IDEAS home Printed from https://ideas.repec.org/a/taf/conmgt/v29y2011i1p15-23.html
   My bibliography  Save this article

Dubious benefits from future exchange: an explanation of payment arrears from 'continuing clients' in Mainland China

Author

Listed:
  • Jin Wu
  • Mohan Kumaraswamy
  • Gary Soo

Abstract

Clients and contractors are frequently advised to adopt a collaborative attitude and approach in construction projects in general, with 'continuing clients', i.e. clients with continuous large projects portfolios, expected to be in the forefront of such initiatives. Although such a governance approach has been argued to be beneficial in construction transactions, it is not uncommon to hear contractors complaining that clients do not fulfil their payment obligations. For example, in Mainland China, a large proportion of deliberate payment arrears are from 'continuing clients'. Gametric models are used in this research to show that three prerequisites are needed for inducing continuing clients to be cooperative. Empirical evidence from legislation and a questionnaire survey indicates that these preconditions are not fulfilled in Mainland China. Prevalent institutional arrangements, differentials in appreciation of the value of relationships, and opaque payment track records are found to contribute to continuing clients' deviation from the often advocated amicable approaches. Thus, transaction attributes seem to only suggest a theoretically optimal governance structure from the perspective of transaction costs, but other factors may also substantially influence parties' calculation and choice.

Suggested Citation

  • Jin Wu & Mohan Kumaraswamy & Gary Soo, 2011. "Dubious benefits from future exchange: an explanation of payment arrears from 'continuing clients' in Mainland China," Construction Management and Economics, Taylor & Francis Journals, vol. 29(1), pages 15-23.
  • Handle: RePEc:taf:conmgt:v:29:y:2011:i:1:p:15-23 DOI: 10.1080/01446193.2010.521757
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/01446193.2010.521757
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Patrick Bajari & Steven Tadelis, 1999. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," Working Papers 99029, Stanford University, Department of Economics.
    2. Parkhe, Arvind, 1998. "Building trust in international alliances," Journal of World Business, Elsevier, vol. 33(4), pages 417-437, January.
    3. Sai-On Cheung & Tsun-Ip Lam & Mei-Yung Leung & Yue-Wang Wan, 2001. "An analytical hierarchy process based procurement selection method," Construction Management and Economics, Taylor & Francis Journals, vol. 19(4), pages 427-437.
    4. Roberto Pietroforte, 1997. "Communication and governance in the building process," Construction Management and Economics, Taylor & Francis Journals, vol. 15(1), pages 71-82.
    5. Anna Dubois & Lars-Erik Gadde, 2002. "The construction industry as a loosely coupled system: implications for productivity and innovation," Construction Management and Economics, Taylor & Francis Journals, vol. 20(7), pages 621-631.
    6. Barlow, James, 2000. "Innovation and learning in complex offshore construction projects," Research Policy, Elsevier, pages 973-989.
    7. Albert Chan & Daniel Chan & Kathy Ho, 2003. "An empirical study of the benefits of construction partnering in Hong Kong," Construction Management and Economics, Taylor & Francis Journals, vol. 21(5), pages 523-533.
    8. M. Motiar Rahman & Mohan Kumaraswamy, 2002. "Joint risk management through transactionally efficient relational contracting," Construction Management and Economics, Taylor & Francis Journals, vol. 20(1), pages 45-54.
    9. Spekman, Robert E., 1988. "Strategic supplier selection: Understanding long-term buyer relationships," Business Horizons, Elsevier, vol. 31(4), pages 75-81.
    10. J Michael Geringer, 1991. "Strategic Determinants of Partner Selection Criteria in International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(1), pages 41-62, March.
    11. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, pages 387-407.
    12. Per Erik Eriksson, 2006. "Procurement and Governance Management ? Development of a Conceptual Procurement Model Based on Different Types of Control," management revue. Socio-economic Studies, Rainer Hampp Verlag, pages 30-49.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:conmgt:v:29:y:2011:i:1:p:15-23. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RCME20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.