Effect of Contract Completeness on Contractors’ Opportunistic Behavior and the Moderating Role of Interdependence

Abstract

The characteristics of construction projects—e.g., one-off, high complexity, information asymmetry, and asset specificity—have led to a very common phenomenon of opportunism. In this paper, a questionnaire based on a sample of contractors was employed to explore the effect of contract completeness on contractors’ opportunistic behavior, as well as the moderating role of interdependence. The results show that term specificity, contingency adaptability, and contractual obligatoriness all have negative effects on contractors’ opportunistic behavior (both weak and strong forms), while issue inclusiveness positively influences contractors’ opportunistic behavior. In addition, except for the positive moderating role of interdependence magnitude on the relationship between contingency adaptability and contractors’ opportunistic behavior (weak form), the other three significant moderating effects (magnitude on issue inclusiveness and strong form, magnitude on contractual obligatoriness and strong form, asymmetry on term specificity and strong form) are all found to be negative. These findings can give insight into the many ways that contracts affect opportunism, and thus help both sides strategically react to opportunistic disturbances and minimize transaction costs.