Foreignness in public–private partnerships: The case of project finance investments

The literature on public–private partnerships (PPPs) has begun to identify critical success factors associated with PPP performance. However, despite the international nature of PPPs, the literature has not considered the performance implications of the foreignness of the private sector firm that manages the PPP and its associated infrastructure project. This is a particularly intriguing issue for PPPs, given that the private sector firm is chosen through a bidding process by the host government to lead the project – making the relationship between foreignness and performance potentially endogenous. Our findings suggest that foreignness may have a detrimental effect on project completion time, but not the probability of project completion. Furthermore, the scale and scope of the project moderate the effect of foreignness on project performance. Our findings suggest that governments and policy makers should be mindful that the participation of foreign private sector firms has nuanced implications for local economies and stakeholders impacted by PPPs.