Strategies for Public Private Partnerships - The Answer to Society's Demands for Corporate Social Responsibility?

The growth of public-private partnerships (PPPs) over the past decade has brought together "for-profit" and "not-for-profit" actors, often traditionally cast as adversaries. Adjunct Professor of Economics and Political Science, Margaret Hanson, considers how the traditional model of doling out grants to worthy individuals, made famous by great industrialists in previous centuries, is making way for a new generation of philanthropy based on a model where partners barter products, services, expertise and reputations to create what are hopefully win-win outcomes.

by Margaret Hanson
Last Updated: 23 Jul 2013

It seems like every company has one - a partnership with the social sector. Starbucks works with Conservation International to promote Shade coffee in the Chiapas region of Mexico. Lafarge, Europe's leading building materials maker, works with the World Wildlife Fund to safeguard the habitat of migratory birds in Scotland. Cisco Systems, along with a dozen other high-tech companies, has joined in the Jordan Education Initiative, to assist the King of the Middle Eastern nation with educational reform. Unilever cooperates with United Nations agencies and local schools in rural India to teach kids to wash their hands.

<b>What is a "public-private partnership"?</b>

A public-private partnership (PPP) is an arrangement in which business firms form partnerships with governmental and non-governmental organizations (NGOs) in hopes of meeting the growing demands for corporate social responsibility. In short, to use an often-heard phrase, business partners look to "make money while doing good". Public and social sector actors typically enter into partnerships with business in the interests of tapping into the energy, ideas and resources of the free market in order to meet an ever-expanding social and global welfare agenda.

The growth of public-private partnerships over the past decade has brought together for-profit and not-for-profit actors, often traditionally cast as adversaries. Philanthropy across the corporate sector has been transformed in recent years from the traditional model of charitable donations, to far more innovative exchanges that often join diverse characters from business, non-governmental organizations (NGOs) and governmental agencies.

The traditional model of doling out grants to worthy individuals or targeted public works such as libraries, museums, and theatres, made famous by great industrialists such as Carnegie, Ford, and Rockefeller in previous centuries, is making way for a new generation of philanthropy based on a model where partners barter products, services, expertise and reputations to create what are hopefully win-win outcomes.

The models for these partnerships range widely, from strategic philanthropy through charity foundations, such as the Monsanto Fund to cause-related marketing, such as American Express's campaign to help reopen the Statue of Liberty and more unconventional donations of knowledge, effort and infrastructure, such as GlaxoSmithKline contributing staff, drug development expertise and infrastructure to the publicly funded Global Alliance for TB Drug Development.

<b>Is partnering the answer to society's demands for CSR?</b>

In the MBA course taught at INSEAD Strategies for Public Private Partnerships, we look at partner relationships that involve at least one for-profit business actor and one NGO. These may also include governmental agencies, international organisations like the United Nations, and private individuals. Partners in PPPs normally have some shared objectives for the creation of social value, often for disadvantaged populations, and agree to share both efforts and benefits of the partnership.

This mini-elective offers a survey of cases of PPPs, and tests frameworks for their analysis. We explore the life of the partnership, including partnership selection; mixing and matching motivations; defining social value; the distribution of efforts and benefits; developing and managing a working relationship, and exiting a partnership. These partnerships run across the social sector spectrum, including issues relating to food and nutrition, education, environment, labour and health.

While PPPs can often provide a key to sustainability, they can also carry risks. Through partnerships, business firms interact with a range of stakeholders such as NGOs, international and local governmental organizations, consumer and professional associations - each with their own driving motivations, organizational limits and embedded links into the broader social and political environment.

Firms are not always well prepared to manage these new relationships, however, and may find themselves participating in a range of governance structures, taking on social responsibility (which may or may not be their own), and fulfilling the duties usually expected of governments.

Challenges and risks for firms that participate in a PPP may stem from simply poor coordination and miscommunication, to more complex issues of trust, reputation, mismatched motivations, and competing performance criteria. Greater challenges to partnerships may stem from fluid or changing social and political environments within which partnerships form.

The INSEAD MBA course explores a broad range of challenges presented by PPPs and considers and examines potential strategies for managing these risks, emphasizing the concerns of business partners, in particular.

<em>Dr. Margaret Hanson, Adjunct Professor of Professor of Economics and Political Science at INSEAD, is a regular participant in conferences including the International Studies Association, the Amercian Political Science Association and the Academic Council on the United Nations System. Professor Hanson's current research examines organizations which challenge divisions between public and private interests and she currently teaches INSEAD's MBA PPP elective.</em>

INSEAD 2005

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