The role of contract flexibility in shaping contractor behaviour: a parallel mediation analysis of trust and control

Contracts are effective instruments for controlling contractor behavior. However, there is limited understanding of why contractor behavior can be contractible ex post, especially when the contract is flexible. This research examines how contract flexibility influences contractor behavior including contractor perfunctory behavior and contractor consummate behavior through the parallel lenses of trust and control. Additionally, this study incorporates information transparency as a moderating variable to elucidate the underlying mechanisms. A survey conducted in the Chinese construction industry unveiled the "mixed blessing" of contract flexibility in shaping contractor behavior. Price flexibility does not influence contractor perfunctory behavior, while control rights flexibility negatively affects contractor perfunctory behavior and renegotiation flexibility positively impacts contractor perfunctory behavior through control. Conversely, all three flexibility types are significant antecedents of contractor consummate behavior through trust. Interestingly, information transparency does not strengthen the link between contract flexibility and contractor perfunctory behavior while it facilitates the connection between contract flexibility and contractor consummate behavior. This study addresses the inconsistent findings surrounding the effects of contract flexibility by treating both contract flexibility and contractor behavior as multidimensional constructs. Moreover, this study contributes to the ongoing debate regarding the control-trust nexus in interorganizational collaboration.