Can relational governance improve sustainability in public-private partnership infrastructure projects? An empirical study based on structural equation modeling

Abstract

PurposeAccording to relational contract theory, relational governance has potential to improve public-private partnership (PPP) infrastructure project sustainability. The main purpose of this research is to investigate the association between relational governance and the sustainability of PPP infrastructure projects. Further, this study examines the mediating effect of managerial innovation and the moderating role of public involvement.Design/methodology/approachResearch data were collected from 158 valid questionnaires completed by Chinese PPP professionals. Structural equation modeling (SEM) was then employed to test five hypotheses.FindingsResults indicate a positive correlation between relational governance and PPP infrastructure project sustainability. This linkage is regulated by public involvement. In addition, managerial innovation plays a mediating role between relational governance and the sustainability of PPP infrastructure projects.Originality/valueThis study verifies the relationship between relational governance and PPP infrastructure project sustainability, as well as intermediary and regulatory factors, providing a new approach to achieving sustainability in PPP infrastructure projects.

The influence of contractual and relational governance on the sustainable performance of public-private partnership projects: Findings from PLS-SEM

“…The results of the structural equation model show that both contractual and relational governance significantly improve the sustainable performance of PPP projects when the two governance mechanisms work together. This finding supports the views of Cheng et al [13] and Tian [12] respectively.…”

“…Through communication, more comprehensive messages can be delivered, and information asymmetry between partners can be reduced, thus reducing transaction costs and coordination costs [3]. Studies have also shown that communication and trust have a mutually reinforcing effect and can effectively alleviate opportunism [12]. Thirdly, reciprocity is a code of ethics [34].…”

“…But for infrastructure PPP projects, more emphasis should be put on long-term sustainable performance, not the inadequate economic performance. So far, scholars have demonstrated that relational governance [12] and contractual governance [13] are positively correlated with the sustainability of PPP infrastructure projects separately, while collaborative governance mechanisms under this goal has received limited attention. Secondly, the mutual influence of contractual and relational governance is complementary or substitutive, which has always been controversial.…”

Identifying Critical Influencing Factors of the Value Creation of Urban Rail Transit PPP Projects in China

“…VFM is used to evaluate whether PPP projects can create value [12]. The 3E principle including economy, efficiency, and effectiveness is widely adopted in government capital efficiency audits to evaluate whether a project achieved VFM [18]. Based on the 3E principles of VFM, various performance objectives of PPP projects are proposed to promote effective cooperation between the public and private sectors and achieve value creation.…”

“…The PPP model is changing from high-speed to high-quality development. "Implementation Opinions on Promoting the Standardized Development of Government and Social Capital Cooperation" issued by China s Ministry of Finance in 2019 emphasizes that PPP projects should strictly perform VFM evaluation and promote PPP projects to create more value for society [18]. Therefore, achieving the basic performance management objectives in URT PPP projects can no longer meet the expectations of participants, but rather realize value-added through effective cooperation [5].…”