Impact of government guarantees on private sectors’ behavior in public–private partnership projects: moderating role of trust
Li Hou, Bin Yao, Yibo Hu, Jinbo Song, Shijie YuPurpose
This study aims to resolve the dilemma of government guarantees (GGs) in public–private partnerships (PPPs), where improper GGs risk escalating costs and project failures. It specifically examines how differentiated GGs and private sectors’ trust in governments jointly influence private sectors’ behavior (PSB), addressing prior research gaps in trust mechanisms and GG categorization.
Design/methodology/approach
Combining Herzberg’s two-factor theory and the principal–agent theory, GGs were classified into attractive and incentive guarantees. Simultaneously, PSB was divided into participation intention and effort level. A structural equation model was applied to test the “GGs–trust–PSB” framework with survey data from various PPP practitioners. Competence and goodwill trust were introduced as moderators.
Findings
GGs significantly enhanced PSB. Goodwill trust positively moderated the GG–PSB relationship, whereas competence trust only moderated attractive guarantees-PSB but not incentive guarantees–PSB.
Practical implications
Based on these findings, governments are guided to optimize the GGs mechanism and cultivate goodwill trust through transparent communication to reduce costs in all phases and mitigate risks throughout the project.
Originality/value
This study innovatively combines Herzberg’s two-factor theory for GG categorization and social exchange theory (SET)'s dual-dimension trust, providing a novel framework to explain how both types of GGs and dual-dimension trust interact to influence PSB. This approach breaks new ground by integrating formal contractual governance with relational mechanisms, offering a comprehensive understanding of PPP governance dynamics.