Tie-Formation Mechanisms in Evolving Networks of Sponsors in Highway Public–Private Partnerships

Abstract

In public–private partnership (PPP) projects, private sponsors collaborate to manage and implement project tasks through shareholder agreements and subcontracts. It is important to recognize that relying exclusively on contractual arrangements may not guarantee effective collaboration. Additional informal contractual mechanisms, such as trust and reputation, which are embedded in social connections among sponsors, should be considered. However, the existing literature lacks sufficient information on the relationship between social connections and informal contracts. This study employs social network analysis (SNA) and binomial logistic regression analyses to investigate how highway PPP sponsors form ties in dynamic social networks. Specially, it examines four distinct tie-formation mechanisms, including expertise difference, repeated collaboration, preferential attachment, and multiconnectivity. The findings indicate that the sponsor networks exhibited typical characteristics of small-world networks, such as high clustering and short average distance. Moreover, small-world networks showed an evolutionary trajectory characterized by an inverted U-shaped trend. Binomial logistic regression analyses reveal that repeated collaboration and multiconnectivity significantly impact formation of ties between sponsors in both the growth and decline phases. Preferential attachment has limited effects, whereas the impacts of expertise difference vary during growth and decline phases. This study contributes to the current body of knowledge on PPPs by examining the effects of the dynamic network structure of PPP sponsors on their tie formation strategies during different phases. Particularly, these strategies provide new insight into the origins of informal contractual mechanisms. The findings offer valuable evidence for private sponsors in partner selection and strategy development for long-term market viability. Furthermore, these findings provide direction for governmental intervention in regulating PPP markets.