Relationship Orientation, Justice Perception, and Opportunistic Behavior in PPP Projects: An Empirical Study From China

Abstract

An equal and high-quality partnership between public and private sectors is essential to the sustainable development of public–private partnership (PPP) projects. However, in the special social circumstance in China, the public sector has a strong voice in PPP projects. According to the existing research on PPP project failure, the government's dishonest performance and negative cooperative attitude and the private sector's speculative behavior of concealing information will lead to termination or even failure of project. The attitude and behavior that reflect the relationship orientation of public sector may determine whether the private sector adopts an opportunistic behavior. However, few studies have revealed the mechanism of relationship orientation on opportunism in PPP projects. This paper proposes the connotation of the public sector's relationship orientation and designs a measurement scale from three aspects: emotional relationship orientation, instrumental relationship orientation, and rent-seeking relationship orientation. Based on the data from large construction enterprises, financial institutions and investors, and scholars with practical experience in PPP projects, this paper explores the mechanism of the public sector's relationship orientation on the private sector's justice perception and opportunistic behavior by using the structural equation model (SEM). The results show that the public sector's relationship orientation significantly affects the formation and development of the private sector's justice perception and opportunistic behavior, justice perception plays a mediating role in the process of relationship orientation acting on opportunistic behavior, and the instrumental relationship orientation is more conducive to reducing the opportunistic behavior. The results provide new ideas for changing the public sector's concept and attitude and regulating behavior in PPP projects.

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

“…PPP project is characterized by large scale, long cycle, numerous participants and asymmetric information [17]. So, the shortcomings of single-dimensional research of contract governance are .…”

“…Firstly, the function of contractual control is primarily to protect investments from the opportunism of partners. In PPP projects, the conditions for opportunistic behavior are easily formed due to the high degree of information asymmetry and separation of ownership and management rights [17]. The more perfect the terms, the stronger the binding effect [9], and this function can be reflected in setting incentive and punishment mechanisms [22].Secondly, due to the complexity and interconnectedness of PPP projects, the goals may be difficult to achieve, which needs coordination functions.…”

“…The function of contractual coordination can promote frequent and positive communication between partners, which has a positive impact on avoiding disputes and improving trust [38]. Equal partnership based on contractual provisions helps to restrain opportunistic behavior, reduce conflicts and disputes between partners, so as to improve the quality of partnership [17]. Similarly, if there is sufficient trust and support in the process of cooperation, the partners can feel fully respected and fair [39], which can also improve the execution efficiency of the contract.…”

An evolutionary game analysis of supervision behavior in public-private partnership projects: Insights from prospect theory and mental accounting

“…The public sector expects the project to meet the public’s demands for public goods or services, while the private sector expects economic benefits from the project ( Lohmann and Roetzel, 2014 ). The pursuit of profit by the private sector may make it opportunistic in the operation of PPP projects ( Feng et al, 2021 ). For example, the private sector may reduce the frequency or standard of road maintenance to save operating costs in expressway PPP projects.…”

Influence of public credit risk on private capital in public–private partnership models

“…If a project is terminated early and is redeemed by the national treasury, the government must ensure that the agreed minimum return is provided to private capital based on the market liquidation value, outstanding debt, and book value of private capital's holdings (Dahdal, 2010; Irwin & Mokdad, 2010). Hence, private capital participation in PPPs requires a certain level of government credibility (Feng et al, 2021).…”