TY - JOUR
T1 - Causal relationships of moral hazard and adverse selection of Ghanaian Public-Private-Partnership (PPP) construction projects
AU - Owusu-Manu, De Graft
AU - Kukah, A. S.
AU - Edwards, David John
AU - Pärn, Erika Anneli
AU - El-Gohary, Hatem
AU - Aigbavboa, Clinton
AU - El-Gohary, Hatem
N1 - Publisher Copyright:
© 2018, Emerald Publishing Limited.
PY - 2018/7/3
Y1 - 2018/7/3
N2 - Purpose: The purpose of this paper was to assess the causal relationship(s) between moral hazard and adverse selection of public–private partnership (PPP) construction projects. Structural equation modelling (SEM) was used to explore the cause and effect relationship between moral hazard and adverse selection problems in PPP construction projects in Ghana. The study produced a framework to predict, estimate and depict the complex causal relationships (i.e. the directionality) between moral hazard and adverse selection. Design/methodology/approach: To test the proposed framework, a quantitative methodology was used, in which, data were collected using research questionnaires that targeted a sample of 280 PPP stakeholders in Ghana. In total, 210 useable questionnaires were retrieved, representing a response rate of 75 per cent. Findings: The interrelationships between the eight causes and the nine effects of moral hazard and adverse selection were established using the model. The tested framework showed the degree of association and isolation of the unobserved variables on the indicator factors. Confirmatory factor analysis (CFA) was used to evaluate the fit of items to latent constructs. Because the fit of each model was good and the item loadings were adequate, it was assumed that the indicators of the different variables factors were fitting. Furthermore, a diagnostic fit analysis was conducted using the robust maximum likelihood method to test the statistical significance of the parameter estimates. Practical implications: This novel research is one of the few studies investigating the causal relationships between moral hazard and adverse selection of PPP construction projects. The research concluded with future studies that seek to validate the model developed in other countries and/or other industries. Originality/value: The research findings will serve as a guide for construction stakeholders in the PPP sector on the causes and effects of adverse selection and moral hazard and how to mitigate these.
AB - Purpose: The purpose of this paper was to assess the causal relationship(s) between moral hazard and adverse selection of public–private partnership (PPP) construction projects. Structural equation modelling (SEM) was used to explore the cause and effect relationship between moral hazard and adverse selection problems in PPP construction projects in Ghana. The study produced a framework to predict, estimate and depict the complex causal relationships (i.e. the directionality) between moral hazard and adverse selection. Design/methodology/approach: To test the proposed framework, a quantitative methodology was used, in which, data were collected using research questionnaires that targeted a sample of 280 PPP stakeholders in Ghana. In total, 210 useable questionnaires were retrieved, representing a response rate of 75 per cent. Findings: The interrelationships between the eight causes and the nine effects of moral hazard and adverse selection were established using the model. The tested framework showed the degree of association and isolation of the unobserved variables on the indicator factors. Confirmatory factor analysis (CFA) was used to evaluate the fit of items to latent constructs. Because the fit of each model was good and the item loadings were adequate, it was assumed that the indicators of the different variables factors were fitting. Furthermore, a diagnostic fit analysis was conducted using the robust maximum likelihood method to test the statistical significance of the parameter estimates. Practical implications: This novel research is one of the few studies investigating the causal relationships between moral hazard and adverse selection of PPP construction projects. The research concluded with future studies that seek to validate the model developed in other countries and/or other industries. Originality/value: The research findings will serve as a guide for construction stakeholders in the PPP sector on the causes and effects of adverse selection and moral hazard and how to mitigate these.
KW - Adverse selection
KW - Causal relationships
KW - Moral hazard
KW - Public–private partnership (PPP)
KW - Structural equation modelling (SEM)
UR - http://www.scopus.com/inward/record.url?scp=85048544719&partnerID=8YFLogxK
U2 - 10.1108/JEDT-12-2017-0137
DO - 10.1108/JEDT-12-2017-0137
M3 - Article
AN - SCOPUS:85048544719
SN - 1726-0531
VL - 16
SP - 439
EP - 460
JO - Journal of Engineering, Design and Technology
JF - Journal of Engineering, Design and Technology
IS - 3
ER -