The Private Scope in Public-Private Collaborations: An Institutional and Capability-Based Perspective (article)

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, the authors analyze the determinants of private scope in partnering with public actors —i.e., the extent to which private actors are involved in multiple, consecutive value-creating activities in the partnership. Based on a unique dataset of public-private agreements worldwide over two decades, the authors find that institutional and capability-based determinants jointly affect the extent of private scope in public-private collaborations. The results highlight the contingent role of the quality of institutional environment. Institutions not only facilitate greater private scope directly but also moderate the effect of public and private capabilities on private scope. The authors 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 appear 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 co-funded projects, appear 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, the study offers important implications for the theory and practice of hybrid (cross-sector) organizational forms.