Evaluating post-pandemic compound risk impacts in China-led infrastructure projects: A comparative study of Malaysia and Indonesia

Abstract

Post-pandemic transport infrastructure projects increasingly operate in compound risk environments shaped by interacting Supply Chain Disruption (SCD), Labour and Health Constraints (LHC), Financial and Capital Pressure (FCP), and Regulatory and Institutional Uncertainty (RIU). Although prior research has examined project risk and governance mechanisms separately, limited empirical evidence explains how layered risk exposure simultaneously erodes project performance (PP) and stimulates adaptive governance responses. Drawing on Dynamic Capabilities Theory (DCT), this study develops and tests a governance-buffering framework that conceptualises compound risk impacts (CRI) as a higher-order construct and positions governance adaptation capability (GAC) as an intermediate mechanism between risk exposure and performance outcomes. Data were collected from 300 project-based respondents with direct governance or risk-coordination experience in Malaysia and Indonesia and analysed using partial least squares structural equation modelling (PLS-SEM). The findings reveal a competitive mediation pattern: compound risk is negatively associated with PP through the direct pathway, while its positive association with GAC contributes to a positive indirect pathway to performance. The indirect buffering relationship partially counterbalances, but does not fully eliminate, the negative direct relationship between CRI and PP. Multi-group analysis detected no statistically significant differences in the examined structural relationships between the Malaysian and Indonesian respondent groups. The study extends DCT to multi-actor infrastructure ecosystems and contributes to megaproject governance research by demonstrating the dual-path dynamics of disruption and adaptive reconfiguration under compound risk conditions. Practically, the results highlight the need to institutionalise adaptive governance processes to strengthen resilience in large-scale transport infrastructure development.