Constructive Partnerships: When Alliances between Private Firms and Public Actors can Enable Creative Strategies

Drawing on transaction cost economics and externalities theory, we argue that private-public partnerships will be necessary when economic opportunity realization (1) calls for industry-specific competencies but entails significant positive externalities (i.e., implies specialized private actions wit...

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Bibliographic Details
Published in:The Academy of Management review 2006-07, Vol.31 (3), p.738-751
Main Authors: Rangan, Subramanian, Samii, Ramina, Van Wassenhove, Luk N.
Format: Article
Language:English
Subjects:
Alliances
Business management
Business partnership
Economic theory
Externality
Networks
Organizational behavior
Public private partnerships
Public-private partnership
Strategic behaviour
Studies
Uncertainty
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Summary:Drawing on transaction cost economics and externalities theory, we argue that private-public partnerships will be necessary when economic opportunity realization (1) calls for industry-specific competencies but entails significant positive externalities (i.e., implies specialized private actions with significant public benefits), (2) is shrouded by high uncertainty for the private actors, and (30 necessitates for private actors high governance costs for contracting, coordinating, and enforcing. Thus specialized resources, positive externalities, uncertainty, and governance costs are all jointly implicated in our theory. [PUBLICATION ABSTRACT]
ISSN:0363-7425
1930-3807
DOI:10.5465/AMR.2006.21318928