Impact of Public Sector on Sustainability of Public–Private Partnership Projects

Abstract

This study addresses the topic of sustainability in public–private partnership (PPP) projects. From the theoretical perspective of attention-based and resource-based views, the study explores the impact of the public sector on project sustainability by analyzing its motivations and capabilities for sustainability. Furthermore, the authors empirically investigate the relationship between projects’ public investment ratio and project sustainability performance, using a project database from the Asian Development Bank from 2010 to 2015. The results indicate that public-sector involvement can help PPP projects to embrace sustainability. At the project level, financial and natural environmental risks play negative moderating roles in the relationship between public investment ratio and project sustainability performance. At the country level, the macroeconomic risk of the host country has a negative moderating impact, while the role of the host country’s natural environmental risk is not significant. These findings can serve as a valuable reference in shaping the motivation and capability of the public sector in pursuing sustainable development in PPP projects. This study contributes to the body of knowledge in three ways: (1) it explores the impact of financial structure on project sustainability and thereby yields information that has the potential to complement current capital structure theory, which has focused primarily on the influence of PPP projects on triangle targets (cost, time, and quality); (2) it elaborates on the motivations and capabilities of project organizations and thus provides new theoretical explanations of the decision processes for project sustainability; (3) it addresses potentially influential project-level and country-level factors to integrate both micro and macro lenses, shedding light on the internal and external contingencies of PPP project governance for sustainability.