The Private Scope in Public–Private Collaborations: An Institutional and Capability-Based Perspective

Abstract

There has been a growing interest in the organization of business activities at the public interface as illustrated by the emergent phenomenon of public–private partnerships (PPPs). In this study, we analyze the determinants of private scope in partnering with public actors—that is, the extent to which private actors are involved in multiple, consecutive value-creating activities in the partnership. Based on a unique data set of public–private agreements worldwide over two decades, we find that institutional and capability-based determinants jointly affect the extent of private scope in public–private collaborations. Our results highlight the contingent role of the quality of the institutional environment. Institutions not only facilitate greater private scope directly but also, moderate the effect of public and private capabilities on private scope. We find that prior public experience in PPPs enhances private scope in settings with high-quality institutions while having an opposing effect in low-quality environments. Moreover, public governance capabilities accumulated via units designed to deal with PPPs seem to substitute for the lack of high-quality institutions, suggesting that, even under weak institutional settings, countries can foster high private scope with the creation of pockets of specialized public capabilities. In contrast, private capabilities in PPPs, expressed as firm engagement in recurring government cofunded projects, seem to have a complementary effect: they help to increase private scope in PPPs but only when domestic institutions are of high quality. By highlighting the determinants of private actor involvement in public sector activities, our study offers important implications for the theory and practice of hybrid (cross-sector) organizational forms. The e-companion is available at https://doi.org/10.1287/orsc.2018.1251 .

Governance by targets and the performance of cross‐sector partnerships: Do partner diversity and partnership capabilities matter?

“…Our results imply that a more balanced representation of partners from different sectors reduces the transaction costs associated with achieving comprehensive action in pursuit of social goals (Lasker et al, ). Partnership experience and administrative capacity too may reduce those costs, suggesting accumulated capabilities increase the potential for explicit targets to create value in CSPs by minimizing opportunism and encouraging goal commitment (Quélin et al, ).…”

“…Those with a longer history of collaboration are therefore likely to have stronger capability for addressing the challenges posed by sectoral differences and for harnessing the distinctive sectoral advantages that are present (Bryson et al, 2006;Lasker et al, 2001). Accumulated capabilities in managing CSPs reduce the transaction costs associated with achieving goal alignment and commitment, as partners do not need to build the trust and understanding required to underpin collective action (Quélin, Cabral, Lazzarini, & Kivleniece, 2016). As a result, established CSPs may be especially well-placed to reap the benefits of targetsetting for partnership performance because they already have routines for bringing together different partners in pursuit of shared objectives (Caldwell, Roehrich, & George, 2017).…”

“…suggesting accumulated capabilities increase the potential for explicit targets to create value in CSPs by minimizing opportunism and encouraging goal commitment (Quélin et al, 2016).…”

Value creation and value appropriation in public and nonprofit organizations

“…Individuals and organizations vary in their governance capabilities. Some individuals and organizations are more effective than others in deploying resources and dealing with the peculiarities of the institutional environment in pursuit of value (Quelin, Cabral, Kivleniece, & Lazzarini, forthcoming), as exemplified in several of the studies in this issue. Zheng and Shenzhen, for example, describe how some organizations are more deeply “embedded” in their environments, and therefore more effective in managing political capital.…”

Public‐Private Collaboration, Hybridity and Social Value: Towards New Theoretical Perspectives

“…Therefore, features of the external institutional environment directly influence the creation of economic and social value. Public‐private collaborations will likely unravel under weak enforcement and unstable regulation, while more developed institutional environments should help reduce contracting costs and leverage complementary capabilities (Fabrizio, ; Quélin et al, ).…”