ABSTRACT
Public-private partnerships (PPPs) are becoming an increasingly common method of delivering public services. A PPP arrangement exists when a government agency assigns a traditionally public responsibility to a private company in an attempt to improve delivery efficiency, lower costs, increase customer satisfaction and attract private funding (Hofmeister and Borchert 2004). Whilst governments in many nations (e.g. the UK, Australia, Germany, France, the Netherlands, Spain, USA and Canada) have implemented PPPs since 1990s and accumulated significant management experience, for other economies PPPs are fairly new (Osborne 2000; Akintoye et al. 2003; Grimsey and Lewis 2004; Urio 2010). There is a critical link between sustainable entrepreneurship and PPPs owing to the latter’s capacity to contribute to society’s sustainability along three dimensions. First, partnerships demonstrate capacity to ensure sustainability of the natural environment (Shepherd and Patzelt 2011), for example, by expanding the use of renewable energy sources for power generation. Second, PPPs are able to build, maintain and enhance life support systems (Halkias and Thurman 2012), for example, by constructing and operating key elements of infrastructure – electrical grids, roads, airports and seaports, as well as urban infrastructure units including water supply facilities and trash recycling plants. Third, PPPs can effectively serve a community (Leiserowitz et al. 2006) by providing public services instead of the government. Examples of these public services include education, health care and recreation. To summarise, by contributing to all three dimensions of societal sustainability, the PPP work appears in the core of sustainable entrepreneurship (Peredo and Chrisman 2006; Hall et al. 2010), which explains the significance of this study. PPPs should be viewed as examples of sustainable entrepreneurship, i.e. the latter is a concept of creative business practices in society, whilst contractual PPPs are one of manifestations of creative business in collaboration with the government. As this chapter aims to highlight the relations between PPP, entrepreneurship and sustainability, the term interplay accurately captures not only multiple links between these three categories, but also the influence that each element
exerts on the other two and receives from the other two. This can be illustrated by partnerships’ impact on environmental and social issues, whilst PPP success in solving certain problems drives further PPP deployment. For example, based on worldwide PPP experience to date, partnerships are particularly instrumental in effectively addressing a number of environmental problems, such as flood alleviation, water treatment, waste utilisation and the use of renewable energy sources (e.g. wind farms and waste-to-energy plants). In addition, PPPs are capable to provide effective solutions to certain social problems, such as childcare, by using private investment for building and operating kindergartens whilst parents and the government reimburse a private company over the long term. Other similar examples of where PPPs have a high success rate include construction and operation of hospitals, schools, stadiums and recreational facilities (spas, swimming pools, parks). In the two ex-Soviet nations – Kazakhstan and Russia – PPP deployment is still in its infancy as it began only after 2005 (Mouraviev 2012). Nonetheless, in both economies PPP development is high on the government agenda and the governments are actively pushing for accelerated PPP formation. Why is it so? The chapter investigates the underpinnings of the government decision-making regarding PPP development through the prism of entrepreneurship that partnerships foster. This research perspective is aligned with a view of sustainable entrepreneurship that entails not only preservation of nature, sources of life support and community, but also produces gains, both economic and noneconomic, to the economy, individuals and society (Shepherd and Patzelt 2011). As PPPs are rarely studied from the sustainability perspective, the chapter addresses this knowledge gap by exploring the impact of partnerships on entrepreneurship. It is worth noting that, although a PPP is commonly viewed as an organisational arrangement that is inherently entrepreneurial because a private operator pursues the goal of profit maximisation and utilises creative tools to achieve this goal, the chapter focuses on how, in what ways PPPs contribute to sustainable entrepreneurship beyond the scope of entrepreneurial actions of a private operator that implements a partnership project. Hence, the policy and societal aspects of PPP impact on entrepreneurship and what makes the latter sustainable are highlighted in this chapter. Kazakhstan and Russia have been selected for the study owing to a large number of commonalities in their economies and public policies. Having a common border (i.e. Russia is North of Kazakhstan), both nations are transitional economies and share many economic, political, business, social, educational and cultural realities that stem from a common Soviet legacy. Although the two economies are different in size, the ways in which governments have shaped PPP development, created a legal and regulatory framework and selected sectors for partnership projects show considerable commonalities that allow for meaningful comparisons between Kazakhstan and Russia. An empirical examination of dynamics underlying the PPP arrangements in Kazakhstan and Russia may thus contribute to a more comprehensive understanding of the role that the governments and other stakeholders attach to partnerships. More generally,
the government approaches to PPPs may elucidate, at least in part, the partnerships’ significance for the interplay between sustainability, entrepreneurship and innovation as this interplay increasingly becomes the driver of society’s development and growth. The chapter begins by elucidating a theoretical framework that links partnerships, entrepreneurship and sustainability. It then highlights the progress made in Kazakhstan and Russia to date in the PPP deployment. Next, internal and external PPP drivers in the two nations are discussed. Subsequently, the chapter demonstrates theoretical grounds based on which PPPs are typically launched (value for money and transaction cost economics) and discusses whether these two approaches are used in Kazakhstan and Russia. We then identify PPPs’ social value that governments aim to promote, such as sustainable entrepreneurship, economic growth and innovation, which, if they materialise, outweigh limitations of the value-for-money concept and transaction cost economics.
