THE ROLE OF CONTRACTUAL GOVERNANCE IN PUBLIC-PRIVATE PARTNERSHIPS SUSTAINABILITY PERFORMANCE: MEDIATING EFFECT OF OPPORTUNISTIC BEHAVIOR AND MODERATING EFFECT OF ENVIRONMENTAL UNCERTAINTY

Abstract

Purpose: This study investigates that how contractual governance (CG) influences the public-private partnership sustainability performance (PPP-SP). Additionally, opportunistic behavior (OB) was used as mediating variable and environmental uncertainty (EU) as moderating variable. The study extends Transaction Cost Economics (TCE) by introducing behavioral and environmental factors that impact public-private partnership (PPP) operations. Design/Method/Approach: - This study employed Hayes' PROCESS macro (Models 4, 1 and 7) for mediation, moderation, and moderated-mediation analysis which conducted using data from PPP projects in Khyber Pakhtunkhwa Pakistan through bootstrapping with 5000 resamples. The scholar used regression analysis to investigate both direct and indirect effects while moderation analysis assessed how environmental uncertainty affected the results. Findings: The results show that contractual governance has a positive impact on PPP sustainability performance, both directly and indirectly through opportunistic behavior. Environmental uncertainty significantly moderates the relationships between contractual governance and opportunistic behavior, as well as between contractual governance and PPP sustainability performance. Originality/Value: This research contributes to TCE theory by introducing opportunistic behavior as a mediator and environmental uncertainty as a moderator in the context of PPP sustainability. It highlights the need for flexible governance structures that can adapt to environmental changes and reduce opportunistic actions to ensure better sustainability outcomes. Implications: The study provides practical implications for policymakers and project managers, suggesting that well-designed contractual governance mechanisms and an understanding of environmental uncertainties are important to achieving long-term sustainability in PPP projects. Additionally, the research recommends the adoption of technology integration and competitive intensity as future moderators to enhance governance frameworks.

Keywords: Contractual Governance, Public-Private Partnership Sustainability Performance, Opportunistic Behavior, Environmental Uncertainty.