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Supervising for quality: an empirical examination of institutional arrangements in China's construction industry

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  • Ping Yung
  • Lawrence Wai Chung Lai

Abstract

Most of the literature on the rapid changes in institutional arrangements in China's construction industry have either limited themselves to a description of these changes or relied on opinion surveys to draw conclusions. Few researchers have conducted serious empirical examinations, especially regarding the ownership of developers or contractors. To fill this gap, we empirically examined the effectiveness of compulsory construction supervision arrangements on the quality of construction projects in mainland China, explained the seemingly inexplicable phenomenon that projects undertaken by state-owned enterprises (SOEs) are of better quality than those undertaken by non-SOEs, explored the law of tort in relation to construction supervision firms, tested the published official data from 1991 to 2001 on construction 'good quality rates' with regression against per capita values and powers of machinery as well as the capital-output ratios of both SOEs and non-SOEs, identified the determining factors affecting construction quality, and demonstrated the limitations of using the principal-agent theory in analysing the construction industry. The results supported the corollary of the Coase Theorem that resource allocation in terms of output quality will be affected by changes in the institutional arrangements.

Suggested Citation

  • Ping Yung & Lawrence Wai Chung Lai, 2008. "Supervising for quality: an empirical examination of institutional arrangements in China's construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 26(7), pages 723-737.
    • Handle: RePEc:taf:conmgt:v:26:y:2008:i:7:p:723-737
    DOI: 10.1080/01446190801998690
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    References listed on IDEAS

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    1. David D. Li & Changqi Wu, 2002. "The Ownership School vs. the Management School of State Enterprise Reform: Evidence from China," William Davidson Institute Working Papers Series 435, William Davidson Institute at the University of Michigan.
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    Cited by:

    1. Ping Yung, 2015. "A new institutional economic theory of project management," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 16(1), pages 228-243, February.
    2. Ceric Anita & Ivic Ivona, 2021. "Network analysis of interconnections between theoretical concepts associated with principal–agent theory concerning construction projects," Organization, Technology and Management in Construction, Sciendo, vol. 13(2), pages 2450-2464, January.

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