PPPs: inter-actor relationships two cases of home-based care services in China.

Author:Yu, Jianxing
Position:Report

INTRODUCTION

Over the past 30 years, initiatives have been taken throughout the world to seek alternatives to traditional methods for the provision of public services. PPPs, an important tool for government reform, have been increasingly implemented since the 1980s (Gibelman and Demone 1983) and have become popular institutional arrangements for supplementing or replacing traditional supply models of public services.

At present, the definition of PPPs remains ambiguous. Some define PPPs in a narrow sense as private investment in public infrastructure, and this has become the focus of most existing research. Others consider PPPs to be a middle way between state and privatization (Leitch and Motion 2003). Savas broadly defined PPPs as any relationship between the public and private sectors, or any arrangement under which the private sector takes up actions traditionally performed by the public sector (Savas 2002: 105). His definition covers almost everything with public and private features, including such arrangements as contract system and joint operation. This paper utilizes a broad definition: PPPs are agreements between the public and non-public sectors, in which the non-public sector participates in public service decision-making, directly or indirectly provides services, and shares risks with the public sector. (1)

The division of public service delivery subjects into providers and producers can be traced back to the late 1950s (Musgrave 1959). Later, the multiple service provision model was put forward (Savas 2002: 69). The service provision under administrative orders model was gradually replaced by the provision through market allocation based on competitive contracts model. As a result, the relationship between the public and private sectors was reconstructed. The multiple service provision model required cross-sector partnerships and collaboration and targeted integration between the public and non-public sectors. PPPs then emerged as institutional arrangements to address these issues (Jamali 2004).

The strengths of PPPs include reduced input cost, improved operational efficiency, better service quality, risk sharing, and maximum use of existing resources and competition. As an innovative path for public service provision, PPPs can bring about more new resources and competition (Domberger and Jensen 1997, Pongsiri 2002, Bovaird 2004). In PPPs, government is increasingly dependent on the external environment to fulfill its mission of providing public services. Most of this work must be completed by coordinating complex inter-actor relationships. The majority of government employees are not in direct contact with personnel responsible for public service provision. The traditional approach of acting alone features limited impact, but the expertise of the public and non-public sectors can complement and balance each other (Linder 1999). Besides, increased efficiency of individual organizations is not equal to the improved overall service of PPPs (Provan and Milward 1995). This may be due to the other organizations' reduced efficiency, or to the poor coordination of different organizations. Government no longer relies solely on traditional hierarchical authority or itself to provide public services (Rhodes 1996), but more on a variety of collaborations and partnerships to establish a network to achieve the goal of public service provision. It's the establishment of reasonable partnerships that can guarantee the strengths and successes of PPPs.

Although Savas included various forms of PPPs in the multiple institutional arrangements for public service provision (Savas 2002: 69-91), he failed to analyze in depth how PPPs should be established. Cooper managed to deepen his research into the quality level in contract management (Cooper 2007: 5), but he ignored that excessive reliance on regulatory management and control, such as special inspection and regulations, might cause confrontations between subjects in the collaborative network, for in this case the principal aimed to find errors, but not to improve partnerships (Goldsmith and Eggers 2004: 106). Most infrastructure PPPs focused much on financing methods and cooperative relationships, such as JV, BOO, BOT, BOOT, DBF, DBFO, DBFOT (Grimsey and Lewis 2008: 54), but the formation mechanisms of partnerships between the public and private sectors were not discussed. Nor was any comparative study of social organizations and the private sector conducted. Research into the efficiency of individual organizations and the efficiency of public service provision started early and much has been accomplished. Few scholars, however, have studied inter-actor relationships in PPPs, which, in fact, exert great influence on the success of PPPs projects and the quality and efficiency of public service provision.

Therefore, this paper examines the features of the ideal type of inter-actor relationships in PPPs. By examining and comparing two PPPs projects on elder care services in China, this paper aims to acquire more information on non-infrastructure PPPs projects, compare the differences between social organizations and the private sector, enrich PPPs theory with Chinese practices, and provide new proof to the construction of inter-actor relationships in PPPs.

IDEAL TYPE OF INTER-ACTOR RELATIONSHIPS IN PPPS

Bartlett and Grand maintained that a competitive market, a perfect information system, low transaction costs, effective incentives, and supervision mechanisms were indispensable to the success of collaborative networks among public service providers (Bartlett and Grand 1993: 13--34). Huxham even concluded that only when all the participants in PPPs were clear about how to obtain "collaborative advantages" with their partners could the partnership as a whole have competitive advantages over other partnerships (Huxham 1993). Government is no longer confined to its conventional role. It needs to handle its relationship with other subjects, and coordinate the relationships among other subjects in the network (McGee 2001). The above elaboration indicates that good inter-actor relationships in PPPs consist of, at least, two parts. First, a good institutional environment is essential. Government must not only make good rules, but also follow the rules, as good rules help to regulate partners' behavior, ensure contract performance, avoid monopoly, and reasonably share risks. Meanwhile, good rules also regulate the public sector's behavior. Second, the subjects of PPPs collaborate, build a platform for trusted partnerships to increase the confidence among partners, bring into play the strengths of each sector, and ensure the effective operation of PPPs. Therefore, we believe that the ideal type of inter-actor relationships in PPPs should, at least, include the following principles.

Power Sharing, from Control to Consultation

By examining the European experience in PPPs infrastructure projects, Broadbent and Laughlin proposed political will as a core element in PPPs projects (Broadbent and Laughlin 2004). This is true, not just in Europe or of PPPs infrastructure projects, but it is a universal issue faced by any PPPs project in any country. In PPPs, "partnership" inevitably requires sharing power, achieving common goals through the integration of resources and professional skills, and sharing accountability.

In other words, in the decision-making process for public services or goods provision, the public sector and the non-public sector first need to jointly identify the type, quantity, and quality of the public services or goods, plan the provision approach and process of delivery, set common targets, and consult on indicators and methods for performance appraisal. This is because standards unilaterally set by the public sector, to a large extent, are no more than the requirements for its partners, but are not the common goals.

Transparency, Information Sharing

Market-based competition may undermine information flow in the collaboration system in PPPs, and the information is often incomplete and asymmetric. Competition enables subjects to be aware of keeping their own information confidential, which substantially reduces the possibility of open collaboration. Even worse, the government's understanding of partners' defects increases as time goes by, and the financial performance of an individual subject remains unknown until it is time for the subject to declare bankruptcy. Such a consequence will adversely impact the subject selection, efficiency, and quality of public service provision. Ensuring efficiency through competition instead of government's internal control, is problematic, because structural risks caused by the absence of government's internal information, control, and free outsourcing make it more likely for government to ignore political accountability. Meanwhile, the collaborative network also requires the government to be more capable of information communication. This is because, on the one hand, network communication and power sharing will encounter various barriers (Bardach 1998: 131-134), and, on the other, the information systems of the subjects in the collaborative network need to be compatible for information communication.

Accountability Sharing

According to the World Development Report 2004: Making Services Work for Poor People, "accountability," a core concept of public service delivery, refers to the relationships among...

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