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P3 governance
A power game without a master

by Gilles Paquet

Basically, the Canadian socio-economic system consists of some 1,000 idiosyncratic ways of doing things, ranging from macro-institutions like our health care or banking or police systems, to micro-arrangements like the way in which liquor is distributed.

The broad institutional style of a socio-economy is defined by the division of labour among three mechanisms: the market, the government and not-for-profit or solidarity institutions. In some countries, markets are required to do much of the job of coordination of economic activities, and government and solidarity organizations play a minor role. In others, governments or not-for profit organizations play a much more important role.

In Canada, there was a systematic shift toward more and more government involvement in the coordination work between the 1930s and the late 1970s. Thereafter the pendulum swung the other way with much devolution of state activities onto private and not-for-profit concerns.

It is naive to presume that there is always a perfect fit between particular tasks and one of the three mechanisms, each of which, in isolation, often does a poor job. A case can be made that the job would be dispatched much more effectively if one could creatively mix the features of the three: the long term horizon and fair stewardship of the public sector, the creativity and dynamism of the private sector, and the compassion, commitment and trust in the not-for-profit sector.

This is why there is much experimentation with mixed institutions built on partnerships. The most interesting aspect of these experiments is the fascinating evolution in the nature of the linkages that have proved effective. What were at first mainly opportunistic efforts to take advantage of certain specific skills of sub-contractors (with the need to constrain them with strong legal contracts and numerous specific requirements and penalty clauses) has evolved into true partnering based on a flexible continuing relationship rooted in efforts to respond to the expectations and needs of the other parties (with the need to build on loose arrangements and soft accountabilities).

Governance of these partnerships has created important new challenges:

  • These partnerships have blurred considerably the boundaries between the collaborating firms and agencies. In order to work collaboratively, the partners have to break down institutional barriers and shift their focus from process to performance.
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  • These partnerships must produce new knowledge - innovate - if they are to succeed. As a result, knowledge must be shared and traditional means of controlling intellectual property must be abandoned. The parties must be mutually accountable. Such accountabilities must provide the sorts of incentive needed for the parties both to wish to join the game in the first place and to ensure that they will meet their commitments, even in circumstances when they cannot be forced to do so.
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  • As the strength of the partnerships (i.e., the degree to which such dual incentives to join and honour commitments exists) grows, the underlying conventions require less and less formality. But this generates an immense problem when it comes to the definition of performance or the fair sharing of the surplus. Partners need a much higher degree of commitment and trust, and must develop such relational capital if it does not exist.

Because of these challenges, at first glance partnerships may appear to be unmanageable. In fact, in a concrete setting, really committed partners, each having different frames of reference, always find ways to co-design viable arrangements. Indeed, it is a result of this very process of co-design that the intentions and meanings of each partner are revealed and negotiation in a situated context can be conducted.

This is not the place for an inventory of the vast array of possible rationales partners may harbour as they enter a collaborative arrangement. But it may be important to underline a few that have been mentioned widely in the specialized literature, to help identify the sorts of interfaces likely to exist where compromises might be sought, and to suggest ways in which the "proceeds" may be shared. Since the partners may not be at all after the same sort of loot, sharing the "proceeds" in specific circumstances may not be as intractable a problem as one might anticipate.

First, partnership may simply be a device to trigger management reform or restructuring. In this case, the dominant logic involved is process reform - simply using partnerships as a way to destabilize the organization. The partner is an agent of subversion meant to inject new efficiency in the organization.

Second, the objective may also be to effect a problem conversion -a way to redefine the business one is in through some reframing. The partner is an agent of seduction that helps elicit a different way to tackle a task; for example, brokering a public interest issue like environment protection into one that is of interest to entrepreneurs.

Third, partnership may be sought for the purpose of moral regeneration - to inject the spirit of competition and entrepreneurship into a bureaucratic organization, or from a concern for the long run in myopic quarterly, earnings-fixated organizations. The partner is an agent of moral refurbishment.

Fourth, partnership is also an instrument of risk shifting. It is a way of unloading onto the partner a portion of the responsibility for some commitment. The partner becomes an agent of risk sharing.

Fifth, partnership may simply be a mode of power sharing. In this case, the intent is a true partnership because it is recognized that no one party has the resources, information and power to govern appropriately. The partner is an agent of cooperation.

Most partnerships are a mix of these rationales - multi-purposed instruments used for various reasons. If they fail, it is usually because the partners refuse the basic condition - power sharing. One or the other partner wants to use partnership as a tool to reform, convert, rekindle, or shift risk but without paying the price of relinquishing some power, accepting the need to negotiate fair terms of agreement, developing relational capital and trust, etc. The result is a phony partnership bound to fail. Fortunately, partners who know that they are in cohort for the long run see that this is necessary and appear to be willing to pay the price.


Gilles Paquet is a professor of public administration at the University of Ottawa and a founder of the Centre on Governance.


 

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