Determining the relationship between fee structure and project performance between firms: an empirical study based on institutional and task environment perspectives

Abstract

Construction firms, under the influence of different dynamic institutional and task environment forces, are likely to have differing perceptions about the determinants of project performance. To test this proposition, this study uses institutional and task environment frameworks to investigate specifically the relationship between fee structure and project performance across different construction firms. Despite anecdotal evidence suggesting that such a relationship exists, empirical results based on data collected from 398 construction firms in Hong Kong did not support this assertion. However, by further modelling the differences across firms, the results indicate that firms on the whole regard other task environment factors as more important to project performance compared to institutional factors. Based on follow‐up interviews, suggestions as to why this may be the case point to the fact that firms feel they can exercise greater business control on the capitalization, enhancement, and management of various task environment resources than they can on institutional ones. The paper concludes by highlighting the need for researchers to be cognizant of the benefits of integrating both task environment and institutional factors and understand how they affect project performance.

Keywords:

• Institutional factors
• task environment factors
• fee
• project performance
• hierarchical regression modelling

Notes

Note: (a) Emboldened item is summated dependent variable. Pearson‐product moment correlation, listwise deletion. Whole sample n = 378; Contracting firm sub‐sample n = 250; Consulting firms sub sample n = 124; Hong Kong firm sub‐sample n = 315; foreign firm sub‐sample n = 61; firms involved in public project sub‐sample n = 128; firms involved in private project sub‐sample n = 204. (b) Scale:‐ 1 = Strongly disagree, 2 = Disagree, 3 = Neutral, 4 = Agree, 5 = Strongly agree.

*p<0.10, **p<0.05, ***p<0.01, two tailed.

These firms were randomly chosen from the pool of 2005 firms drawn from various professional and trade membership directories.