Procedural fairness and cooperation in public‐private partnerships in China

Purpose The paper aims to extend research on public‐private partnerships (PPP) by exploring the path toward procedural justice and cooperation performance through contracts. Design/methodology/approach The paper uses equity theory to address inter‐partner cooperation in PPPs. The paper emphasizes how procedural fairness, as perceived by partners in a PPP, influences cooperation effects. Using both social exchange theory and transaction cost theory, it hypothesizes that procedural fairness improves cooperation effects by enhancing two kinds of contracts: the control‐formal contract and the informal contract. Findings The regression analysis suggests that procedural fairness indirectly affects three kinds of cooperation effects – direct effects, knowledge‐created effects, and social effects – by increasing formal and informal contracts. Research limitations/implications Further research might address the antecedents of procedural justice. Practical implications The paper suggests that procedural justice is important to PPPs and that contracts mediate this relationship. Originality/value The paper enriches PPP research, especially with regard to procedural formalization, contracts, and cooperation performance.