This thesis follows a neo-institutional
economics approach to analyse the economic nature
of contractual arrangements in the Hong Kong
construction industry. It explains that
subcontracting can reduce transaction costs:
(1) using piece-rate contracts to replace time-wage
contracts to save the high costs of monitoring;
and
(2) using subcontractors as intermediaries to
perform tasks at a lower transaction cost due
to their comparative advantages in gathering
price information, specific knowledge and
resources.
The above assertions are evaluated in terms of
three refutable hypotheses using statistics
published by the Census and Statistics Department
of the Hong Kong SAR Government.
Hypothesis I: To be employed with short term
contracts is not preferred by the construction
workers than to be employed with long term contracts;
Hypothesis II: A subcontractor is not more
commonly used in construction works of higher values
than in those of lower values;
Hypothesis III: A subcontractor is not more
commonly used in construction works by ordinary
trades than in those by special trades.
In Table 1 summarizes the test results for each
hypothesis and states their wider theoretical
implications. The three hypotheses are all refuted.
The message is that subcontracting is neither an
inefficient contractual arrangement nor a means of
exploitation by the upstream contractors. It is
rather the result of the free choice of the
contracting parties, as a matter of constrained
maximization in a private property rights system,
seeking to reduce transaction costs.
Table 1. Summary of Tests Results for Hypotheses I, II and III
Hypotheses Regarding Subcontracting in
the Hong Kong Construction Industry
Test Results
Theoretical Implications
Hypothesis I
To be employed with short term contracts is not preferred by the construction workers than to be employed with long term contracts.
Hypothesis refuted.
The construction workers prefer being employed with piece-rate contracts or casual daily wage contracts.
Hypothesis II
A subcontractor is not more commonly used in construction works of higher values than in those of lower values.
Hypothesis refuted.
A subcontractor is more commonly used in construction works of higher values and by ordinary trades. Subcontracting is not a matter of random choice but for reducing transaction costs. Subcontracting decision would depend on the characteristics of the construction works.
Hypothesis III
A subcontractor is not more commonly used in construction works by ordinary trades than in those by special trades.
Hypothesis refuted. A subcontractor is more commonly used in construction works of higher values and by ordinary trades. Subcontracting is not a matter of random choice but for reducing transaction costs. Subcontracting decision would depend on the characteristics of the construction works. / published_or_final_version / Real Estate and Construction / Doctoral / Doctor of Philosophy
| Identifer | oai:union.ndltd.org:HKU/oai:hub.hku.hk:10722/146553 |
| Date | January 2010 |
| Creators | Chan, Kiu-wai., 陳喬威. |
| Contributors | Chau, KW, Lai, LWC |
| Publisher | The University of Hong Kong (Pokfulam, Hong Kong) |
| Source Sets | Hong Kong University Theses |
| Language | English |
| Detected Language | English |
| Type | PG_Thesis |
| Source | http://hub.hku.hk/bib/B47280049 |
| Rights | The author retains all proprietary rights, (such as patent rights) and the right to use in future works., Creative Commons: Attribution 3.0 Hong Kong License |
| Relation | HKU Theses Online (HKUTO) |
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