Research On Construction Industry Co-opetition Issue

During 30 years of reform and opening-up, China construction industry has experienced three development phases:conversion from planned economic system to product economic system, conversion from product economic system to market economic system, and perfection of construction industry market economic system with going scientific development road, in which process, operation mechanism of construction industry has consummated, and GDP pulling function of the industry has grown. As manifested in data, from the year 1980 to 2007, construction output has developed from 28.693 billion RMB to 5104.371 billion RMB, and number of practitioners has increased from 6.48 million to 31.337 million. Construction industry has become important pillar industry of national economy In 2009, in order to minimize the impact on China's economy, and to ensure sustained and rapid growth of the national economy, Chinese government reacts promptly, and introduces to speed up the construction of housing projects, speed up construction of rural infrastructure, and speed up rail, road and airport construction and other major infrastructure measures. These measures on the one hand, reflects construction industry plays a role in stimulating economic growth, and on the other hand, make us to realize that only strongly operating mechanism can improve the construction industry, and to ensure the industry healthy and sustainable, stable and orderly operation in order to achieve its contribution to the national economy.Nowadays, China construction industry still transits from exploration to perfection. In the process, the operation of the market competition mechanism is not perfect, and competition situation is in more serious disorder, such as, differences in construction firms are not obvious, competition is in serious condition; firm scale is prevalent large, appropriate industry structure has not been established, contract and subcontract system is not perfect, which makes it difficult in both cooperation and competition; industry market is in disorder, contract payment delay problems are serious, unfair competition still exists; industry management institution is not well-establishment, corruption and local protection behaviors are prevalent, fair and equitable environment for competition is in urgent need; the industry and local barriers still exists, it is hard for competition and cooperation between local areas. The existence of the above-mentioned problems the construction industry has seriously hindered the orderly conduct of competition, industry competition is not conducive to the establishment and operation mechanism, which greatly restricts the industry of long-term stability and sustained and healthy development and impacts the industry to play its major pillar industry role in promoting national economy.In order to ensure the stable development momentum of the industry, make it continuing to play the role of the pillar industries in economy, and in advance to play an important role of economic revitalization in the new round of planning, in 2005, the Ministry of Construction published "On several issues of promoting construction industry revolution and development", which suggested by the way of competing orderly, to establish modern market system, to create fair competition and orderly regulation construction market environment, to act better pillar industry function in domestic economy. That same year, the Ministry of Construction proposed establishment of market economy and social credit system, both from a legal and moral aspects of regulating the market competition order. These measures are practices of continuous improvement to guide the new ideas in the industry after 30 years of construction industry reform, which still not enough. It must be research deeply in academy particularly about disorderly competition, vicious competition and illegal competition in construction industry, and put forward relevant measures and suggestions. In this context, from the perspective of coopetition solve the problems such as disorderly competition and improve the corresponding measures are both need and urgency with reality.This dissertation entitled as "research on construction industry coopetition issue", which seeks a balance and unity between cooperation and competition in construction industry. The construction industry coopetition means within the construction industry around client's projects or long-term strategic objectives, contractor and subcontractor cooperate as a core team, through the cooperation, the contractor and subcontractor create common market opportunities and gain competitive edges that measured by the contribution of different enterprises to the cooperation team by which distribution of cooperation surplus is decided. Construction industry coopetition is a long-term process, the opportunities for cooperation from the enterprises in the industry are network resources as well as credibility.On the issue, foreign and domestic scholars have not complete research achievements. Lots of researches are about partnering relationship between client and contractor, but few for contractor and subcontractor coopetition issue. Recently, several foreign scholars make experience analysis about cooperation between contractor and subcontractor, which contributes to the dissertation. However, the research is still at initial stage. At this point, the dissertation references to two kind of research achievements:coopetition of management theory and partnering of construction industry theory.From a unique perspective, the dissertation theoretical basis integrates institution economy, social network theory and management theory to find out an appropriate point between those theories with coopetition issue, especially has the usage of embeddedness theory, which are transaction costs and asset-specific are construction industry coopetition internal demand, construction firms embedded in industry environment is construction industry coopetition external condition, strong-tie and weak-tie edges between construction firms are bridges of construction industry coopetition, construction firms embedded in social cooperation system is momentum to realize construction industry coopetition. Meanwhile, the dissertation uses information economics and game theory techniques, especially cooperative game theory to research coopetition issue in China. The dissertation has mainly utilized the game theory as an analysis tool in technology. Respectively, it analyzes the antagonism competition frame with the request-proxy theory, analyzes the coopetition frame with the cooperation games. It establishes the model of the cooperation competitive system of construction industry.Construction industry is elasticity production, which decides output level and efficiency of the industry. Subcontractor plays a key role in the industry. The coopetition between contractor and subcontractor decides elasticity production of construction industry. Through researches, foreign scholars have find cooperation between different organizations is a base of construction project success. At the background of traditional frame, usually contractor subcontracts for removing risks of main contract, which leads enmity competition between contractor and subcontractor. Therefore, "back option" and "moral risk" become prevalent, which makes competition disorderly. However, we notice that at the advocating of Sir Michael Latham, partnering agreement especially ACAPPC2000 and SPC2000 have made part of contractor and subcontractor gain long-term relationship. In Japan, by the way of cultivating intimate relationship between contractor and subcontractor, contractors in Japan have played more excellent roles to Britain's and America's. Therefore, construction industry cooperation is probably necessary to achieve. In the past few years, advocacy of partnering between contractor and subcontractor has been in use in Beijing, Shanghai, and Hong Kong in China. Because of major project accomplishers are subcontractors, partnering in narrow sense has not included subcontractor in client decision making process, the usage of partnering has not alleviated the enmity between contractor and subcontractor. Thus, to integrate subcontractor to partnering relationship to form client-contractor-subcontractor coopetition pattern is an efficient way to solve the problem. The dissertation promotes coopetiton issue at the point of the shortage of traditional partnering relationship, integrates client, contractor and main subcontractor to form a long-term relationship pattern. Coopetition relationship has three aspects:relationship between contractor and subcontractor, relationship between client and contractor, and relationship between client and subcontractor. For the client is the sponsor of the project, it has initiative in construction process, so client is playing an impetus role in coopetition relationship. Thus, client should activate its role to formulate coopetition relationship.Coopetition operation mechanism includes cooperation promoting mechanism, interest allocating mechanism, mutual supervising mechanism, rewards-penalty mechanism, credit mechanism, and surplus allocating stimulation mechanism. Through analysis of game theory techniques, six conclusions are gained:1. It is possible to establish a cooperation promoting mechanism.2. Cooperation interest can be allocated efficiently.3. Mutual supervising can be possible and efficient on condition.4. Penalty and supervision are efficient rewards-penalty mechanism.5. Credit is a key factor to influence construction firms in a long run; firms without credit will be eliminated.6. The proportion of surplus allocation in team conforms to the importance of contractor and subcontractor in team production.Virtual construction is a unique construction method in construction industry, which also is a useful way to realize projects. With the research of virtual construction, coopetition issue broadens its research vision, which converts project coopetition to strategy coopetition. The two phases have its own advantages that are project coopetition is good for project team construction, and to form firm core competition capacity; while strategy coopetition is good for firm core competition capacity to form strategy elasticity, and to form long-term competition advantage to promote surviving and developing ability, which is good for continuous and healthy development in construction industry. The virtual conversion from project coopetition to strategy coopetition makes the industry more stable and orderly, at the same time, construction firms become more capable.Construction coopetition system in construction industry must get the powerful support from insurance system. Contract, trust, project guarantee institution and industrial association as an informal institution are four powerful safeguards, which insure the coopetition of various main bodies in construction industry whose common goal is the long-term benefit. Therefore, construction industry in China should carry out four aspects to achieve the goal of ensuring construction industry coopetition system operate effectively, they are formed of the relational contract, promotion of the profession trust, improvement of the guarantee system, and effective operation of industrial association.The dissertation innovation standpoints are:1. Broadening construction industry coopetition theory base, which are transaction costs and asset-specific are construction industry coopetition internal demand, construction firms embedded in industry environment is construction industry coopetition external condition, strong-tie and weak-tie edges between construction firms are bridges of construction industry coopetition, construction firms embedded in social cooperation system is momentum to realize construction industry coopetition.2. Establishing principal-agent model to analyze "back option" and "moral risk" in traditional enmity competition pattern and interest allocation model between contractor and subcontractor in coopetition pattern.3. Promoting construction industry coopetition informal institution insurance path. Firms in construction industry coopetition have common goals that are long-term benefit. Therefore, construction industry in China should carry out four aspects to achieve the goal of ensuring construction industry coopetition mechanism operate effectively, which are usage of relational contract, promotion of the profession trust, improvement of the guarantee system, and effective operation of industrial association.