PPPs as strategic alliances: from technocratic to multidimensional risk governance

Laura d'Alessandro*, Stephen J. Bailey, Marco Giorgino

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

Purpose – Public-private partnerships (PPPs) are characterised by contracts which are necessarily incomplete due to the complexity of their contractual specifications for the contracted services combined with the long-term legal obligations they create. This creates high transaction costs including sharing (and so bearing) risks. The purpose of this paper is to investigate the link between risk sharing and governance, providing a new perspective for analysis with less emphasis on transaction costs and more on PPPs as strategic alliances. Design/methodology/approach – Three main issues are analysed. First, the definition of PPP in terms of both the type of arrangements and the actors involved, structures varying from one country to another and between contracts. Second, the definition of strategic alliance, identifying which form(s) of PPP is a strategic partnership. Third, reconsideration of incomplete contract theory to identify the circumstances where a strategic alliance can accommodate high transaction costs. Findings – The paper concludes that establishing PPPs as strategic alliances could rectify problems of incomplete contracts by implementing a multidimensional (rather than technocratic) approach to risk governance. Originality/value – The contribution to knowledge provided by this study is rooted in the conceptualization of PPPs as strategic alliances by distinguishing the tangible characteristics of strategic alliance related to the letter of the contract from the intangible characteristics related to the spirit of the contract with the main purpose being to create both public and private value.
Original languageEnglish
Pages (from-to)1095-1111
Number of pages17
JournalManagerial Finance
Volume40
Issue number11
DOIs
Publication statusPublished - 7 Nov 2014

Keywords

  • Governance
  • Incomplete contracts
  • PPPs
  • Risk
  • Strategic alliances

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Finance

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