Interplay of relational and contractual governance in public-private partnerships: The mediating role of relational norms, trust and partners’ contribution

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Abstract

Defining the nature of the relationship between contractual and relational governance is critical for understanding how to maintain commitment and coordination between private and public organizations in long-term partnerships. In this study, a theoretical model explains Public-Private Partnership (PPP) project performance as the result of a mediation process. Contractual and relational governance elements operate sequentially with relational elements (relational norms and trust), playing a mediating role between contractual elements, project actors' behaviour and final performance. Based on the analysis of a survey of PPP practitioners in The Netherlands, and using Consistent Partial Least Squares Modeling, the study provides empirical support for these mediating effects. The findings are aligned with the idea that both economic incentives and hierarchical relationships formalized in contract agreements require being internalized in working practices by means of informal and socially based mechanisms. The enabling and compensating mechanisms underlying the mediation role of relational governance elements are discussed. Managers can particularly find in relational norms a leverage point for designing collaborative day-to-day practices aimed at reinforcing trust and long-term contractual obligations.
Original languageEnglish
Pages (from-to)429-443
Number of pages15
JournalInternational journal of project management
Volume36
Issue number3
DOIs
Publication statusPublished - 1 Apr 2018

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Managers
Economics
Governance
Public-private partnerships
Relational governance
Relational norms
Mediation
Economic incentives
Empirical study
Partial least squares
The Netherlands
Mediating effect
Public organizations
Leverage
Working practices
Project performance
Obligation
Modeling

Cite this

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title = "Interplay of relational and contractual governance in public-private partnerships: The mediating role of relational norms, trust and partners’ contribution",
abstract = "Defining the nature of the relationship between contractual and relational governance is critical for understanding how to maintain commitment and coordination between private and public organizations in long-term partnerships. In this study, a theoretical model explains Public-Private Partnership (PPP) project performance as the result of a mediation process. Contractual and relational governance elements operate sequentially with relational elements (relational norms and trust), playing a mediating role between contractual elements, project actors' behaviour and final performance. Based on the analysis of a survey of PPP practitioners in The Netherlands, and using Consistent Partial Least Squares Modeling, the study provides empirical support for these mediating effects. The findings are aligned with the idea that both economic incentives and hierarchical relationships formalized in contract agreements require being internalized in working practices by means of informal and socially based mechanisms. The enabling and compensating mechanisms underlying the mediation role of relational governance elements are discussed. Managers can particularly find in relational norms a leverage point for designing collaborative day-to-day practices aimed at reinforcing trust and long-term contractual obligations.",
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T2 - The mediating role of relational norms, trust and partners’ contribution

AU - Benitez Avila, Camilo Andres

AU - Hartmann, Andreas

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AU - Henseler, Jörg

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AB - Defining the nature of the relationship between contractual and relational governance is critical for understanding how to maintain commitment and coordination between private and public organizations in long-term partnerships. In this study, a theoretical model explains Public-Private Partnership (PPP) project performance as the result of a mediation process. Contractual and relational governance elements operate sequentially with relational elements (relational norms and trust), playing a mediating role between contractual elements, project actors' behaviour and final performance. Based on the analysis of a survey of PPP practitioners in The Netherlands, and using Consistent Partial Least Squares Modeling, the study provides empirical support for these mediating effects. The findings are aligned with the idea that both economic incentives and hierarchical relationships formalized in contract agreements require being internalized in working practices by means of informal and socially based mechanisms. The enabling and compensating mechanisms underlying the mediation role of relational governance elements are discussed. Managers can particularly find in relational norms a leverage point for designing collaborative day-to-day practices aimed at reinforcing trust and long-term contractual obligations.

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