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

Abstract

As a widely adopted model of infrastructure and public service provision, the goal of PPP projects is gradually shifting from traditional economic orientation to sustainable development orientation. During this process, contractual governance and relational governance are regarded as effective ways to improve the sustainable performance of PPP projects. This paper extends contractual governance (control, coordination, adaptation) and relational governance (trust, communication, reciprocity, and industry practices) to second-order constructs. On this basis, partial least squares structural equation model (PLS-SEM) is adopted to analyze the questionnaire data of 114 PPP project practitioners, aiming to study the influence of contractual and relational governance on the sustainable performance of PPP projects. The results of PLS-SEM verify the support effect of contractual and relational governance on sustainable performance, and the effect of relational governance is more significant. This paper enriches the governance mechanism of PPP projects from the perspective of sustainable development. At the same time, the research results can also help PPP project managers rationally use the governance mechanism of both contract and relationship to promote the project to achieve its sustainable performance.