Dubious benefits from future exchange: an explanation of payment arrears from 'continuing clients' in Mainland China
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.
Volume (Year): 29 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RCME20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RCME20|
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: (Michael McNulty)
If references are entirely missing, you can add them using this form.