Organizational collaboration, hybrid structure, governance and value creation:

Introduction

Organization studies have been occupying a significant position the management discipline. Analysis of organizations became imperative with the advent of organizational collaborations, especially with the hybrid organizational structures. Scholars of organization studies have been more inquisitive in the recent past to understand how these hybrid organizations have designed and managed. Mair et al.1 noticed organizational hybridization and their governance structure are determined by the institutional logics. Organizational heterogeneity, presuming differences and institutional logics2 has made the organizational collaboration more complex, creating a complex structure and management of the hybrid organizations. Institutional logic, categorization, network effects has been occupied a significant space in organizational literature,still there exist blind spots in developing new understandings3. More specifically the focus on isomorphism and semblances in organization studies2 has left a space of understanding growing complexities in organization theories. Meyer and Hollerer4 have shown their concerns that over focusing on the formal organizations may leave a space to understand the alternative mode of organizing institutions.

The inter-organizational environments of the multi-stake holder hybrid organizations are yet to attract attention of organization scholars5. However the stability mechanism in the hybrid structure6 and partnership arrangement in multi-partner based organizational design with heterogeneous organization forms7 has been considered to a vacant space to fill with contemporary theory formation and empirical verification.There were two interesting dimensions of hybrid firms in which studies have been conducted, i.e. (i) governance of hybrid organizations with respect to transaction cost and embeddedness8, and (ii) design parameters for organizational alliance9. But there is significant research gap in establishing the linkage between organizational complexity and value creation with respect to hybrid structure and governance.

Partnership theories have occupied an important place in the general management and economics literature. Organizational partnership, collaboration, alliance, etc. has been used interchangeably10. One of the important factors of partnership in organizations was profit sharing11. Profit making organizations desire for higher economics of scale and high resource utilization, but the interdependencies among organizations some time lead to conflicts12. Sometimes organizational cultures and institutional distinctiveness also create hurdles in the partnership arrangements. Asthana et al.13 emphasized on trust which carries paramount importance in partnership arrangements.

The hybridization of public sector and private sector in delivering public services are increasing practiced. UNESCAP14 and FICCI15 defines public-Private Partnership (PPP) as an agreement or contract between government organizations (Public Parties) and private sector organizations (private Parties) for the provision of public services where the public party and a private party/parties share one or more responsibilities planning, execution, implementation and management control of a project (with their own experiences and strengths) in which the involved parties share resources, risks and responsibilities. The organization scholars are have studied the PPP structure and governance from the project perspectives from two major dimensions i.e. (i) sectoral basis [for example water sector16^,17, sports tourism18, transport system and infrastructure19^,20, Railways21, Textile22, health23, education24 etc.], and (ii) objective basis [for example risk management25^,17, government obligations26, collaborative mechanisms & organizational studies27^,28^,19^,29, corruption, security and law30, social entrepreneurship31, environment protection32, infrastructure development33, international policy and public policy networks34]. However there is a significant research gap in understanding in-depth into the structure and governance of PPPs.

A partnership between public sector and non-profit organization aim to have a common goal of societal value creation and social capital formation34. But the partnership arrangement gets into complex governance and structural design when the partners have two different orientation i.e. social orientations versus economic orientation.This article attempted to understand organizational collaboration, hybrid structure, governance and value creation with respect to Indian Public-Private-Partnership projects, especially by responding to the recent hue and cry on PPPs i.e. ‘what has gone wrong with PPPs in India’ in daily news magazines35^,36^,37^,38^,39^,40^,41^,42. This study followed the Classical Grounded Theory Approach43^,44. Following the approach of the theorists in the Grounded Theory, this study did not do a literature review (on PPPs) until data collection was finished. However, some literature on organizational collaboration were reviewed to gain an understanding on organizational collaboration, alliance, etc. The literature review was conducted later to analyze and compare the study results with previous studies. The manuscript has been divided into eight sections. The introduction section familiarizes the subject addressed in this study. The literature section makes a deep probing into the existing studies, especially on the structure and governance of hybrid organizations, to identify few research questions. The method section explains the sampling & data collection, and analytical procedure. The finding section identifies key findings, and develops a structural framework by linking various key variables. The discussion section discusses the study outcomes, and compares the outcomes with previous studies. The study results were consolidated in the conclusion section. The limitations of this study and the future research opportunities (especially the causality-outcome relationships) were discussed in the limitations and future research section. Finally, the contributions of this study to the practitioners and policy makers have been discussed in the practical implication section.

Literature

The significant causalities of coalitions, alliances and partnerships in organizations are symbiotic interdependencies, mutual reciprocity and complementary goals45. Organizational partnerships were subjected to circumstances pertaining to the purposes of organizations, their relationships and the stage of partnership development46. Hidden agendas, improper communications and lack of coordination led to failures in organizational alliances. Lavie et al.47 identified a typology of differences between alliance partners, i.e. (1) strategic differences and organizational differences, and (ii) cultural differences, and operational differences in routines. The dimensions of organizational differences in cultural space weremanagement style and organizational responsiveness.

Substantial work on hybrid organizational arrangements with respect to strategic alliances was done by Borys and Jemison6. They discussed hybrid organizations with respect to purpose, boundaries, value creation and stability. Hybrid organizations suffered from precision in the specification of boundaries and lack of cooperation from partner organizations. Hybrid organizations were not only be influenced by asset complementarities but also influenced by organizational levers like organizational structure and governance, human resource processes and the system of performance management48.

The structure of Hybrid organizations contained different levels of interdependencies leading to specific organizational coordination mechanisms and it's governance structure49. This different level of interdependencies or mutual dependencies was associated with transaction cost among the collaborating organizations7. Organizational structure of hybrid organizations was associated with the level of strategic complexities. The complexity in the integration of organizational partners was positively associated with the complexity in the governance structure of the hybrid organization50. The governance mechanism was highly dependent upon the production cost and the transaction cost of the collaborating organization51. There was a strong link between institutional logic and hybrid organizational forms52. Organizations entering into collaborations had either complementary organizational logics or competing organizational logics (organizational logics was varied from commercial to social intention). The sustainable hybrids couple elements pulling from different logics. Organizations can be categorized in two groups with respect to their orientations i.e. (i) hybrid organizations and, (ii) Market organizations53. Hybrid organizations were more about task organizations who were designed to perform specific tasks and being controlled for the quality and quantity of their products/services. Value creation in organizational partnerships and collaborations was related to the reciprocity and organizational philosophies. Value creation in hybrid forms was strongly influenced by the management and coordination mechanisms followed in the organization. Hybrid organizations experienced difficulties in value creation relative to the unitary organizations6. In a recent study, Hockerts54 cited that the hybrid organizations identified hidden complementarities and madea unique combination of resources, which often generated an innovative cognitive framework which was previously being ignored by market incumbents. One of the significant issues in the hybrid organization was decision making and human resource management, especially with respect to strategic decision making and power sharing55.

One of the interesting pieces of literature was contributed by56 where the researcher emphasized on the understanding of collaborative governance mechanism (for example institutional conditions, hold up issues and spillover issues) contextual to country specificity, economic systems, and social capital. The ability of the institutional adaptation was a major element of the success of collaborative governance57. Trust, commitment and share understanding were noticed as success elements in PPP based governance58.

A long list of studies on PPP identified in the body of literature (Table 1).PPP studies concentrated across various dimensions, for example, success factors59^,60^,61, risks and uncertainty62^,63^,64, transparency and accountability65^,66^,67^,64, value creation and PPP performance68^,69^,66^,70^,71, contract management72^,73, governance74^,75.

Past studies emphasized on good governance and governance strategy was critical in PPP success27^,76. Organizations in PPPs had complementary and supplementary capabilities77, so the structure and governance in the PPPs adapted to complementary contribution of the stakeholder organizations78. There were two important elements noticed in the PPP organizational structure i.e. (i)Trust79^,80 and (ii) risk25^,81. Meidute and Paliulis82 observed dispute settlement methods and clarity in contract including undertakings and liability, evaluation of risks and payment mechanisms as success elements in PPPs. Grimsey and Lewis83 found various forms of risks those influence the project and private sector like financial risks, environmental risks, technical risks, operational risks, political risks etc.Another important aspect of PPP governance system was the balance between social orientation and economic orientation. Hauxman10 explained the resource dependency in partnership arrangement in the line of collaboration than competition under the synergy approach,but over emphasis of social orientation by public sector or over emphasizing on commercial orientation of private sector led to competition for goals which further created conflicting situations.

Methods

This study employed qualitative methods for data collection and data analysis. In the beginning the research problem was decided followed by framing open-ended research questions. Subsequently theoretical sampling and data collection has been made. The aim of this study was to generate theory from empirical data. For the same grounded theory was followed to build up and integrate set of ideas explains some behaviors43^,44^,84. In the past, the grounded theory approach had been confirmed as a suitable qualitative method to conduct management research85, and organization studies86^,87. Data coding, analysis and theory development was made following43^,44^,84^,88^,89.

Findings

Private organizations were found different from public organizations with respect to their intents, interests, constraints, attributes and orientations. The major intent of public organizations was to accomplish social responsibilities while that of the private organizations were to achieve commercial or financial targets. Similarly the attributes of public organizations (power, standard rules and procedures) were found different from that of the private organizations (efficiency, improved MIS, quick decision making, matrix structure). The distinct intents, interests, constraints, attributes and orientations have given rise to the unique resources and capabilities to the public and private organizations [the assets and capability of organizations in the PPP were derived from the combinations and interactions among characteristics like organizational intent, interest, constraint, attribute and orientation]. The collaboration between public and private organizations helps them to achieve their interests and weaken the negative effects of the constraints (see Table 2).

The organization and arrangement of the structure and governance of the hybrid PPP was the central phenomenon in this study. The dimensions, attributes and immediate outcomes of the structure and governance of the hybrid PPP were identified. The major causalitiesfor the organization of the PPP hybrid were (i) incapabilityof production and provision of services as standalone organization, and (ii) possession of complementary assets and capabilities among organization. There were two major dimensions of complexity associated in the PPP hybrid structure i.e. (i) uninterpretable rules and policies of the PPP organizational contract and functional modalities, and (ii) unexpected actions/decisions in case of uncertain events.

The complex hybrid PPP structure and governance is attributed by five elements (i) trust, (ii) ego, (iii) interpretation of complex operational phenomenon, (iv) mechanism to address risks and uncertainty, and (v) interdependencies and reciprocity. Trust played an important role the organization of the governance structure. This study identified six types of trust in the PPPs i.e. (i) entry level trust, (ii) operational level trust, (iii) cognitive trust, (iv) affective trust,(v) organizational trust, (iv) interpersonal trust (Table 3). The operational level trust was higher than the entry level trust ]. The trust among the partners built up over time but was not significant since the trust was only cognitive in nature [i.e. organizations expected that their partners would behave in a certain way since they are governed by contract agreements]. From ex-ante to ex-post project situation the cognitive trust could not be converted to affective trust. Hence trust was limited to organizational trust [i.e. individual's trust on their partner organizations] than interpersonal trust [individual's trust on the employee/representatives of their partner organizations].

The second attribute of the PPP structure and governance was ego [of the representatives of the partnering organizations]. One type of the ego was position ego [ego of an individual because of an important position he/she occupies in their respective organizations or the PPP structure], and the other type of the ego was representation ego [ego of an individual because he represents an important organizations (representatives of each organizations believed that the role of their organization is very important as compared to other organizations in the PPP)].

The third attribute was ability of interpretation of complex operational phenomenon. When organizations got into partnerships, in the operational process they come across complex phenomenon which all partner organizations were unable to understand with same level. Inability in understanding created unrest among partner organizations. The fourth attribute was the absence of a mechanism to address risks and uncertainty. Partners in the PPP understand the risks and uncertainties in their own dimensions [for example public sector was concerned in the political angle while private sector was concerned in the commercial angle]. The fifth attribute was the degree of interdependencies and reciprocity among organizations. So every action an organization takes has got a twin impact i.e. an impact on it's own organization, and an equal or different impact on the partner organization.

This high level of complexity with their attributions led to five types of outcomes i.e. (i) delay operations: the organizational operations are delayed; (ii) blame game: organizations (workers) tend to not to bear the responsibility and accountability of their mistakes, and often blame partner organizations; (iii) high fear factor: people in the PPP structure do have a high degree of fear with in them expecting anything can go wrong and there is a chance of mistake being committed by them as they do not able to interpret the rules/policies properly; (iv) lack of initiatives: no one want to take an initiative because as the initiator may be caught and punished if anything do not match with the policy framework which are difficult to interpret fully; and (v) rule bound: organizations (people) become very much rule bound as deviations are questionable and punishable.

The organization of the structure and governance of the hybrid PPP was very much contextual and subjected to certain intervening conditions. There were six intervening conditions for the central phenomena described under this study. First, the organizational attributes of the partner organizations (system, structure, governance and policies of the partner organizations). Second, the expectations of the stakeholders of the partner organizations (the major stake holder of the public organization was the public, and the major stake holder of the private parties were the shareholders and other partnering private organizations in the consortium). Third, the power of control (public party had the higher power of control as per the PPP regulation). Fourth, the institutional logic (the institutional logic of public party was to provide public services whereas the institutional logic of private party was the commercials). Fifth, strategic decision making (how much is the role of private party and public party in the strategic decision making). Sixth, the contract management team (ability to manage contract and relationships). However this complex structure and governance of the hybrid PPP along withit's intervening condition was contextual to (i) Indian PPP models, (ii) Indian political and legal environment, and Indian Business Environment (differences in the characteristics of public and private organizations: intents, interests, constraints, attributes and orientations).

The hybrid PPPs with their structure and governance had taken a set of actions/strategies which further ended up to a valuable consequence to all partners and stakeholders. Despite of differences, organizations still prefer to stay together in the partnership because of their latent intentions. Partnership malfunction is a cost for the private party; while partnership failure is a responsibility for public party [government is answerable to public for any deviation or failure of the hybridity]. This study noticed three possible reasons for success of the hybridity in PPP i.e. (i) stick to deliverables, (ii) compromise with organizational intents, and (iii) strengthening trust bond from entry level to operational level. Staying together definitely lead to value creation to all parties i.e. value creation to public party by fulfilling it's responsibility in creating and establishing a service delivery system; value creation for private party by(i) achieving commercial benefits, and (ii) enhancing scale economics and specialization; and. value creation for public by availing public services.

Discussion

The hybrid organizations can be divided into four categories with respect to organizational partnerships i.e. private —private partnership, public-public partnership, public-social partnership, and public-private partnership. The organizational intents of all these organizational are different, for example the intent for public organizations and social organization are public service delivery, while the organizational intent of private organizations are commercials and profit structures. Hence the public —private partnerships are the most complex organizational structure and governance (as compared to other organizational partnerships) because of the contrasting and conflicting organizational intents.

There were two different types of causality analysis was done in this study. First, analysis on the causality of the hybrid structure, and second, analysis on the causality of the complexity of the hybrid structure. The causality of hybrid PPP was assets/resources complementarities and interdependence i.e. inability as a standalone player to carry outcertain tasks or achieve certain organizational goals [as seen in previous study, i.e., 94]. Harrison et al.95 noticed potential of a greater value creating synergy which comes from alliances with resource complementarities.

The complexity of the hybrid structure was resulted from intervening conditions [organizational attributes, institutional logics, power roles, strategic decision making capabilities, and contract management (ability to manage contract and relationships) (see figure 1)]. An earlier study noticed existence of contract hazards and mutual interdependencies among partner organizations in the hybrid organizational structure and governance7. This study found similar attributes, and the PPP structure and governance was influenced by the intervening conditions. So a contract hazard in PPPs can be an outcome of the intervening conditions.

Complexity to the PPP hybrid was attributedby complex operational phenomenon, and risks and uncertainty (Follow Figure 1). Past studies emphasized on risk as a predictor of PPP success or failure72^,64. Also previous studies have identified sharing of risk, and transparency in procurements asthe critical success factors in PPPs59 where risk associations with PPPs were governed by contextual and contractual factors62. However, this study did not find risk as a factor of success or failure of PPP, but risk was found as an embedded element in PPP which resultedfrom the complex interaction betweenintervening conditions and PPP attributes. Earlier studies found ‘contractual agreement’ as a factor influence to the PPP governance74^,68^,72^,73, but this study noticed contract management as an intervening condition to the complex PPP structure and governance.

Power of control was observed to be an intervening condition condition to organizational complexity in the structure in governance in the hybrid set up, and similar phenomenon was noticed by Bjerregaard and Jonasson96 [they found power asymmetry as an intervening condition in the structure in governance in the hybrid organizations] , The governance structure gets more complex if the strategic complexity in integration of project partners is very complex50 but this study found that the governance structure becomes complex because of the degree of strategic decision making and the power of control rests in the organizations in the PPPs.

Institutional logics was found causing complexity in the governance of the PPP. The institutional intent of private sector was different from that of the public sector [even though the parties have joined hands because of their complementary assets and capabilities]. Private sectors had a different organizational attributes (system, structure, rules, styles and policies) as compared to that of the public sector in the context of Indian political, legal and business environment. The fusion of organizational attributes was difficult in the hybrid governancewhich has made the PPP structure and governance more complex. Under the Indian situation the public sector was able to exercise high degree of power of control and strategic decision making as compared to those of the private sector. But at the same time the contract management was being controlled by the private sector who practicallyimplement the PPP project either by putting it's resource or by pooling resources from others. Sstake holders’ expectations were also different from both the parties (public party and private party) in the PPP. All these factors have brought complexity in the governance of the hybrid PPP. Some of these findings corroborate with previous studies, for example, Lindqvist97 observed conflicting legislation and power relations influence the governance of PPPs; and Brinkerhoff34 found the diversity among the stakeholders in the PPP which accounted for the intensity of conflicts. Similarly Dormois et al.98 emphasized on organizational logic and attributes as instruments to differentiate private sector from public sector and found path dependency as causality in the differential nature of public sector and private sector. In the presence of asymmetric information in the interdependence mode leads to conflicts in the partnership governance.

Previous studies explained that the public organization and private organization collaborate and cooperate through a contract based partnership mechanisms to achieve a common goal by sharing their resources and risks99^,100^,101^,102. Similarly Keene77 found organizations who have complementary and supplementary resources and capabilities with a common interest get into a PPP mode of partnership. However this study noticed that the public organization and private organization collaborate through a partnership arrangement and share resources and capabilities to perform a common task but the ultimate goals of the partners were different even though task-based goals remains the same. So, this study claims that the PPP mode of partnership exist to attain meaningful goals than common goals.

The PPP success [value creation] was ensured by appropriate actions/strategies as shown in figure 1 [Stick to deliverables, compromise with organizational intents, strengthening trust bond from entry level to operational level]. The interpersonal trust is governed by cognitive and affective trusts which influences interpersonal cooperation in organizations103. Chia-Hui79 noticed shared values and trust as major organizing principles of dynamic collaborative mechanisms in organizational partnerships, and Edelenbos80 commented trust is one of the critical factor in the sustainability of PPP. Jamali61 noticed that trust, openness and fairness are Critical Success Factors (CSFs) in PPPs which experience complexities with strategic and operational realities. Similarly, Tan and Lim104 explained trust in the line of openness, cooperation, commitment, inter-dependence, reliability and competence among members. Ansell and Gash58 argued that the trust and shared understanding were success elements in PPP governance. Trafford and Proctor60 identified good communication, openness, effective planning, ethos and direction as success factors in PPPs. This study also argue that trust is an important attribute but the study found trust exist in different forms, i. e , entry level trust, operational level trust, cognitive trust, affective trust organizational trust, interpersonal trust. But the successful element for PPP governance is to raise the operational level trust at a higher level as compared the entry level trust. However, the study did not find the contractual trust (trust of character like honesty, consistency and fairness), competency trust (organization's ability to complete the task strictly adhering to the laid contractual conditionality), and communication trust (disclosing accurate information to partners) among PPP partners.The complex interaction between these two attributes i.e. trust and ego [higher ego, weak trust] led to weak communication among the partner organization.Studies on organizational alliances found that partners who acknowledge latent differences can overcome the negative consequences of the partnerships outcomes47. Similar outcomes have been traced out in the PPPs i.e. when partners compromise with organizational intents they are like to derive value (by achieving their specific interests) out of the partnership arrangements.

Past academic studies have not much focused on the success strategies in organizational collaboration. Few studies emphasized on cooperation and coordination as key to partnership success105. This study could not find any concrete strategy per se for inter-organizational collaborations in PPPs, but a possible set of actions (adhering to deliverables, compromising with organizational intents, and strengthening trust bond from entry level to operational level) were noticed for partnership success. Also it was seen that the set of actions to make the collaboration success was not a strategy but a fear factor of partnership failure. A partnership malfunction invites troubles for public sector in fulfilling government's commitment to public and politics. At the same time any malfunctions has a financial implication to the private party.

Conclusion

This qualitative study was conducted employing grounded theory approach to probe deep into the structure and governance of PPPs in the context of Indian legal, political and business environment. The major causality of the PPP hybrid structure was the complementary and supplementary relationship among project partners, and the inability of any partner to do the task standalone. The major causality in the complexity of the governance of the hybrid PPP structure were (i) organizational attributes (policies, styles, systems, structures) of each partnering organizations, (ii) stakeholders’ expectations from each partnering organizations, (iii) power of control held with each partnering organization, (iv) organizational logic of each partnering organizations, (v) strategic decision making power held with each partnering organization, and (vi) the efficiency of contract management team. The complexity in the PPP governance had two different dimension i.e. one uninterpretable rules, policies, systems, and two, unexpected actions/decisions in uncertainty. The major attributes to this governance system were trust, ego, interpretation of complex operational phenomenon, mechanism to address risks and uncertainty and Interdependencies and reciprocity. The complexity in the governance structure in the PPP leads to series of phenomenon like delay operations, blame games, high fear factors, lack of initiatives and highly rule bound behavior. To create value with complex governance structure, PPPs have taken a set of actions [stick to deliverables, compromise with organizational intents, and strengthening trust bond from entry level to operational level] to create value. Even though the major stakeholders in the PPP (public sector and private sector) have common interest but they have a different goals. For example, the goal of public sector was creation of service delivery systems for public while the goal of private sector was commercial benefits, achieving scale economics and specializations.