Influence of Trust and Contract on Dispute Negotiation Behavioral Strategy in Construction Subcontracting

Abstract

This paper examines the effects of trust and contract on the dispute negotiation behavioral strategy of general contractors and subcontractors in construction subcontracting, which is an underresearched area. This research regards trust as a two-dimensional construct, distinguishing the control and coordination functions of contractual governance, and explores their effects on negotiation behavioral strategy; this research also examines the moderating effects of bilateral lock-in. The empirical results from a survey of 272 Chinese general contractors and subcontractors reveal that there is a positive relationship between trust, including both goodwill trust and competence trust, and interest-based negotiation behavioral strategy. However, increasing contractual control will increase the adoption of a rights-based negotiation behavioral strategy, while contractual coordination governance will reinforce the adoption of an interest-based behavioral strategy. Both Chinese general contractors and subcontractors tend to rely more on trust under higher degrees of bilateral lock-in. The research findings offer an advanced and nuanced understanding of how trust and contract affect negotiation behavioral strategy in construction subcontracting. The authors also discuss the theoretical and managerial implications of the findings and future research for governance mechanisms in construction.