Impact of corporate credit scoring on construction contractors in China

In an attempt to enhance the trustworthiness of contractors and reduce corruption, the China Government has launched a construction contractor credit scoring (CCCS) scheme in Beijing for evaluating the compliance and integrity of contractors registered in the construction market. The contribution of this paper to the Body of Knowledge is to analyze how the incorporation of CCCS may affect general contractors’ present and future competitiveness through a case study in China. The paper analyzes the procurement of 158 building projects tendered in Beijing, involving 2071 local general contractors active in the market. The results show that (1) the contractors’ CCCS scores are important for being awarded large and mega project contracts; (2) CCCS scores have a generally positive effect on future corporate financial income; and (3) that, contrary to expectations, the policy does not increase the CCCS of companies. Finally, it is observed how the changing trend in contractors’ CCCS scores is highly correlated with their initial values (the scores of higher CCCS scoring companies increase faster on average than other companies). Final remarks concern ways to better implement CCCS schemes in the future and avoid the potential risks involved in their use.