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International Journal of Public Administration

ISSN: 0190-0692 (Print) 1532-4265 (Online) Journal homepage: http://www.tandfonline.com/loi/lpad20

Public–Private Partnership (PPP) as an


Interdependent Form (I-Form) Organization

Sami Ullah Bajwa, Naveda Kitchlew, Khuram Shahzad & Khaliq Ur Rehman

To cite this article: Sami Ullah Bajwa, Naveda Kitchlew, Khuram Shahzad & Khaliq Ur Rehman
(2017): Public–Private Partnership (PPP) as an Interdependent Form (I-Form) Organization,
International Journal of Public Administration, DOI: 10.1080/01900692.2017.1298610

To link to this article: http://dx.doi.org/10.1080/01900692.2017.1298610

Published online: 24 Mar 2017.

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Download by: [University of Newcastle, Australia] Date: 28 March 2017, At: 09:09
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION
http://dx.doi.org/10.1080/01900692.2017.1298610

Public–Private Partnership (PPP) as an Interdependent Form (I-Form)


Organization
Sami Ullah Bajwa, Naveda Kitchlew, Khuram Shahzad, and Khaliq Ur Rehman
Management Department, School of Business and Economics, University of Management and Technology, Lahore, Pakistan

ABSTRACT KEYWORDS
As “public–private partnership” (PPP) is becoming a popular model among states, the debate concern- Public–private partnerships;
ing how to make it more successful is accelerating. Based on insights from contemporary organization organization theory; public
administration;
theory (OT), the present article suggests that instead of taking PPP as “partnership” between private and interdependent form of
public sector partners, it is rather more beneficial to construe it as inter-dependent form (I-Form) organization
organization. Subsequently, it identifies three types of interdependencies, faced by PPP-based I-Form
organizations, and furnishes a model—comprising of initial and external conditions, and interplay of
internal factors—that could enable smooth functioning and performance of I-Form organization.

Introduction of interdependencies among internal groups, and fur-


nishes a model of external and internal conditions for
Recurring debate regarding public–private partnerships
enhancing performance of PPPs.
(PPPs) postulates them as partnerships between public
and private sector organizations, where private sector
partner has opportunistic tendencies (Bult-Spiering &
Public–private partnerships as interdependent form
Dewulf, 2008) and in return government sector has to
(I-Form) organization
impose strict control to safeguard its interests (Pongsiri,
2002, 2003). Based on this assumption, scholars have The way states can engage in economic activities has
suggested bureaucratic management model for improv- witnessed different trends during the last three decades;
ing functioning and performance of PPPs (Kjaer, 2009; for instance, increasing privatization in developed and
Walker & Boyne, 2006; Yang & Holzer, 2006). This developing countries, shrinking size of public bureau-
article suggests that PPP is not a partnership rather a cracies in OECD countries, shift of outsourcing of
new organization in itself. It is an interdependent form goods and services from public sector to private sector,
(I-Form) organization that embraces two dominant and an increasing tendency toward more competition
groups, representing public and public sector partners, in segments which were previously dominated by pub-
which are different in their characteristics but depen- lic enterprises (Robinson, 2004). Among others, PPP
dent on each other for achievement of their respective model is outcome of this trend. It is refinement of the
and collective interests and goals. private financing initiatives for provision of public ser-
The new conception (i.e., I-Form organization) is vices that started in the early 1990s; and is defined as
important and opportune because, in view of the “provision of public assets and services through the
dynamic and uncertain environment in which PPPs participation of the government and private sector
perform, bureaucratic models have little to offer partner(s)” (Grimsey and Lewis, 2005).
(Morgan, 2006; Daft et al., 2010). Taking PPPs as Literature on PPP performance abounds that PPP is
I-Form organization highlights the opportunity to capi- a marriage/partnership of two parties (one public, and
talize on “interdependence” of its two internal groups, second private) that have conflicting interests. While
and providing supportive management approaches so private sector gets into PPP arrangement for profit
that a shared understanding among organizational maximization, risk mitigation, and reduced transaction
members is instigated and an organization is enabled cost (Välilä, 2005), the interests of public sector include
to perform in uncertain and complex milieu. minimizing current expenditures in budget, and cover-
Accordingly, this article explains three different types ing inefficiency of public sector; for example,

CONTACT Sami Ullah Bajwa sami.bajwa@umt.edu.pk Room #5. Management Department, School of Business and Economics, University of
Management and Technology, C-II Johar Town, Lahore, Pakistan.
© 2017 Taylor & Francis Group, LLC
2 S. U. BAJWA ET AL.

Figure 1. A comparison of traditional approach of PPP and new perspective, based on application of OS view, conceptualizing PPP
as interdependent form (I-Form) of organization.

production cost (Parker & Hartley, 2003). The conflict also be because of difference in characteristics of
between interests of both partners primarily stem out of public and private sector partners. Furthermore,
the reason that private sector partner is considered to instead of construing it a partnership, between gov-
have opportunistic tendencies of profit maximization ernment (organization A) and private sector player
(Ahwireng-Obeng & Mokgohlwa, 2002) and therefore (organization B), it could be seen as if a new organi-
government sector partner has to impose control zation (organization C) has emerged by amalgama-
mechanisms to protect its interests. It is further sug- tion of two organizations. This newly formed
gested that these conflicts could be mitigated and per- organization, however, would have two distinct and
formance of PPP could be improved through detailed dominant collations in it, one coming from private
planning including clear targets, responsibilities, time partner, whereas other from public sector. These col-
lines, and robust evaluation mechanisms. lations would be different in their characteristics, yet
As it can be observed, the above-described approach interdependent on each other for their performance
of augmenting performance of PPP is mechanical and and respective mutual gains.
bureaucratic in its conception. Precise plans, detailed A PPP, therefore, is suggested to be an organization
rules, and overreaching control mechanism, however, which is characterized by interdependence of represen-
do not support innovation, organizational learning, and tatives of two major groups (public and private) and
hence performance of an organization which is operat- hence can be labeled as I-Form of organization. The
ing in a complex and dynamic business environment interdependence in I-Form organization connotes “the
(Morgan, 2006; Daft et al., 2010). Owing to the involve- extent to which the organization’s task requires its mem-
ment of large number of stakeholders and changing bers to work with one another” (Mohr, 1971). The inter-
external conditions, PPPs perform in dynamic and dependencies are thus inevitable and inextricable
uncertain environment. Detailed plans and bureau- reliance on each other for achieving one’s task in
cratic control of one partner over other have therefore organization.
little to offer to improve performance of PPPs. An individual’s task in an organization can be better
Learning from advancements in organization the- understood as manifestation of one’s pursuit of inter-
ory, however, brings novel way of thinking about PPP ests in organizations. Gareth Morgan (2006) suggests
and its performance. To begin with, it underscores that there could be three types of interests for organiza-
that both the public and private sectors’ partners in tional members, namely, task interests, career interests,
PPP not only bring their interests but unique char- and extramural interests. Task interests are concerned
acteristics as well; the conflict in PPPs therefore could with the performance of individuals at the workplace in
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 3

Figure 2. Framework of key processes of interdependent form of organization, under given initial conditions, leadership, design, and
management approach.

terms of achieving goals and performing duties common background, it is more likely that they will
assigned by an organization (Samson & Daft, 2009). A tend to associate them with other colleagues coming
finance manager’s task interest would be to best utilize from the same background and company (Cooke &
the finances of the company, whereas a salesperson Szumal, 1993). Resultantly, the boundaries between
would aim to complete his task of selling the assigned both groups (public and private) inside the organiza-
volumes. With achievement of task interests, indivi- tion become stronger; and dependencies of individuals
duals aim to pursue their ambition of progressing in turn into collective dependencies of members of one
their career and hence strive for the career interests. group on the other group (Walter, Lechner, &
They also have their unique personalities, views, pre- Kellermanns, 2007).
ferences, etc., which shapes their extramural interest in While career and extramural interdependencies
the organization. Fulfillment of these three interests is have more relational gradient, task interdependen-
essentially constrained by and dependent upon interac- cies entail procedural outlay. Furthermore,
tion and support from other members or in certain Mintzberg’s (2005) idea of “coupling” explains how
cases collations of organization. The Morgan’s (2006) three types of coupling (pooled coupling, sequential
taxonomy of interests, thus, explicates that three types coupling, and reciprocal coupling) may shape the
of interests could beget three types of interdependen- task interdependencies of two groups in an I-Form
cies, namely (a) task interdependencies, (b) career organization. In pooled coupling, activities of orga-
dependencies, and (c) extramural interdependencies. nizations are divided into discrete organizational
Since employees representing public and private unit. The failure to perform by one unit in this
groups in I-Form organization share respective case would not affect the performance of other
4 S. U. BAJWA ET AL.

units, though overall organizational goal will not be conditions can encourage collaboration among key
achieved. In sequential coupling, a chain of activities constituencies of organization and may also hinder
prevails, where activity of one unit proceeds subse- them on the other hand. For instance, if somehow
quent to the output of the other units. Finally in relations between the two or more parent organiza-
reciprocal coupling, mutual exchange relationship tions, that combine together to form an interdependent
exists whereby output of one unit is delivered to form organization, are bitter and hostile, likelihood of
the next unit(s) and after processing the receiving their positive and cordial relationships in newly made
unit(s) sends the output of initial unit back for organization can rarely be expected. On the other hand,
further work on it (Thompson, 2011). in case of partnership of two or more organizations
In an I-Form organization, public and private which share positive views and somewhat good work-
groups greatly depend on each other for fulfillment ing relationships between them, there are much higher
of their unique interests, making it either sequential chances that in newly formed organization the level of
or reciprocal coupling of work. Failure or low per- trust and relationship with other would be much more
formance of one group (public or private) leads to productive and strong (Child, 2001). Role of power-
low performance of the other. It is therefore bene- balance and prehistory of both organizations, at forma-
ficial for both groups to foster good working colla- tion stage, would thus be important in setting the
boration with each other. Accordingly, instead of future course of an I-Form of organization.
detailed rules and control mechanisms, effective
performance of an I-Form organization would Balance of power
require supportive conditions which could enable Number of scholars have pointed out the potential
shared understanding of both groups and lead problem of imbalance between power of stakeholders
toward high performance. in collaborative form of organizations (Ansell & Gash,
2008; Tett, Crowther, & O’Hara, 2003). On similar
lines, Morgan (2006) has noted that “power—which
Supportive conditions for effective
one already has” is important source of power in any
performance of an I-Form organization
relation. If at the start of partnership, one or more key
I-Form organizations are vulnerable to extreme level partners or stakeholders have much high power in
of conflicts, ambiguity of purpose, and lack of col- comparison with the other, the collaborative process
laboration among its two key employee groups, will be vulnerable to be manipulated by the actors
representing public and private sectors. On the which have relatively high power in organization.
other hand, these two groups are also highly inter- Nevertheless, power imbalance between partner orga-
dependent on each other for not only organizational nizations and hence their representatives in the newly
but their personal (career and extramural) interests. formed organizations is a common thing to be expected.
Communication flow, trust, small-win approach, This imbalance in power would greatly impact the col-
and tactical solutions could bring the desired shared laborative processes of the interdependent organization
understanding among these two groups. The inter- (Albert, Gunton and Day 2003; Imperial, 2005). The
play of these factors, however, is also dependent on difference in relative power also has impact on the will-
initial conditions of an I-Form organization (forma- ingness to resolve conflicts with negotiation (Gray, 1989;
tion stage) as well as leadership and management Ren, Gray, & Kim, 2009) and would augment the ten-
approaches. The most favorable management dency to attempt to purse aims and goals independent to
approaches for effective performance are thinking each other. Therefore, these organizations need to deal
in terms of system dynamics, polycentrism, and with this complex issue in a cogent manner.
pluralism.
Prehistory of cooperation and antagonism
Another important factor that can expedite or
Significance of initial conditions (at the formation
impede collaboration among stakeholders is prehis-
phase of an interdependent organization)
tory of the stakeholders in terms of antagonism and
Literature on collaborative forms of organizations cooperation (Margerum, 2002). The social psychol-
accord with complexity theory in its assumption that ogy of the I-Form organization has huge impact in
initial conditions of the partnership, or in other words, setting up culture of mutual trust and cooperation
formative affairs of interdependent organizations, are or disrespect and “us versus them” mentality. If
crucial for setting the course of future of such organi- organizations, which are venturing together to
zations (Bryson, Crosby, & Stone, 2006). The initial make a new interdependent organization, have a
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 5

history of collaborative experiences, their likelihood interdependencies in an organization calls for coordi-
of forming alliances and easily becoming a team nation as basic element of organizational functionality
would be much higher than those organizations and performance. Since each component of a system is
which have traditionally been antagonist in their envisaged to perform its specific role in system theory,
dealing with their stakeholders. In such situations, the interdependence not only emphasizes the depen-
the collaboration among internal stakeholders could dence and hence need for coordination among intra-
be achieved by increasing the intensity of interde- organizational and interorganizational units but also
pendence between each other so that the rival and connotes the degree of dependency among execution
clashing group could understand that their own of various work-roles. Coordination here is construed
performance and success depends on each other as degree to which various activities of the members of
and the only way to succeed is to start cooperating the organization are coherent and consistent
with each other. Organization may also consciously (Georgopoulos & Mann, 1972; Lawrence et al., 1967).
take steps to augment the level of trust and social As per system theory, the whole performance is out-
coherence among stakeholders. come of the role-system and thus organizations exist
and survive only if their members perform as per
External conditions significant for performance of assigned roles. Therefore, a bare-minimum level of
I-Form organizations coordination among its members is essential for an
organization to perform, and performance will keep
In addition to the initial conditions, following two
on increasing as coordination increases beyond the
conditions are highly influential on performance of
minimum requirement (Lawrence et al., 1967). In case
I-Form organizations.
of interdependent organizations, the need and hence
requisite at a bare-minimum level of coordination will
Facilitative leadership be much higher than the less/non-interdependent
Overwhelming literature supports the significance of organizations.
leadership in developing the culture of an organiza- Proponents of system theory advocate the signifi-
tion and effecting the relationship and work style of cance of “constitutive” model in contrast to traditional
employees (Saarikoski, 2000; Lasker & Weiss, 2003; “sum-mative” conceptualization of organizations.
Margerum, 2002, etc.). Although different working While sum-mative model assumes that outcome of
units and individuals themselves settle the issues at whole is result of additive effort of its parts, the con-
formative stage of an organization through the pro- stitutive model explicates that outcome of whole is
cess of forming, storming, norming, and performing “super additive” (Miller, 1965) result of the efforts of
stages of group development; the facilitative role of system component. In perspective of system theory,
leadership cannot be over emphasized (Imperial, I-Form of organization would call increased coordina-
2005). Leadership sets ground rules, instigates tion and synergetic efforts of its components and mem-
trust, and builds a culture of mutual gains. bers to achieve “super additive” outcome, or in other
Moreover, leadership is also important for empow- words, performance of the organization.
ering and involving various individuals and groups
in organizations; thereby partially dealing with the Thinking in terms of polycentricism. Extant literature
above issue of power imbalance. In case of interde-
is available in both business studies as well public
pendent organization, the most critical role is of
administration theory on the problem of silos and
leadership and therefore choice of right leaders for
intra- and interorganizational power struggle. While
steering such organization is essential for perfor-
theorists and practitioners are already concerned with
mance and survival of interdependent organizations.
inadequacy of contemporary solutions of the perennial
problems of insufficient coordination and pursuit of
Management approach narrow self-interests at the expense of organizational
Following three management approach are more con- success, their challenge has gone manifold with genesis
ducive for effective performance of I-Form of new forms of organization that need to work in
organizations. collaboration with each other for implementation of
joint initiatives. While business studies identify such
Heightened need of coordination: Thinking in terms of organizational forms as network organizations, it is
system paradigm. Interdependence between the ele- more commonly referred as horizontal management
ments of components is the basic assumption of system in public administration theory (Peters, 1998). The
theory of organization. The high need of major problem, however, with both these streams is
6 S. U. BAJWA ET AL.

conviction to epistemological assumption of the need of managing and creating a balance between interests of
hierarchy. Much of the traditional theory in both public key stakeholders. For an I-Form organization, man-
and business administration streams assume Weberian ager’s competencies to operate in pluralistic environ-
conception of hierarchy as necessary condition for the ment are essential for effective performance.
effective performance. The Weberian school of thought
would thus suggest the need for more detailed rules,
Organizational design
regulations, policies, and unambiguous hierarchy for
effective performance of an interdependent organiza- Organizational design and processes are backbone of
tion (Brown, 2013). Increasing dynamism in environ- any organization. It influences hierarchy, working rela-
ment that interdependent organization are faced with, tionships, team orientation, collaborative, and/or com-
however, brings into light the inefficiency and failure of peting employee attitudes and ultimately outcomes of
hierarchical models in coping with the complex and the organization (Daft, 2009). Most important dimen-
unstable environmental forces. sion of design for an I-Form organization is ground
Polycentricism view of public administration, mainly rules and procedures which set system for interaction,
propagated by Vincent Ostrom (among others), offers and hence interdependencies, and provide legitimacy to
admissible alternate view. Polycentricism offers princi- them. Who should be included in which types of orga-
ple of organization for a constituency having multiple nizational decisions, how tasks will be performed, and
social, political, and/or financial centers. In terms of how employee performance would be appraised are
competencies, polycentricism signifies the importance central features of design that can effect collaboration
of an attitude which is open and flexible toward various and joint accomplishments of the tasks (Albert,
competing paradigms, cultures, and practices (Rhodes, Gunton, & Day, 2003) in an interdependent form of
2000). More specifically, it propels the ability of indivi- organization.
duals to interpret phenomena not merely in one’s own
cultural background but also in appreciation and accep-
Internal factors, significant for performance of
tance to see relative occurrence in preview of whole
I-Form organization
context. The emphasis on whole context dovetails with
the above noted implication of thinking in terms of Under the aforementioned conditions, following five
system paradigm. internal factors interplay to enable or to impede per-
formance of I-Form organizations.
Thinking in terms of organizations as pluralistic sys-
tems. Combining the above two conceptual stances
Communication flow
along with concept of pluralism offers more compre-
hensive picture of the type of interdependencies that If a partnership, having interdependent and bi-polar
an I-Form organization would be facing. Pluralism is stakeholders, has to unleash itself as an organization,
a political science concept that characterizes a model communication flow will be the most important factor.
of governance where traditional authoritarian ten- Given that groups, forming the interdependent organi-
dencies are undermined by interplay of different sta- zation, are coming from diverse—if not clashing—
keholder groups that would have to compete with background, dialogue is necessary to know each other’s
each other, exercise power, and bargain to get their working styles, norms, interests, reservations, compe-
share in relative power of organizational landscape. tencies, and explore the possibility of becoming a team.
Pluralistic frame of reference is pertinent for inter- Some theorists suggest that face-to-face communication
dependent organizations because such form of orga- is more important channel of communication, as it is
nization characterizes the plural nature of interests, more suitable to breakdown stereotypes and is less
conflicts, and power structures in organizations prone to communication barriers. However, communi-
(Schneider & Somers, 2006). cation and its importance need to be comprehended at
Cornerstone of pluralistic frame is manager’s ability more abstract level. Where entire processes and perfor-
to appreciate the fact that divergence of interests, con- mance of organization are heavily influenced by sense-
flicts, power struggle, and politics are inevitable part of making of organizational members, the communication
the organizational life. The manager needs to under- is major source of influencing employee cognitive
stand that pursuit of individual interests is integral to frames, which in result make sense of organizational
organizational landscape and that a right level of con- phenomena. In other words, communication channels
flict increases the potential of an organization (Weick, and frequency is important for enabling employees of
2012). Managers would also have to be skillful in interdependent organizations to make better sense of
INTERNATIONAL JOURNAL OF PUBLIC ADMINISTRATION 7

the organizational phenomenon and perform accord- small tasks allowing organizational members to see
ingly. Communication is also pivotal for trust building concrete results in shorter time of span (Chrislip &
and promoting shared understanding (Plummer & Larson, 1994). These small-win opportunities could be
FitzGibbon, 2004). named as “intermediate outcomes” that can provide
positive-feedback loop into collaborative process, for
building commitment, trust, and common vision
Trust building
among employees (Vangen & Huxham, 2003).
Lack of trust has long been an issue in the collaborative
and partnership-based ventures (Weech-Maldonado &
Merrill, 2000). To perform the I-Form organization not Tactical solutions for effective performance of
only requires negotiation for initiating a collaborative interdependent organizations
culture but also necessitates strong prevalence of trust
The foremost tactical solution for effective performance
among internal stakeholder (Glasbergen & Driessen,
of interdependent organizations is to foster personal
2005). Drawing on prisoner’s dilemma analogy of game
relationship among partner managers so that personal
theory, the importance of trust among key stakeholder
level of trust and commitment with each other gets
for the outcome of I-Form of organizations can easily be
augmented. Moreover, organization should encourage
underscored. Especially in situations where prehistory of
and provide platform for enhanced communication
antagonism exists, the trust comes out to be the most
across horizontal and vertical spheres of organization
important and crucial factor for collaborative process
(Santos & Eisenhardt, 2005). The communication
(Murdock, Wiessner, & Sexton, 2005) and hence effective
among managerial partners strengthens personal ties
performance of interdependent organization.
and creates parallel relationships to anchor supplemen-
tary alliances (Koopman & Wierdsma, 1998).
Shared understanding The second solution involves organizational strate-
gies to change the structure of coupling relationship, as
When stakeholders are coming from different back-
explained above. If organizations are successful in
grounds, especially from two different genres as public
changing reciprocal coupling to pool or at least sequen-
and private sector could be, I-Form of organization
tial coupling, the daunting task of coordination will
would be in dire need of the shared understanding.
become far less complex (Wimsatt & Griesemer, 2007).
The shared understanding enables collaboration, collec-
tive sense (Tett et al., 2003) and makes the organiza-
tional goals as “common mission” (Roussos & Fawcett,
Conclusion
2000). Organizations are defined as goal-directed enti-
ties where group of people work with each other to Even the name, PPP, suggests that in mainstream lit-
pursue common as well as individual goals. Therefore erature it is conceptualized as a “partnership” between
an agreement and perusal of collective goals is a neces- public and private parties. This conception has guided
sary condition for all organizations in general and scholars to study behavior, interests, and conflicts
interdependent organizations in particular. The shared between private and public partners; and extend
understanding is also a necessary condition for align- bureaucratic model of management is most pertinent
ment of the core values of the organization (Heikkila & business model for effective performance of such initia-
Gerlak, 2005). tives. The present article has furnished that “partner-
ship” conception, and vis-à-vis suggested that
bureaucratic model of management is flawed, in the
Small-win approach
face of dynamic and complex business environment
Achievements of individuals and groups provide them being faced by PPP-based organization. Furthermore,
motivation and may encourage employee’s tendency of it is suggested that a boarder level of analysis lead us
being more innovative and creative. As noted by Stacy toward conceptualizing PPP as an organization in itself.
(2005); Stacey and Griffin (2005), the final outcomes of When private and public sector form partnership for
the organization are guided by positive-feedback loops any initiative, a new organization gets emerged. This
where outcome of small events correspond with the organization includes employee groups coming from
other factors and provides lead to the future course of private as well as public partner, which not only differ
actions. Accordingly, one way to encourage collabora- in their interests but also in characteristics. Despite this
tion and performance orientation, it seems opportune difference, both the groups are interdependent for their
for I-Form of organizations to breakdown the work in respective individual and mutual gains.
8 S. U. BAJWA ET AL.

Based on this interdependence feature, this article Daft, R. L. (2009). Principles of management. South-Western,
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