Relational Governance as Mediator Of Contractual Governance In Public Private Partnership

This research provides empirical evidence that relational governance can play a mediating role between contractual governance and project performance of Public Private Partnerships. Based on the analysis of a survey of PPP practitioners in the Netherlands, using Partial Least Squares Modeling we found that organizational rules for organizing the day-to-day interaction between partners and partners’ trust mediate the relationship between contractual arrangements and project performance. These findings are aligned with the idea of tripartite governance conceptualization, which states that both economic incentives and hierarchical relationships formalized in contract agreements require to be in interplay with socially based mechanisms to actually guarantee the integrity of value creation in PPPs. Theoretical discussion elaborates on enabling and compensating underlying mechanisms of the relational governance mediation role. Managers can find in relational governance, and particularly in relational norms, a leverage point for bridging the long-term contractual obligations with the day-to-day partners’ contribution