DISPOSICION DEROGATORIA.

6.3.6.1 University Supportiveness and Trust

The relationship between the public and private sectors on the Board of Directors reflected the support of the University for the strategic direction of the business school. The arrangements outlined in the Affiliation Agreement defined the division of responsibilities and roles of each organisation which demonstrated University support. Areas of support included programme arrangements and financial buffering through the provision of infrastructure including faculty and buildings. In its evolution the Business School relied less on the University for financial support and this would have contributed to its internal ‘socio-political legitimacy’ within the University.

6.3.6.2 Commitment to Competitiveness

The University held the view that the Business School must “…operate better like a

business …to be a corporation in many respects” (#1 Pub Director, Gerran). As such, it

was expected that it must be managed as a business without reliance on public funding. The company was seen as “…an institution which would be separate and distinct from

the normal administration of the University and an institution in which the business community could play a more effective role and a larger role in the decision-making process” (#1 Pub KOA, Gerran). The structure of the governance mechanism

established in this context retained the primacy of the University and accommodated private participation in the role of engaged stakeholders. The functioning of the PPP governance mechanism based on the structure and directors’ understanding of its purpose is explained in the sub-sections that follow. The first sub-section examines the social network of KOAs at Gerran.

6.3.6.3 Hierarchical Control and Trust among Actors

The social network of KOAs of Gerran Business School is presented in Figure 10. This network provided data with respect to the density of actor sub-groups in the professional network of KOAs. This data enabled the researcher to make inferences with respect to actor sub-group contribution to the school’s development. This network represents the professional social network of four of the nine KOAs who held these positions throughout the history of the school. The network includes the top four people

167

on the Board of Directors that respondents identified as providing significant professional support to them in the management of the School. Where respondents indicated more names, these were included in the network. Order of priority was not a factor in this network. The selection of KOAs was based on access and availability of persons to the researcher. The length of ties is not significant in this network and is used for convenience in the presentation of the data. All names are fictitious.

Figure 10: Social Network of KOAs - Gerran

The network includes seven people from the private sector, four people with public- private experience and four people from the University. The density of actor sub-group appears distributed and non-homophilous (McPherson et al., 2001; Lazarsfeld and Merton, 1954) and there is no indication that any KOA relied on the professional support of people based primarily on their sectoral experience. As such, it may be inferred that the flow of resources from alters in the network increased the social capital of KOAs and the performance of the network. In this network, KOAs were from all sectors and every KOA sought professional support from at least one other KOA, who in only one case belonged to the same sector. The professional support from other KOAs indicates the strength of the professional relationship between actors from within the University and a reliance of the PPP on hierarchy and control by authority within the University. This, however, did not appear to negatively influence the formation of relationships with private actors. In fact, the density of the private sector actors in the

168

networks indicates they were strongly engaged in the key decisions and direction of the school. This form of engagement appears to be explained by a resource-based view of the firm where the KOA draws resource support from the network to maximise the value of alliance partners (Gulati, 1999) and build competitive advantage (Barney, 1991; Barney et al., 2001). An alternative explanation of control and dominance by alliance partners within the small strategic network is contested by the assertion of one KOA who indicated that “…one of the things they definitely do is get out of the way

and allow me to manage, and I respect that a lot” (#1 Pub/Priv KOA, Gerran).

6.3.6.4 Primacy of the University System, Role Definition and Trust as Control Mechanisms

The new company form changed the roles and expectations of both the university and private sector actors. The way in which the new form of governance included elements of price, authority and trust, which are the ideal types of market, network and hierarchy (Bradach and Eccles, 1989), influenced its performance. Respondents were alert to this and considered the co-ordination of the new system:

“The decision certainly was taken at Gerran then to create a company, so the Gerran School of Business is a company as you know and there was then the need to a. to unambiguously identify the role and authority of the University in this the scheme of things and there was also a need to identify the role and authority of the private sector” (#1 Pub/ Priv Director, Gerran).

Having established roles within the legal framework, the PPP appeared to have functioned in a manner by which trust evolved.

Studies of alliances in all sectors have asserted that trust is important to the success of partnerships (e.g. Larson, 1992; Cross and Parker, 2004; Austin, 2000). In this case, respondents indicated that trust had to be developed and appeared to be facilitated by the control of the University through the non-reliance on private funding and control of appointments to the Board of Directors by the University. This structure is consistent with the conclusion that hierarchical mechanisms must co-exist with other forms of control in network governance (Eccles, 1985; Stinchcombe, 1985; Bradach and Eccles, 1989; Ingraham and Lynn, 2004) and contrasts with the finding of Rondinelli and London (2003) that mutually developed collaboration procedures are indicators of trust. In this case, the reputation and developmental trajectory of the PPP appeared to have

169

instilled trust from the private sector. In the context of scarce financial resources within the country, the search for financing depended more on the competency of private directors to source and manage funds and contributions, rather than the injection of their own funds. Working with the funds of a third party ensured that there was no issue of private control or domination and this appeared to engender trust of the private sector from the University actors.

6.3.6.5 Shared Control and Unity of the Corporate Body

Control of the new governance structure by the University created a culture of collaboration based on an overall appreciation of the value of stakeholder input and a governance form that was configured as a traditional university committee and designed to elicit stakeholder involvement and resource contribution. Moreover, the resource contribution expected from private sector actors was primarily their knowledge of the private sector in general and of their industries in particular, and what academic knowledge was necessary for their development. Additionally, private sector actors were expected to contribute to the development of the private sector through relationship building and advocacy, ensuring that the private sector was more receptive and placed greater value on university inputs to their businesses. This purpose was articulated by both the private and public sector actors and constituted a shared understanding that contributed to the perpetuation of the partnership.

Dodd (1932, p.1160) contested the ideas of a business executive, Owen D. Young, and claimed that:

“If the unity of the corporate body is real, then there is reality and not simply legal fiction in the proposition that the managers of the unit are fiduciaries for it and not merely for its individual members, that they are...trustees for an institution (with multiple constituents) rather than attorneys for the stockholders” (1932, p.1160; author's parentheses).

This statement was extended by (Donaldson and Preston, 1995) to include the phrase ‘with multiple constituents’ to accommodate the notions of shared responsibility in governance and the development of stakeholder theory. The findings of this study further extend the statement to account for the notion of shared purpose amongst stakeholders in PPP arrangements as follows:

“If the unity of the corporate body is real, then there is reality and not simply legal fiction in the proposition that the managers [and Directors]

170

of the unit are fiduciaries for it and not merely for its individual members, that they are...trustees for an institution [with multiple constituents]…[motivated by a shared, compelling purpose that reflects

the common good of society].” (Researcher’s italics).