Survey on Ppp in Sweden
Transcript of Survey on Ppp in Sweden
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In the Twilight Zone: A Survey of Public-Private Partnerships in Sweden
Author(s): Sven-Olof CollinReviewed work(s):Source: Public Productivity & Management Review, Vol. 21, No. 3 (Mar., 1998), pp. 272-283Published by: M.E. Sharpe, Inc.Stable URL: http://www.jstor.org/stable/3380859 .
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I N T H E TWILIGHT Z O N E
A Surveyof Public-PrivateartnershipsnSweden
SVEN-OLOF COLLIN
LundUniversity,Sweden
A partnership etweena municipality ndoneor moreprivatepartnerss oneof the
many ormsfor the municipalproduction f sewices to satisfytheneedsanddemands
of citizens available(Borys 6c Jemison,1989;Mackintosh,Jarvis,& Heery, 1994;
Mohr& Spekman,1994).In theUnitedStates, t has beena meansof gathering apital
andcompetencies or downtownredevelopment rojects Davis, 1986;Stephenson,
1991), in Englandof achieving ocal economicredevelopmentField, 1990), andin
Germanyt has sesed similarpurposes Jochaimsen, 990).
A public-private artnershipPPP) is not restricted,however,to local economic
policy; it can also be useful in otherareasundermunicipalurisdiction.A PPPcan
enable a municipality o obtainaccs to specific competenceor to create stong
competitors o enhancecompetitionn the local market.As withany organizational
form, specific conditions and strategiesspeak for its employment.For example,
municipalitiesunder inancialstressmayhave need fora PPPto obtain rom private
sourcessufficient inancialresources o financedowntownredevelopment.
A PPP s, however,anorganizationhat s positioned n between hepublicsphere,
characterized y such thingsas democracy, itizens,and monopolyproduction, nd
theprivatesphere,with its pricesystem,owners,and competition Brunsson,1989;
Dahl & Lindblom,1953; Parker,1992; Perry& Rainey,1988). A PPPcould gain
advantages f its location n the twilightzone, overcoming nstitutionalbstaclesand
usingqualities romboth spheres.Thus, we can find reasonswhy PPPs are used, despite or thank to its twilight
character.The aim of this articleis to test a theoryconcerningPPPs, predicting
conditionsthatpromote heemploymentof organizations wnedand controlled n a
partnershipbetween a public and a privateorganization,hat is, a public-private
partnership.The structureof the article s as follows: In the first section, the majormotives
behindbotha municipality's nda privatepartner's ecisionto engagein a PPPare
Author's ote.The workffiis arficlerepresent was fundedby R^det or KommunalElconok ForskningOchUbildning(KE1:U)e Council orResearch ndTrg in MunicipalEconomics).LennartHansson
andBengt Jacobssonprovidedhelpfulcomments.
PublicrodgctivitMgc Rai, Vol.1 No.3, Mh 1w8 272->3o 1998 Sagc Publicadons, nc.
272
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Collin / PUBLIC-PRIVATE ARTNERSHIPS N SWEDEN 273
Municipality|
Society
< { 1 Socialization
| _ Regulabon
< | Deregulation
Public-Pnvate< _ PartnershipPPP)__
Figure 1. Three Municipal Strategies for Managing the Line of Demarcation Between a Municipalityand Society
deduced. n the second ection, hesevariousmotives re hen aken ntoaccountn atheory redictinghepropensityowardheuse of PPPsas a function f the structuralcharacteristicsf themunicipality,hich s seenasshapinghesemotives.Themethodused n theempiricalnvestigations describedn the hird ection, nd heresults representedn thefourth ection.Finally, onclusions redrawn ndpracticalmplica-tionsarediscussed.
Public and Private Motives for the Use of a PPP
A PPP anbetreated sa rationalesponseo problemsropportunitiesxperiencedby botha public nda private arty.n hissection, will ista fewconceivableeasonsfortheuse of a PPP.The ist s basedpartly n the iteraturendpartly n speculation.
A municipalitys an organization itha constantlyhangingine of demarcationbetween tself and society.Threemunicipal trategiesn dealingwith this line ofdemarcationanbe identiEledKooiman, 993):privatization/socialization,de)regu-lation,andPPPs see Figure1).
Privatizationmplies hat perations ithin municipalrganizationre ransferredto a private wner. his seems o be a rather opulartrategyn mostcountriesoday
(Galal, ones,Tandon, cVogelsang, 994).A less populartrategyoday s socializa-tion, o transferormer rivate perationso themunicipality. second trategys toregulate he line of demarcationhroughaws andregulations,hat s, to changenottheplayers rthecoachbut herulesof play.The h*dstrategy,heone focused n inthisarticle,s to create PPP n which hemunicipalitynda private artnerhare herisk, he profit, he utility, nd he investmentsHaider, 986).It is notprivatizationbecauseoperations renot shiftedout.Neither s it regulation ecauseno new rules
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274 PPldRIMarch998
are nvented.t is a stetchingof theborders,o create no-man's-land,r betterboth-man's-land,n which he woquitedifferentctors anbe partners.
A reasonableasis oramunicipality'sngagingn a PPPs its lackof a resourceof somesort,onethat anbegained hroughpartnershipnwhich nfluencever heoperationss retainednd ynergiesfdifferentesourcesanbe obtainedMackintosh,1992;Roberts, ussell,Harding, Parkinson,995).Oneresourcen short upplyntoday'smunicipalitiess monetaryapital,which sduemainlyodifficultiesnraisingtaxes.1Mis eemsto be a rather ommon eason or using a PPP n downtownredevelopmentrojectsothn theUnited tates nd heUnitedKingdomBennett&Krebs,1990;Lyall, 1986),private irmsbeingengaged o bnng bothcapitalandSpeCifilCcompetenceo thepartnership.us, anotheresourcen short upply s
specialcompetence f sometype.Although mploying r hiring ucha resourceis possible,omeresourcesanbe better sed n interorganizationalollaboration,sindicated y Powell 1996).A third ategoryf resourcefiat anbe in short upplysthecommercial ental ispositionhatpnvatepartnersupposedly aveof fosteringa climate f costpressure ndmarketrientation.
A second nducemento engage n a PPP is market ompetitivenesshroughtransformationfmunicipalrganizationsMackintosh,992)and hroughtretchingthe legal limitations. he transformationf formermunicipal perationsims atgaining hecommercialulturef theprivateector nd o legitimizetas anefficient
operationo meetthe increasingemands f competition.Municipal perationsnSweden re estainedhroughaws hata)prohibitpeculativeperations,hat s,therunningf a business;b) imitmunicipalperationseographicallyoffiearea f themunicipality;nd c) force hedocumentsndbookson theoperationo be disclosed,because ll publicdocumentsn Sweden reconsideredo be genuinely ublic.Thismeanshatnomunicipalityan egally ngagen selling omatoesorprofitn anotherdistrictf thetomatoesrecultivatedna hothouse eated hroughurplus eat romthe municipaleating lantownedby themunicipality,nless he growing f thesetomatoess only a smallpartof the operationsnvolvedand uses slaclcs n the
operations. hus,perhaps omore han %of the omatoes rown anbesoldoutsidethemunicipality
These hree egalrestrictionsamperhosemunicipal perationshatencounterincreasing ompetitionhroughmarket-orientedeformsn the municipalities.hemunicipalitiesacehighlybusiness-mindedompetitors,hoarenotrestrictedo ageographicreaandhaveconsiderablyewerdemandslaced n them o make heiroperationsublic.Rationalesponsesothisproblemf competitionre 1)toprivatizeoperations,huswithdrawinghem rom egalrestrictions;b) marketxpansion;r(c) productxpansionAnsoff,1965). he alternativef productxpansion,hat s, of
a municipalperationngagingn theproductionf anothertility iming tthesamemarket,hatof themunicipalit,s probablyare ecauset createsompetitionnsidetheorganization.arketxpansions a viable lternativeuta prerequisiteo it is thatthe egal estrictionsanbesidestepped.nSwedenhis s possiblehroughhecreationof a PPP, n organizationwnedogether ithaprivate ctor.However,t is unclearto whatdegreemunicipalitiesavefreedom erebecause herehavenot beenanyoperationsf aPPPyetthathavebeenbroughtocourt.Thisemphasizeshe wilightzonecharacterf SwedishPPPs.
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Collin / PUBLIC-PRIVATE ARTNERSHIPS N SWEDEN 275
Thereasons ehind heprivate ctor's nvolvementn a PPPcanbe assumedo berelated, irectly r indirectly,o profit Kouwenhoven,993).A PPPcan generate
good profit or the privateactoror reduce he actor's isk if it involvesa relateddiversificationf the actor'soperationsDatta,Rajagopalan, Rasheed, 991).Anobviousprerequisiteo this s that hePPPoffers hemarket commercial roduct rservice,which t doesnotnecessarily o in thecaseof more ndirect rofit ffects.Onesuch ndirect roEltffect s the synergy hatoccurswhen he PPPallowsa resourcethat s produced y the PPPor supplied y the private ctor o be more ully used.Another ndirect ffect s the goodwill hat nvolvementn a PPPcan create or theprivate ctor.ThePPPcanenable heprivate ctor o display ts highquality f workand ts trustworthinessn business ffairs,whichamong ther hings educesmunici-
pal uncertaintybout uture ossible ontracts.To summarize,t appearshata municipalityastwo major easons orbecominginvolved n a PPP, hatof gaining esources, e it monetaryapital, ompetency,r acommercialmentaldisposition, nd hatof gaining ompetitivequality. heprivateactor, ntheother and, asa direct rofitmotive oncerned ithprofit, isk eduction,or indirect ains hroughynergy r goodwill.
A Theoryof the Propensity o Use a PPP
The mixingof the publicandof the private ctor'smotivesmeans hat hesearevarious actorsor conditions hatmay be conducive o establishing PPP. n thissectionwe focus on the structure f the municipalitys one factor hataffects hepropensityoward se of a PPP.
Thegaining f differentypesof resources,inancial esources eingone of these,is a majormotivebehind hecreation f a PPP.Fora municipalitynder onsiderablefinancial tressbecause f a highburden f debtand he low tax base, he Elnancialmotive ouldpredominate.hepossibility f gaining service nvolving ittle inan-cialburden ouldbe veryattractiveo a municipalitynder uchconditions. hus,ourfirsthypothesiss thata municipality itha low taxbasehasa stronger ropensityouse a PPP hanone witha high axbase:
Hypothesis : The tax base in a municipalitys negatively elated o the municipality'spropensityo use a PPP.
Thesecondhypothesisxpresseshecontentionhata highdebtburden rients hemunicipalityo gaining inancial esourceshrough lternativeources, orexample,a PPP.
Hypothesis : Thedebtburden f a municipalitys positively elatedo the municipality'spropensityo use a PPP.
Gaining ompetencyhroughheuse of private ctors nd hepoolingof resourcesis a secondmotivebehind PPs.This houldmore ikelyoccur n municipalitiesherethe municipal rganizations smallbecauseof the population eingsmall,withtheaccompanyingnabilityof the municipalityo use nondivisible esources uch as
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276 PPhIRMarch 998
competence. hus, fiecontention ere s that hepropensityoward singa PPP shighern a smallmunicipalityhan n a larger ne.
Hypothesis : Thesize of the populationn a municipalitys negativelyelated o themunicipalit's ropensit ousea PPP.
However, contradictoryypothesis asto beformulated,asedon theoppositeof resourcecarcity.nSweden,tis widelybelievedhatargemunicipalitiesremoreinnovative nd morewilling o experiment ith new ideassuchas thoseof neworganizationalorrns. arge rganizationsanpresumablybsorb igher isks hansmaller nescan, hisplacing estrictionsnthesmaller rganizations'ropensityoexperiment.naddition,arge rganizationsontainmore lack hat anbedirected texperimenting. PPPbeing a rather ntried rganizationalorm, he innovativedispositionnd hecapability f absorbingiskhasto be high.Ishe actthatonly alargeorganizations capableof doing this forcesone to formulate hypothesiscontadictoryoHypothesis.
Hypothesis: The size of thepopulationn a municipalitys positively elated o themunicipalit's ropensityousea PPP.
The thirdresource ffered hrough se of a PPP, hatof a commercialmental
disposition, ouldbepreferredymunicipalitiesonfronted ithproblemsfa rigidbureaucracy.t least n Swedenheres abelief hatbusiness rinciplesreapplicablewhencost-effectivenessndcustomeratisfactionresoughtsomethinghat timu-lates heintroductionf proEltenters ndcorporationsn a municipal rganization(Collin& Hansson, 991).A PPPrepresents ot onlya businessormbutalso abusiness ubstancehroughhe private artnerepresentingheultimatepplicationofbusitless rinciples.ecause f itsbusiness-orientednvironment,societywithasmallpublic ectorwouldpresumablyace esser iskofdeveloping rigidbureauc-racy.Wewould hereforexpect municipality itha largepublic ector obe more
inclined ouse a PPP.Thishypothesisanbereinforcedhroughhe nclusion f theprivate artner's otive fgoodwill.Whenhepublicectorn a municipalitys large,itrepresentslarge nddominant arketorprivatentrepreneurs.rhroughnvolve-ment n aPPP, heprivate ctor ainsaccess othishugemarketnd heaccompanyinggoodwill.Accordingly,t can behypothesizedhata largepublic ector osters hecreation fPPPs.
Hypothesis: Therelativeizeof thepublic ectorn amunicipalityspositivelyelatedothemunicipality'sropensityo usea PPP.
In thiscase, oo, it is possible oformulatecontradictoryypothesis.When hepublic ectors large nddominant,t iscapable fbeing elf-supportingithregardto most of the servicesand activitiesdemanded. here s no need thento joincooperativeartnershipsecause f any ackofcompetency.nder uchconditions,publicpartnersouldbeassumedo be themost ikelypartners.hus,when here s alargeandhence elf-supportingublic ector,heuseofa PPP ends o behampered.
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Collin / PUBLIC-PRIVATE ARTNERSHIPS N SWEDEN 277
Hypothesis: The relative size of the publicsector in themunicipality s negatively relatedto the municipality'spropensity o use a PPP.
Theindustrial tructure f amunicipality ould influence hepropensity oward he
use of a PPP.Because on the wholemunicipalitiesproduceonly services, partnershipsare most likely to occur in the branch of service. Partnershipswith manufacturersshould probablybe of short-termcharacter, ocused on single productionssuch asbuildings.Therefore,one can suspect that the presence of a large service sector in amunicipality ncreasesthepropensity o use a PPP.
Iypothesis7:Therelativesize of the servicesector n amunicipality s positively related othe municipality'spropensity o use a PPP.
Because a municipality is principally a political organization, an ideologicaldimensionhas to be included o explain a municipality'spropensity oward he use ofa PPP.Being in thetwilightzonebetweenpublic andprivate, t could behard o predictthe outcomes of different political majorities. The left-wing parties in Sweden,consisting of the Socialists and the formerCommunists,have tendedto favor a largepublic sector, yet with a hazy distinctionbetween the public and the privatesectors,as conceptualized n the termsof folkhemmet, he people's home in which societyshould function as a great family, with the state providing it with support. The
right-wing and center parties n Sweden,representedby the ConservativeParty, heCenterParty,andthe Liberals,have tendedto favor a smallerpublicsector andrathersharpdistinctionsbetween the public and theprivatesectors, stronglycombined withthe family concept.The left wingcould thus be expectedto favor a PPPmore stronglybecause it constitutesa mix of the public andthe private,oronly partialprivatizationwith the retainingof politicalcontol. Thus, it can be hypothesized hata left-wingmajority n the municipalcouncil should fostera propensity owardusing a PPP.
Hypothesis : A left-wing majority in the municipalcouncil is positively related to amunicipality'spropensity o use a PPP.
The varioushypothesesthathave beenproposedaresummarized n Figure 2.
Method
Data on PPPs in Sweden had to be collected througha survey because no reliabledata iles wereavailable.To thisend, I selected 64 municipalities out of 280), limitingrandomselection through he use of two criteria:
size: Here I selected all municipalitieswith a population xceeding 49,999 inhabitants; helogic of this criterionwas thatthe projectof which this article s a partneeded a recordof as many PPPs as possible and that I believed PPPs to be more frequent n largermunicipalities.
Geography:ecause Swedenextends very farin a north-southdirection n particular,t isimportant hat every part of the country be representedn the data. The nonrandomselection procedurenotwithstanding, he sample reflects the populationquite well ifmeasuredby a frequencydistribution n the size variable X2= .0007, p = .9786).
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Figure 2. Hypotheses RegardillgMunicipalityPropensity to Use a Public-PrivatePartnership(PPP)
278 PPMR March1998
po6.
Two assistants,MagnusRonnlidand JorgenMalmsten, o whom I acknowledgemy gratitude, alled the central elephoneexchange n each of the 64 municipalities
to determineall of the PPPs in each of the municipalities.Strangelyenough,only a
few municipalitieshad theirPPPs registered. n the 64 municipalitieswe found 117
PPPs. A comparisonof our list of PPPs with one received from the Statistiska
Centralbyran SCB) (an organizationproducingmuch of the official statisticsin
Sweden), containingdata from the samemunicipalities, howed that 31% of all the
cases (i.e., my list and the SCB list) were identical,whereas41% of the cases only
occurredon the SCB list and 28% of the cases occurredonly on my list. SinceSCB
only recorded ome few variables, he lists could not be combined.However,compar-ing our ist with the SCB list on the variable"legal ormof the organization"ndicated
no significantdifferencebetweenthe two samples %2 = 1.15317, with 4 degreesof
freedom;p = .886).
The observations n which the differentvariableswere based were gathered rom
sources as close to the PPP as possible, preferably rom the CEO or from apersonof similar position. Unfortunately,his was not always possible. This reducedour
samplesize on some of the variables.The variables ecorded represented n Table 1.
We tested the hypotheses by using a multipleregression.Testing involved two
dependentvariables: a) the numberof PPPs in the municipalityand (b) a dummyvariable ndicating he presence or nonpresenceof PPPs. Thus, both intensityandpropensity n the use of PPPs can betested.
The regressionof a qualitativevariable epresented y a dummyvariable uch as
propensityposes two serious problemswith regard o estimation Montgomery&Peck, 1982). First, the estimatedprobabilities an assume both negative values andvalues greater than 1, which are meaningless. Second, the demand of normally
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Collin / PUBLIC-PRIVATE ARTNERSHIPS N SWEDEN 279
lible 1. ObservedVariables
VariablesTesting
Propensityfor theUse of pPpa Description
PPPInt PPP-Intensity,easuringhenumberf PPPs na municipality.S)PPPProp PPP-Propensity,easuringhether municipalityas(1) ordoesnothave 0)
oneormorePPPs.S)Population Population,umberf inhabitantsn 1993, ransformedogarithmicallyecause
of highkurtosisnd kewness.O)Taxability Taxbase,anestimatef thepopulation'sapacityo pay axes, xpresseds an
index,where100 s thenationalmean.O)Debts Thedebtburden,measuringhedebts f themunicipalityivided y thenumber
of inhabitants.O)RightWing Politicalmajontyn 1993, heright-wingarties aving majority,ecordeds (1).(O)LeftWing Politicalmajorityn 1993, he eft-wing arties chieve majority,ecordeds (1).
Municipalitiesith 0) inthisand he ormer ariableadanevenbalance fparty ower. O)
Service Theshare f all those mployedn themunicipalityerritoryelongingo serviceproduction.O)
Public Theshare f all ose employedn themunicipalityerritoryelongingo publicproduction,e itgovernmentalr municipalroduction.O)
Note. (S): data rom he survey;O):data romofficial tatistics,hats,Arsbokfor SverigesKommuner
(1993).a. PPP= public-pnvatearMership.
distributed errors is violated. A solution to these problems is to apply a logit model as
estimated through a maximum likelihood technique, creating an S-shape curve with
asymptotes at 1 and 0 (AElfi & Clark, 1990; Kennedy, 1984)
Results
Table 2 summarizes the descriptive statistics of the test of the propensity to use
PPPs. The municipalities have a mean of 1.84 PPPs and many of them (0.7) have at
least one PPP. Our sample shows a tax base (98.5) close to the population mean (100).
Many municipalities are governed by a right-wing majority (0.67). Almost 70% are
employed in service production and 41% are within the public sector. The correlation
coefficients show that intensity in the use of PPPs is positively correlated with
population size, thus supporting our initial hypothesis that larger municipalities have
more PPPs. The propensity toward the use of a PPP is positively correlated with debt
burden and is almost significantly correlated with population size. A negative corre-
lation with taxability approaches significance, thus supporting our contention that
municipalities exposed to Elnancial stress are more prone to use PPPs.
Table 3 presents the multiple regression equations. Intensity in the use of PPPs is
significantly influenced by the size of the population and taxability within the munici-
pality. Transforming intensity to propensity removes the population effect and reveals
an influence both of taxability and of the relative size of the public and the service
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lAble . Means, tgadard)e09Zans,nd Comlation Coemc-ients or Dependent andIntlependent Variabks Concerning the Use of pPpsa (N = 64)
Variable M SD 2 3 4 5 6 7 8 9
2. PPPProp 0.70 0.46 .18 -.19 .25* -.09 .02 .14 .08
3. PopulaXon 4.64 0.45 .58*** .47*** .14 -.14 .52*** .05
(log)
4. Taxabilit 98.5 12*8 .16 .18 -.09 .58*** -.04
5. Debts 16,782 4,994 .02 .01 .29* .23t
6. RightWmg 0.67 0.47 -.65*** .20 -.05
7. lsfftXmg 0.17 0.38 -.13 .11
8. Service 68.7 10.3 .56***
9. Public 41.1 7.0
Note. See Table 1 for descripbon f variables.a. PPP = public- vk parMership.*p c .05. **p < .01. ***p < .001. Ap < .l0.
Ibble . ReFessioD egax g IlxtelXsityndPropensit5yard Usillg Ppsa
Varisble PPP Intensity PPP Propensity
Populabon log) 2.514** 1.347(o.732) (1.181)
Taxabilit 4.069* 4.150**
(0.027) (0.047)
Debts 4.00001 0.0001
(0.00005) (0.00009)
RightXmg 4.935 4.796
(0.643) (1.004)
LeftXmg 4.602 0.205
(0.802) (1.244)
Sexce 0.046 0.169*
(0.042) (0.069)Public 4.062 4.144*
(0.043) (0-073)
Constant -2.708 @.143
(2.863) (15.835)
AdjustedRj = .200 x2 = 19.958**
F = 3.254** (7 degreesof freedom)
Note. Standard wrors re n parentbeses.a. PPP= public-privat paruership.$p 05 **p^< 01
280 PPMR March 998
sectors. An increase in the public sector is also associated with a decrease in thepropensity o use PPPs, whereasan increase n the service sectorappears o promotethe use of PPPs. A classiElcationable showed that the estimationcould correctlypredict78% of the cases.
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Collin / PUBLIC-PRIVATE ARTNERSHIPS N SWEDEN 281
The significantly supportedhypotheses were thus Hypothesis 1, concerning the
negative impact of taxability;Hypothesis 6, concerning the negative impact of the
public sector; and Hypothesis7, concerning he positive impactof the service sector.The size of the municipalityand political party n power did not appear o influencethe propensity.
Conclusions
PPPs are organizational orms situatedbetween the public and the private zones.
Our results indicate that PPPs areused as a strategy o attract carce resources,be itmoney or competency.When thereis no scarcity, hat is, when the public sector is
large, thepropensity oward he use of PPPs decreases.The ideological dimension was not found to have any influence. Obviously, thiscould have its cause in a poorconception of the ideological standpoints avoring or
disfavoringPPPs. However,a more realisticunderstanding f theprediction ailure sthat he 1980s and he beginningof the 1990s have witnessedarather urbulentpolitical
situationin Sweden. Majoritieshave shifted from the Left to the Right in many
municipalitiesduringthis time. A PPP is presumablya ratherenduringorganizationbecause it embraces a privatepartner,making a terminationof the organizationnot
only a political action but a contractual ne as well. PPPs can thereforebe thought o
survive shifts in political majority,with the observedconsequence of ideologicalprediction ailure.
The practical mplicationsof the study point toward he PPPpotentialof being an
instrument or managing the bordersof the municipality'ssphere of influence and
control,attracting esourcesnototherwiseavailable.PPPsshouldbe regarded s viablealternatives o privatization ndsocializationbecause theyprovide he opportunity o
alterthe institutionalmilieu withoutthe loss of municipal nfluence. Ample evidencefromother ines of research s available hatdiversitycreatesmilieus characterized y
innovation (Ancona & Caldwell, 1992; Bantel & Jackson, 1989; Murray, 1989;
Watson,Kumar, & Michaelsen, 1993). Thus, mixing two institutionallydifferent
partiescan create potential or change and, as Mackintosh 1992) put it, "to turnthepressuresof partnershipo the service of a new 'developmentalism' t local level andwithin the local state" p. 211).
However, the twilight characterof the PPP creates not only advantagesfor the
municipalitybut disadvantages s well, the uncertainty f the institutionalbasis being
the most obvious. The largedifferences between private andpublic can induce themunicipalityand the managersof the PPPto exploit the twilightcharacter f the PPP,sometimes acting as if the PPP is in the privatesphereandsometimes as if it is in thepublic domain. The twilightcharacter an be reinforced hrough hese acts, makingthe behavior of the PPPunpredictable or the other stakeholders.Thus, the twilightcharacter f a PPP puts a demandon the municipalityand the managersof the PPP toproperlybalancethe interestof thepublic and the pnvate sphere.
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282 PPMR March1998
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Sven-Olof ollin s an assistant rofessorn theDepartmentf BusinessAdministrationat LandUniversity,weden.His researchsfocusedon corporate overnancessues nthepublicand theprivate phere.