The Complexity of Private Actor Interests in Public-private Arrangements: the Nature of the Firm and Its Social Value Orientation
Abstract: Collaboration between public and private organizations creates a density of interactions. The interests are numerous: at the partnership level as well as for each partner. The prevailing view is that these interests are clear and unambiguous. However, in this exploratory paper, we discuss how a multitude of underlying private actor interests may interact and shape the way a firm behaves in public sector engagements. Contrary to the existing literature, which emphasizes the return-maximizing objectives and opportunistic behavior of a private actor, we disentangle the complexity of firm incentives and behavior in public-private arrangements. By embracing a multitude of interests embedded in the “firm as nexus of contracts” approach, we focus on four sets of dimensions likely to impact considerably the distribution of interests and incentives guiding the private action and social value orientation, specifically: 1) organizational architecture, 2) multiple principals and the divergent preferences stemming from firm’s governance, 3) executive interests and 4) third-party or social forces. Far from being homogeneous, private actor interests are shown to exhibit important discrepancies and interactions between various internal goals and different claimholders to a firm.
