The impact of contractual governance and trust on EPC projects in construction supply chain performance

Abstract

This paper theoretically refines and empirically extends the debate on the type of interplay between formal and informal governance in an under-researched area: Engineering, Procurement and Construction (EPC) Projects in construction supply chain. Taking contractual governance as the core element of formal governance, and trust as the core element of informal governance, this paper seeks to address their impact on cooperation and EPC projects in construction supply chain performance by structural equation model. The result shows that contractual governance has a positive effect on EPC projects in construction supply chain performance, but the effect on cooperative behavior is not significant; trust shows some influence both on cooperation and performance; cooperation has a positive significant effect on the performance; different dimension of trust has different effects on cooperation and performance: affect-based trust has a positive significant effect on cooperation and performance; the effect of cognition-based trust on performance is not significant, and it only has a positive effect on cooperation; system-based trust has no effect on cooperation and performance.