Do Laws and Contracts Economize on the Same Cost?Trade-offs Between Transparency and Flexibility in Public-Private Partnerships
(with Bertrand Quelin)
Stage: R&R at Strategic Management Journal
Legal institutions and contractual governance matter for fruitful public-private partnerships (PPPs) as they can economize on transaction costs. Yet, extant theories assume that laws and contracts each cover all relevant costs. We revisit this assumption and suggest that they target different sets of PPP risks. There are two substantial hazards in PPPs: governmental opportunism and maladaptation. We find that introducing PPP-specific laws to improve transparency and mitigate governmental opportunism will conditionally increase contractual rigidity and inflexibility. Then, in response to rising adaptation costs, PPP contracts are less likely to be user-pay (vs. government-pay). Our findings also show that the relationship between PPP laws and PPP contracts is contingent on the partnership expertise of public sectors, political environments, and the capabilities of private investors.
Inter-alliance Collaborations: Cohesion and Negotiation Between Two Multi-Partner Alliances
(with Bertrand Quelin)
Stage: Ready for submission
Examining collaborations between two alliances, this research aims to explore how group cohesion, as measured by prior collaborations among members, influences the time it takes for them to reach a mutually acceptable agreement with external organizations. Alliance cohesion triggers two mechanisms that can exert opposing effects on negotiation times. On one hand, it facilitates information dispersion and interpretation within the alliance. It thus expedites group decision-making and shortens negotiation time with outside organizations. On the other hand, cohesion strengthens group solidarity and competitiveness when engaging with external parties, impeding mutual understanding with the other alliance and prolonging negotiation time. Drawing on the resource dependence theory, we argue that the dominant mechanism driving the relationship between alliance cohesion and inter-alliance negotiation time is contingent on the alliance's position of dependence. Facing greater uncertainty, dependent alliances are more cautious and tend to focus more on their internal decision-making. However, the dominant alliances supplying critical resources are primarily concerned with achieving their objectives and leveraging their advantaged position. Thus, cohesion carries different implications for these two alliances. To empirically test our hypotheses, we choose project-finance infrastructure setting that involves two multipartner alliances: sponsors alliance (SPV) and lenders alliance (loan syndicate). We use an original database containing about 901 projects across 65 countries and eight different sectors between 2000 to 2021.
Economizing on Costs or Maximizing for Value? The Effect of Institutional Environment on Multipartner Alliance Structure
There is growing scholarly interest in multi-partner alliances (MPAs) that involve three or more organizations. Previous research has established that there are two principal motives for forming MPAs: risk-sharing and resource-pooling. However, there is not much in the literature that systematically describes whether and when one motive is prioritized over the other. We argue that these motives are rooted in two distinct calculi of cost minimization and value maximization. Drawing on the institutional environment research, we then suggest that strong market-supporting institutions lead prospective partners to prioritize value creation over economization, which influences the partner selection process. Examining 1,422 MPAs in infrastructure projects across 95 countries, we show that with strong market institutions, MPAs tend to accommodate fewer partners but a wider variety of expertise