Social Value Creation and Relational Coordination in Public‐Private Collaborations

• Author: Gerard George,Jens K. Roehrich,Nigel D. Caldwell
• Date: 01 September 2017
• DOI: http://doi.org/10.1111/joms.12268
• Published date: 01 September 2017

Social Value Creation and Relational Coordination in

Public-Private Collaborations

Nigel D. Caldwell, Jens K. Roehrich and Gerard George

Heriot Watt University; University of Bath; Lee Kong Chian School of Business at Singapore

Management University

ABSTRACT Public-private collaborations, or hybrid organizational forms, are often difficult to

organize because of disparate goals, incentives, and management practices. Some of this

misalignment is addressed structurally or contractually, but not the management processes and

practices. In this study, we examine how the coordination of these social and work

relationships, or relational coordination, affects task performance and the creation of social

value. We employ a dyadic perspective on two long-term relationships that are part of a

wider ecosystem. We illustrate the social value creation process, identifying mutual knowledge

and goal alignment, as necessary to create relational coordination. We find that the degree of

professional embeddedness moderates the link between coordination and task performance,

and explore the role that organizational and ecosystem experiences play. We develop a model

of how relational coordination influences social value creation in hybrids. The findings have

implications for social value creation, hybrid collaborations, and organizational design.

Keywords: healthcare, hybrid organizational forms, public-private partnerships, relational

coordination, social value creation

INTRODUCTION

Value creation is at the core of management research and practice, central to utilizing

public-private collaborations is that value will be created that could not have been

achieved by either party acting independently. Value in public-private ties is broadly

defined as the sum or entirety of benefits obtainable from the exchange (Kivleniece and

Address for reprints: Jens K. Roehrich, HPC Supply Chain Innovation Lab, Information, Decisions and

Operations Division, School of Management, University of Bath, BA2 7AY, UK (j.roehrich@bath.ac.uk).

Nigel D. Caldwell and Jens K. Roehrich have contributed equally to this paper.

This is an open access article under the terms of the Creative Commons Attribution License, which

permits use, distribution and reproduction in any medium, provided the original work is properly cited.

V

C2017 The Authors

Journal of Management Studies published by John Wiley & Sons Ltd and

Society for the Advancement of Management Studies

Journal of Management Studies 54:6 September 2017

doi: 10.1111/joms.12268

Quelin, 2012). The private sector literature on organizational alliances and partnerships

views value creation in relational terms, and suggests that collaboration generates

opportunities where organizational resources and capabilities can be pooled to create

new sources of value (Dyer and Singh, 1998; Dyer, 1997; Poppo et al., 2008; Priem,

2007). Yet extant literature on public-private collaborations offers limited insights into

the mechanics of how social value is created.

Social value creation in hybrid organizational forms is a significant problem because

the odds are stacked against success, with alliances reported to be statistically more likely

to fail than to succeed (Kale and Singh, 2009; Park and Ungson, 2001). Yet the growing

literature on public-private partnerships (PPPs) (Boyne, 2002; Kivleniece and Quelin,

2012; Mahoney et al., 2009) only reflects governments’ optimistic choices as PPPs are

increasingly utilized around the world. Social value is created when the hybrid organiza-

tional form generates positive societal outcomes beyond that created by either actor

working alone or within its sector. There are many positives for why a hybrid collabora-

tion may outperform either sector acting alone such as: the value of networking (Le Ber

and Branzei, 2010; Lepak et al., 2007; Tsai and Ghoshal, 1998), complementary resour-

ces (Madhok and Tallman, 1998), and being able to address bigger societal agendas

(Klein et al., 2010; Pitelis, 2009).

The issue then for a hybrid collaboration is how to coordinate and align performance

across public and private partners, characterized by, for instance, different knowledge

bases, divergent goals and (public and private) values, and stark differences in organiza-

tional experience; only with highly effective coordination then can a hybrid claim to

exceed within sector value creation (Carlile, 2004; Kivleniece and Quelin, 2012). For

example, Rangan et al. (2006) suggest that a PPP creates a context with high governance

costs from contracting, coordinating, and enforcing – primarily due to misaligned goals,

incentives, and organizational practices. Existing literature recommends deploying

either a contractual or relational perspective for coordination, or combining both; with

arguably a tendency toward the contractual elements (e.g., Ari~no et al., 2014; Puranam

and Vanneste, 2009). However, given the long-term nature of these contracts and the

unpredictability of the contexts in which they operate, contracts may be necessarily

incomplete and cannot fully mitigate the risks of under-performance of either (public or

private) party (Roehrich and Lewis, 2014). Thus, there is a need for coordination of the

relationship itself such that the public-private collaboration could successfully adapt to

emergent constraints during the tenure of the contract. In addition, there is a further

inherent tension between creating value for the community or society at large (i.e., social

value) and the rents that can be appropriated by the private firm (i.e., economic value).

An overt focus on economic value, even if contractually appropriate, might create ten-

sions with the public partner when decisions are needed to accommodate changing pol-

icy environments. In such cases, we expect that hybrids that can effectively coordinate

relationships, might be able to counterbalance contractual incompleteness.

Thus, this study seeks to answer the following research question: How are public-private

collaborations coordinated to create social value? To address this question we examine public-

private collaborations operating under the umbrella of a national ecosystem of PPPs. By

examining the dyadic level of analysis, we offer a yet underexplored perspective on

social value creation (Mahoney et al., 2009). More specifically, we investigate two long-

907Social Value Creation and Relational Coordination

V

C2017 The Authors

Journal of Management Studies published by John Wiley & Sons Ltd and

Society for the Advancement of Management Studies