Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect
In the process of internationalization of construction contractors, international enterprises as main contractors (IMC) need to consider whether part of the contract should be subcontracted to local subcontractors (LSC) to gain a competitive advantage when competing with local main contractors (LMC)...
| Main Authors: | , , , , |
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| Format: | Journal Article |
| Published: |
M D P I AG
2018
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| Online Access: | http://purl.org/au-research/grants/arc/DP180104026 http://hdl.handle.net/20.500.11937/71685 |
| _version_ | 1848762545074077696 |
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| author | Zhu, J. Shi, Q. Wu, Peng Sheng, Z. Wang, X. |
| author_facet | Zhu, J. Shi, Q. Wu, Peng Sheng, Z. Wang, X. |
| author_sort | Zhu, J. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | In the process of internationalization of construction contractors, international enterprises as main contractors (IMC) need to consider whether part of the contract should be subcontracted to local subcontractors (LSC) to gain a competitive advantage when competing with local main contractors (LMC). The involvement of local subcontractors can usually help reduce cost through the cost spillover effect. However, it should be noted that the share of local subcontractors with local main contractors with an inferior quality may lead to quality spillover. The Hotelling model is therefore adopted to investigate the subcontracting decisions of main contractors considering both cost and quality spillover effects. Many scenarios are simulated and the results show that LMCs with inferior quality can always choose the subcontracting strategy to obtain increased profit regardless of the strategy that IMCs adopt. On the other hand, IMCs need to balance the cost spillover of subcontracting and the quality spillover for improving the quality level of LSCs. The results are useful for contractors to make decisions that are relevant to the adoption of subcontracting strategies to obtain competitive advantages. |
| first_indexed | 2025-11-14T10:49:16Z |
| format | Journal Article |
| id | curtin-20.500.11937-71685 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T10:49:16Z |
| publishDate | 2018 |
| publisher | M D P I AG |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-716852022-10-27T07:34:14Z Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect Zhu, J. Shi, Q. Wu, Peng Sheng, Z. Wang, X. In the process of internationalization of construction contractors, international enterprises as main contractors (IMC) need to consider whether part of the contract should be subcontracted to local subcontractors (LSC) to gain a competitive advantage when competing with local main contractors (LMC). The involvement of local subcontractors can usually help reduce cost through the cost spillover effect. However, it should be noted that the share of local subcontractors with local main contractors with an inferior quality may lead to quality spillover. The Hotelling model is therefore adopted to investigate the subcontracting decisions of main contractors considering both cost and quality spillover effects. Many scenarios are simulated and the results show that LMCs with inferior quality can always choose the subcontracting strategy to obtain increased profit regardless of the strategy that IMCs adopt. On the other hand, IMCs need to balance the cost spillover of subcontracting and the quality spillover for improving the quality level of LSCs. The results are useful for contractors to make decisions that are relevant to the adoption of subcontracting strategies to obtain competitive advantages. 2018 Journal Article http://hdl.handle.net/20.500.11937/71685 10.3390/su10093291 http://purl.org/au-research/grants/arc/DP180104026 http://creativecommons.org/licenses/by/4.0/ M D P I AG fulltext |
| spellingShingle | Zhu, J. Shi, Q. Wu, Peng Sheng, Z. Wang, X. Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title | Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title_full | Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title_fullStr | Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title_full_unstemmed | Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title_short | Achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| title_sort | achieving economically sustainable subcontracting through the hotelling model by considering the spillover effect |
| url | http://purl.org/au-research/grants/arc/DP180104026 http://hdl.handle.net/20.500.11937/71685 |