culture and low contract enforceability. Together, this study provides important theoretical and managerial insights and opens the way for more research within IORs context, particularly with regard to complex conditions in large construction projects