Transparency, market operation and trust in the Dutch construction industry: an exploratory study

Abstract

After the discovery of illegal price agreements in the Dutch construction industry, the government and major players in the sector have initiated a transition process towards more professional commercial relations. In the transition process transparency plays an important part, as it is a precondition for better market operation in the construction sector. However, there are significant disadvantages to a pursuit of transparency, such as higher costs and the risk of information overload. It is therefore necessary to find a good balance between more transparency and other ways to restore trust between key players in the construction sector. Especially complex products with a high degree of risk can best be dealt with through implicit contracts, in which trust is based on a mixture of the reputation mechanism, contracts that create a congruity of interests and the integrity of the contract partners.

Keywords:

• Transparency
• market operation
• trust
• integrity
• implicit contracts

Acknowledgements

The authors would like to thank Henk van Tongeren, Vera Besseling, Oskar de Kuijer and other participants of the transparency table for their cooperation in the study report, upon which this paper is based, and PSIBouw for generously funding this research. They are also grateful to several referees for their valuable comments on an earlier version of this paper.

Notes

1. The total number of definitions reported in table 2 is 18. In two interviews the respondents gave no definition.