Relational coordination towards social value creation in public-private partnerships in the private equity sector

Abstract

As an aftermath to the 2008 global financial crisis, public funds which customarily financed infrastructure were substantially reduced, bringing the global infrastructure funding gap. A substantial increase in private investment is required to fill this gap and as a result, public institutions and private firms have been increasingly encouraged to work together, through public-private partnerships. Public-private partnerships are driven by the unique value the diverse parties bring towards driving economic and social transformation. In parallel, private equity firms have been coming to realise the importance of aligning their investment strategy with social initiatives, however the involvement of private equity firms in public-private partnerships is still in its infancy. The ability of these parties to work together towards a shared goal is impacted by their varying skill-sets, differing logics and outcome objectives. The study extends and refines existing literature by providing an in-depth analysis and advancing insight into how PPPs with a private equity firm as a partner, can be coordinated to resolve conflict or tension to enable social value creation. The research further aims to explore the contribution individuals make in guiding the activities, varying skill-sets and development outcomes of a PPP relationship. The exploratory research was conducted by interviewing 12 participants with experience in the phenomenon and two experienced experts who provided a view from the outside looking in. The study provides empirical insights into the structures and processes utilised, as well as the role individuals play in developing relational coordination towards creating social value in PPPs with private equity firms as partners. A framework is presented depicting the relational coordination structures and process that contribute to the creation of social value between the members of PPPs with private equity firms as a partner.