Public Private Partnerships - A Study in Organizational Design.

This paper is a study of Public Private Partnerships as a product of intelligent design and strategy elements. It constructs an integrative theoretical framework for infrastructure PPPs based on a comprehensive literature review. The Public Private Partnership is a public policy entity, sired by economics and nurtured by specific instruments of finance. Therefore any attempt to identify the organizational design elements necessitates an integrative cross-disciplinary perspective. The paper begins with an apparently simple question in Part I: What is a Public Private Partnership? But it moves beyond definitions to distinguish today’s PPPs from public-private interaction over history, and from outsourcing, contracting-out and privatization. A view of PPPs as a language game links it to New Public Management on the one hand, and also establishes our approach to PPPs as an organizational entity with defining characteristics on the other. Part II strengthens the theoretical framework connecting PPPs to NPM and Economics. It traces the changing view of organizations in Public Policy literature, from hierarchies to networks. This is paralleled by changes in economic thinking regarding the provisioning of public goods. Strategic Alliances, Resource Complementarity and the theory of Hybrid Organizations from Transactional Economics offer further rationale for PPPs. Part III continues the theme, dealing with the Risks associated with the ‘marriage of convenience’ between the private and public sectors. The possibility of Cheating and Opportunism are seen in the light of Transactional Cost Theory, Agency theory and Strategic Alliances. Part IV looks at organizational design elements which mitigate risk through cooperation and collaboration. We first look at Governance mechanisms, including PPP structure and financial instruments of risk management. Part V and VI are a discussion of organizational Trust and the strategies flowing from it. Here we see PPP as a partnership and process, and examine various strategies to bring about trust between public and private players. Part VII shifts from analysing the bilateral interactivity between the public and private partners, and places the PPP in the wider landscape of its engagement with the citizenry and community through a study of Accountability and Public Interest issues. Part VIII studies the potential advantages & disadvantages of PPPs and where their use is appropriate. Part IX looks at the Indian scenario, with policy recommendations to foster successful partnerships. The paper provides a useful theoretic framework to study PPPs. A modest contribution is its integrative view, combining the thinking in economics, public policy, organizational studies and finance to study PPPs. Secondly, it focuses attention not on the firm, but the Partnership, viewing it not as an entity, like a company, but a process. In doing so, it takes PPPs from the hard core of Economics and Finance, to the fuzzy pragmatism of Organizational Studies and Trust. Public Policy practitioners must integrate organizational thinking into the design and management of PPPs if the incubator PPP experiment is to succeed. Academic literature and practitioner experience of PPPs in India is limited today. Through a cross-disciplinary approach, this paper attempts to identify research gaps for further exploration, which is the substance of my concluding section.