A Tentative Exploration of Incentives to Introduce Long Term Relationship between Construction General Contractor and Subcontractor from a Game-Chain Perspective

• Tingyu, An

• Watanabe, Tsunemi

Abstract

One of urgent issues for sustainable development of the Chinese construction industry isargued to be developing capable specialty contractors in the downstream of supply chain. One valuableapproach inspired from Japanese construction is argued to be building long-term relationship betweenGeneral Contractor (GC) and a group of allied subcontractors (SCs). Then there comes a crucial issue as howto initiate and motivate the involved players to establish and maintain this cooperative business relationship,particularly under today’s extremely competitive and uncertain business environment.This study aims to explore the potential incentives of long term relationship. A tentative game-chainmodel was conducted on the psychological competition scenarios between GC and SC in the activity ofresource allocating. In this model, maintaining a long term working relationship is interpreted as a chain ofgames, in which the former game will exert influence on the latter through the actions each player takes. As aresult, the systematic equilibrium must be approached based on a holistic and dynamic thinking. The analyticresults show that under an uncertain and dynamic situation in resource allocating, one-off game (asshort-term work relationship) between GC and SC leads to the worst equilibrium, interpreted as cheatingbehaviors by both players. However, with the game repeating more times (forming a game-chain), thesystematic equilibrium moves to honest behaviors by both players, with an increase in both utilities. Itindicates that long-term relationship could provide with economic incentive for both players in theireconomic activities.In future study, this approach needs to be evaluated more comprehensively, particularly on its potentialdemerits. For example, if SCs are too much “locked in” vertical relationship with GC, it might easily lead toSCs’ inability to diversity and over-reliance. It again reveals the significance of more careful considerationson implementation practically.

Journal

• Society for Social Management Systems Internet Journal

  Society for Social Management Systems Internet Journal 9 2014-12

  Society for Social Management Systems

Details

• CRID: 1050282676659804032
• NII Article ID: 120006666003
• Web Site: http://hdl.handle.net/10173/1240
• Text Lang: en
• Article Type: conference paper
• Data Source:
  • IRDB
  • CiNii Articles