Bundling cables or bundling efforts: Horizontal Collaboration in the Public Sector
Master’s Thesis Supply Chain Management, MSc University of Groningen, Faculty of Economics and Business
HILBERT OOST
Student number: S2068435 E-mail: hilbertoost@gmail.com
Supervisor, University of Groningen: Prof. Dr. Dirk Pieter van Donk
Co-Assessor, University of Groningen: Dr. Kirstin Scholten
2 Abstract
Horizontal collaboration has not been explored in the context of the public sector. Based upon drivers and barriers of horizontal collaboration in the private sector, this paper analyses how unique public sector characteristics affect horizontal collaboration in the underground utility infrastructure. Semi-structured interviews were conducted to collect data about the public service providers - active in the underground utility infrastructure – and their experiences in horizontal collaboration. The results show that horizontal collaboration is negatively affected by the influence of the public sector characteristics and a lack of collaboration mechanisms. The conclusion can be drawn that momentarily horizontal collaboration in the public sector encounters more barriers than drivers. Further research to generalize the findings and use the findings for a pilot study is recommended.
Keywords: Horizontal collaboration; Public Sector; Underground Utility Infrastructure
3
Contents
1. Introduction ... 4
2. Theoretical background ... 6
2.1 Horizontal Collaboration ... 6
2.2 Factors of Horizontal Collaboration in the Private Sector ... 6
2.3 Public Sector ... 11
2.4 Horizontal Collaboration factors in the Public Sector ... 14
3. Methodology ... 16
3.1 Defining the method ... 16
3.2 Research setting ... 16
3.3 Interviewee selection ... 17
3.4 Data collection ... 18
3.5 Data analysis ... 20
4. Findings ... 22
5. Discussion ... 32
6. Conclusion ... 34
7. References ... 36
8. Appendices ... 40
Appendix I: Interview protocol ... 40
4 1. Introduction
Over the next ten years there will be a large need for renewal and maintenance of the underground infrastructure in Dutch cities (Vos & Glerum, 2012). The public service providers in the underground infrastructure are independently renewing and maintaining the cables and pipelines, while in the underground infrastructure - with a market size of €1.8 billion (EIB, 2016) – 3.7% savings can be achieved when water providers and gas operators renew and maintain together (COB, 2014). If more public service providers join in collaboration, the savings are even higher. Not only from an economic perspective should public service providers collaborate, but also from a social perspective to minimize the city disturbance in terms of hindrance regarding travel times of citizens, goods delivery and revenues of shops (SEO, 2007). However, as the underground infrastructure is part of the public sector, collaboration and especially horizontal collaboration might be difficult or even impossible to achieve due to the unique characteristics of the public sector (Boyne, 2002).
In my research, no literature was found linking the public sector to horizontal collaboration. In addition, literature on horizontal collaboration itself is limited as well.
There are articles that touch upon what horizontal collaboration is (Barratt, 2004;
Pomponi, Fratocchi, & Tafuri, 2015), but mostly it refers to vertical collaboration (Cao &
Zhang, 2011). Currently, horizontal collaboration is grounded in literature in logistics, retail and industrial literature (Reniers, Dullaert, & Visser, 2010; Rodrigues, Harris, &
Mason, 2015). Based on the framework of Reniers et al. (2010), the factors that enable horizontal collaboration are identified and structured according to soft, hard, and independent factors.
Horizontal collaboration is about two or more unrelated or competing organizations, notwithstanding whether they are similar or different in terms of size, at parallel supply chains, which cooperate to share synergistic activities (Pomponi et al., 2015). In the context of the public sector and especially the underground utility infrastructure, collaborative activities could be, inter alia, knowledge sharing, resource sharing or joint planning between public service providers.
Although research on horizontal collaboration has been focused solely on the private
sector, it can be expected that it is applicable in the public sector as well. However,
5 momentarily it is not understood yet what the influence of the public sector is on the factors that lead to horizontal collaboration. Also, it is not known if there are other factors influencing horizontal collaboration in the context of the public sector. Findings in the private sector literature are not always directly transferrable to the public sector (Radnor & Osborne, 2013). Therefore, the unique characteristics of the public sector are identified in order to research the effect on horizontal collaboration (Berman 1998 IN Karwan & Markland, 2006; Boyne, 2002). The contribution of this study is to investigate if the factors identified in the private sector can be applied in the public sector as well.
More specifically, within the underground utility infrastructure. If that is the case, which factors can be applied and how? Furthermore, this research might contribute in the exploration of even new factors affecting horizontal collaboration in the public sector.
Therefore, the following research question is proposed:
How do public sector characteristics affect horizontal collaboration within the underground utility infrastructure?
Because of its explorative nature, semi-structured interviews are conducted in cooperation with public service providers. Besides the theoretical contribution of linking the public sector to horizontal collaboration, and in doing so providing details on drivers and barriers of horizontal collaboration, the practical contribution is to advance sustainable (collaborative) public services and management practices. As the insights gathered help to enable managers to understand and to engage in horizontal collaboration.
The structure of the paper is as follows. Chapter two will present the theoretical
background and includes the conceptual model, chapter three will describe the chosen
methodology, chapter four the findings, chapter five the discussion, after which the final
chapter six is the conclusion.
6 2. Theoretical background
The first step in the theoretical background is to define horizontal collaboration and which aspects of horizontal collaboration are stated in literature that are expected to play a role. After which, the factors that are proven to influence horizontal collaboration in the private sector are identified. Then, factors of the public sector are identified that might affect horizontal collaboration, which results in a conceptual horizontal collaboration model for the public sector.
2.1 Horizontal Collaboration
Horizontal collaboration is defined as “two or more independent companies work jointly to plan and execute supply chain operations with greater success than when acting in isolation” (Simatupang & Sridharan, 2002, p.19). It is a general definition, which should not be confused with vertical collaboration. Vertical collaboration involves supplier, buyer and/or customer; whereas, horizontal collaboration involves organizations between different chains. The organizations can be both competitors or non-competitors (Barratt, 2004). While literature on horizontal collaboration does not state how to achieve horizontal collaboration in the public sector, key elements can be derived.
Horizontal collaboration could be achieved by means of a combined planning of operations, sharing of resources, and sharing of knowledge (Cheng, Yeh, & Tu, 2008;
Cruijssen, Cools, & Dullaert, 2007; Rodrigues et al., 2015). Literature on more specific factors of horizontal collaboration to better understand its applicability to the public service providers, however, is lacking.
2.2 Factors of Horizontal Collaboration in the Private Sector
The factors that play a role in stable horizontal collaboration in the private sector are
explored in literature. The first step is to structure the factors according to the
framework of Reniers et al. (2010). Based on their nature, a distinction is made between
soft, hard, and independent factors. Soft factors are non-rational, cultural, social, non-
measurable, and abstract; whereas, hard factors are considered rational, calculative,
concrete and tangible. The features that cannot be classified into hard or soft factors are
independent factors. The factors of table 1 are presented individually; nevertheless, they
are linked and form the antecedents for horizontal collaboration in the private sector
based on organizational theories and general management literature (Reniers et al.,
7 2010; Rodrigues et al., 2015). Building upon the framework of Reniers et al. (2010), horizontal collaboration is not driven by hard factors only, which focuses on operational collaboration goals. It includes soft and independent factors that can lead to more sustainable service providers (Lozano, 2008).
Table 1: Soft, hard, and independent factors that influence horizontal collaboration (Reniers et al., 2010; Rodrigues et al., 2015)
Reniers et al. (2010) Rodriguez et al. (2015)
Soft factors Trust among partners
Openness between companies Cultural fit between companies
Trust among partners
Hard factors External knowledge Necessary investments
Legal framework
Effective commercial model Capable 3PL/4PL orchestrator Independent
factors
External flexibility Level of
supplementary/complementarity External innovation potential
Level of
supplementary/complementarity
Soft factors
The first soft factor in horizontal collaboration is trust. Trust among partners refers to
the degree that companies rely on each other. According to Child et al. (2005), high
levels of trust often enable high levels of collaboration. However, a high level of trust is
not simply imposed. Building trust has to evolve through a number of stages (Child,
Faulkner, & Tallman, 2005), and thus, the establishment of effective relationships takes
time. The first stage is about the willingness to collaborate. If willingness is present, the
stakeholders should ‘get to know’ each other. A mutual understanding then leads to a
basis for structural collaboration (Child et al., 2005). This is confirmed by the study of
Pomponi et al. (2015), who argue that it is unlikely that two or more firms reach an
agreement to collaborate on a tactical or strategic level without previous satisfying
operational experiences (Pomponi et al., 2015). If trust between partners is established,
the willingness to share information should increase, which is why managers consider
trust essential for collaboration (Child et al., 2005). Barrat (2004) confirms the necessity
8 of trust by arguing that a lack of trust is one of the main reasons for collaboration failures. Even though trust is important managers cannot misuse their power through forcing collaboration, because that leads to friction among partners (Kampstra, Ashayeri, & Gattorna, 2006).
The second soft factor in horizontal collaboration is openness between companies. The collaborating stakeholders need to be transparent in their communication, and measurability of costs, benefits and risks (Reniers et al., 2010). In comparison to other ways of collaboration, horizontal collaboration has a higher risk of opportunism and conflicts as partnering firms are competing for the same customer (Wallenburg & Raue, 2011). With the availability of new communication tools it is possible to achieve more openness without large investments (Gulati & Kletter, 2005).
The third soft factor in horizontal collaboration is cultural fit. Cultural fit refers to the degree of affinity with potential partners (Reniers et al., 2010). The higher the cultural fit, the easier it is to set up collaboration initiatives (Reniers et al., 2010). Already in 2006, Kampstra et al. mentioned a lack of focus on cultural aspects within supply chain collaboration (Kampstra et al., 2006). Without a proper cultural fit, there is a relatively high chance on collaboration failure (Child et al., 2005). As Child et al. (2005, p. 13) put it: “cooperation is likely to be easier between people who have the same cultural norms … this establishes a common cognitive frame and promotes a sense of common social identity that has a strong emotional element”. However, even if there is a lack in cultural fit, a common strategic driver can overcome the differences. Finding an incentive to work on cultural differences to reduce the chance on conflicts (Reniers et al., 2010).
As Child (2005) argues, the development of the first soft factor trust depends on the
third soft factor cultural fit. Between the mutual understanding and actual collaboration,
often a high cultural distance results in operational problems that hamper the
collaboration. Not only does trust depend on cultural fit, but also on the openness
between partners (Pomponi et al., 2015). As mentioned before, trust is an important
factor in horizontal collaboration. To keep increasing the level of trust, stakeholders
need to continuously interact, broader each other’s knowledge regarding the activities
(Pomponi et al., 2015). Thus, the three factors are interrelated.
9 Hard factors
The first hard factor in horizontal collaboration is external knowledge, which refers to the possibility of knowledge flows between stakeholders. As pointed out already by Hagedoorn et al. (2000) in the industrial organization literature, external knowledge flows and the corresponding technological spillovers can lead to long-lasting collaborative partnerships. To share knowledge a system should be in place that enables technological information exchange (Hagedoorn et al., 2000). In a more general way, this is confirmed by the study of Gulati and Kletter (2005, p. 95), who argue: ‘information technology standards must now be agreed upon and embedded in the processes of all participants to create the electronically linked, real-time information-sharing network’.
These information sharing systems are needed to enable interpretation of information and use it to develop a competence or new technology (Garavelli, Gorgoglione, & Scozzi, 2002).
The second hard factor in horizontal collaboration is the necessary level of investment.
The paper of Reniers et al. (2010) shows that in the chemical industry, there must be a certain willingness among the stakeholders to come up with the necessary (large) investments for collaboration. Investments in collaboration means investments in facilitating IT systems, labor hours and expertise and/or technology (Nyaga, Whipple, &
Lynch, 2010). However, it is not guaranteed that large investments on collaboration lead to the achievement of a company’s individual objectives (Ramanathan, 2014).
Ramanathan (2014) reveals that independently it does not contribute to an improved collaboration. Nevertheless, in case of vertical collaboration it is proven that asset specific investments do lead to an increase in trust and commitments (Nyaga et al., 2010).
The third hard factor in horizontal collaboration is a supportive legal framework, which should be in place to engage in horizontal collaboration. Rodriguez et al. (2015) provide an example of two companies who were fined by the government for collaborating with other companies for environmental-friendly purposes. Due to the UK Fair Competition Act, both firms were violating the antitrust laws.
The fourth hard factor in horizontal collaboration is an effective commercial model. In
order to develop a sustainable collaborative arrangement an effective commercial model
10 including a fair cost-risk sharing mechanism is important, because the stakeholders want to know the risks they are taking and costs they are suffering (Rodrigues et al., 2015). The challenge is to provide a fair cost/benefit analysis and divide the return on investments (Gulati & Kletter, 2005).
The fifth hard factor in horizontal collaboration is a capable 3PL provider or a 4PL orchestrator. In the retail sector 3PL providers or 4PL orchestrators are important in order to manage logistic processes between suppliers, retailers and customers (Rodrigues et al., 2015). For instance, the sharing of trucks that deliver the products for retailers to grocery stores. Sharing trucks results in a lower number of total trucks needed, which leads to a decrease in costs, pollution and traffic and can be beneficial for all stakeholders (Rodrigues et al., 2015).
Independent factors
The first independent factor in horizontal collaboration is the external flexibility.
External flexibility refers to the willingness and the capability of a stakeholder to change some of its activities in order to optimize the collaboration (Reniers et al., 2010).
Examples of such flexibility are the ability to postpone activities or flexible labor to meet unexpected peaks in demand (Björnfot & Torjussen, 2012).
The second independent factor in horizontal collaboration is the degree of supplementary/complementarity, which is about similarity or the degree of overlap in activities of the companies (Reniers et al., 2010). An aspect exemplifying that, which comes from a logistics perspective, is a common supplier and delivery base (Rodrigues et al., 2015). An increasingly complex supply chain network leads to higher costs of supply chain management (Rodrigues et al., 2015). Thus, any activity that can simplify the supply chain network drives collaborative relationships.
The third independent factor in horizontal collaboration is the innovation potential (Reniers et al., 2010). Depending on the partners, the potential for innovation can be high. However, it might be that one of the partners benefits more than the others from innovation. For firm managers this has implications for designing a strategy and thus it could be important to be aware of this before engaging in horizontal collaboration (Alm
& Mckelvey, 2000).
11 All factors discussed are depicted in a model of the private sector regarding horizontal collaboration (see figure 1).
Figure 1: Factors proven to be valid regarding horizontal collaboration in the private sector (Reniers et al., 2010;
Rodrigues et al., 2015)
2.3 Public Sector
The public sector consists out of public service providers. Public service providers arrange “a service or set of services provided to citizens directly through a public sector body or through financing of provision by private sector, third sector or voluntary organizations” (Radnor & Bateman, 2015, p. 1). The public sector is characterized by three factors; namely, ownership, funding and control (Boyne, 2002).
The first characteristic of the public sector is ownership. Public ownership means that
the firm is limited by political constraints opposed by; for instance, a municipality
(Damanpour & Schneider, 2009). All value that is created or assets owned is controlled
by the government. The way of operating with respect to accountability, employees and
use of resources is unique (Petrovsky, James, & Boyne, 2014). In the private sector, the
incentives of the owners and shareholders are more profit related. The interest of the
12 owners and shareholders is in maximizing the return on investment and outperforming their competitors. In the case of the public sector, interest is more focused on the benefits for the society. Notwithstanding the fact that simultaneously keeping costs as low as possible remains important. As is confirmed by the recent pressures on public expenditures (Radnor, Holweg, & Waring, 2012). In the case of the private sector, managers are chosen by the shareholders to serve their interests. In contrast with the public sector, where managers are accountable to the (local, regional or national) government, but also to stakeholders whose interest might not be financial but social (Ellwood & Garcia-Lacalle, 2016). Therefore, most managers in the public sector are more aware of the non-financial aspects (Ellwood & Garcia-Lacalle, 2016). A lack of awareness of non-financial aspects makes improvements in organizational performance more difficult, because of different goals and values than private organizations (Petrovsky et al., 2014). Furthermore, due to public ownership the public scrutiny is high. Information need to be accessible to hold public bodies accountable; therefore, managers should consider every document a public document (Radnor & Noke, 2013).
The public ownership also lead to unique procurement practices, because practitioners are directed in their activities by legal frameworks and an emphasis is on accountability and transparency; whereas, in the private sector the firms are governed by boards of directors and business models (Ambe & Badenhorst-weiss, 2011).
The second public sector characteristic is the funding of organizations, which receive funds from a municipality, government or citizens (who are obliged to pay bills/tax for using a public service such as drinking water). In contrast with the private sector, where revenues are obtained from markets (Petrovsky et al., 2014). For most of the departments of a public service provider the budgets are relatively fixed and determined per year (Radnor & Noke, 2013). A budget that is determined every year, could lead to a short-term focus. If departments do not use their budget, the next year it could be reduced. On the other hand, because control on budgets is high the ability to increase budgets is limited (Radnor & Noke, 2013). As Ambe and Badenhorst-Weiss (2011) state, in the public sector context, the revenue side of a budget is mostly given, which leads to a focus on efficiency and effectiveness. As it is true that the revenue side of a budget is mostly given, it seems that the performance measure equity plays a role as well (Karwan
& Markland, 2006; Radnor & Noke, 2013).
13 The third public sector characteristic is control. Control stands for the extent to which politicians use their authority to constrain policies and practices of managers (Petrovsky et al., 2014). This especially influences the alignment (Hazlett, McAdam, & Walker, 2012). The managers are not independently managing the organization. Due to the ability of politicians to intervene there are multiple sources of authority. As a result, sometimes the political control overtakes the economic control to serve the political agenda (Boyne, 2002), which in turn could lead to an increase in conflicts (Petrovsky et al., 2014). An increase in conflicts limits the decision-making process. Furthermore, part of control is monitoring of the public service providers, which leads to more bureaucracy (Hefetz & Warner, 2004). As Scar (2000, IN Hefetz & Warner, 2004) points out, monitoring hampers the ability of organizations to adapt to a changing environment.
Based on preliminary research, another element that is included is the performance measures that the different stakeholders within the underground utility infrastructure value. It seems that the performance measures are affecting horizontal collaboration.
The difference in importance of outcome measures between public organizations, nonprofit organizations and for-profit organizations is exemplified in figure 2 (Berman, 1998 IN Karwan & Markland, 2006). Where equity means providing the required services for all citizens or equal access to those who need specific services. Effectiveness stands for the usefulness of something, and efficiency refers to how well something is done.
Figure 2: The importance of outcome measures (Berman, 1998 IN Karwan & Markland, 2006)
14 2.4 Horizontal Collaboration factors in the Public Sector
Given the current literature, no relevant research paper is found regarding horizontal collaboration in the public sector. Therefore, the factors that are identified regarding horizontal collaboration in the private sector are used to explore their applicability in the public sector.
Because literature shows that findings in the private sector are not always directly transferable to the public sector (Radnor & Osborne, 2013), the factors that are proven to drive horizontal collaboration in the private sector are tested in the public sector context. The public sector context has been defined based on the factors ownership, funding, control and performance measures. As a result, some factors might disappear or change and some new factors might be explored that drive or hamper horizontal collaboration.
In addition, Reniers et al. (2010) categorize all factors that are not soft or hard into independent factors. However, it is not explained why it is mentioned ‘independent’
factors. External flexibility, level of supplementary/complementarity and external innovation potential are not ‘independent’ factors. Since it is not essential for this research, this paper goes beyond the question how to categorize the factors; but instead,
‘independent factors’ is changed into ‘other factors’. All of the above results in the
following conceptual model (see figure 3):
15
Figure 3: The conceptual model
16 3. Methodology
3.1 Defining the method
The underground infrastructure maintenance and renewal is topical, and horizontal collaboration that can improve the processes is relatively unexplored in literature. Semi- structured interviews are chosen as method, because it results in rich data that generates meaningful and relevant theory (Gill, Stewart, Treasure, & Chadwick, 2008).
Exploratory research is needed to allow for answering the ‘how’ research question with a relatively full understanding of the nature and the complexity of horizontal collaboration in the public sector (Gill et al., 2008). To gather data, the interviews are conducted with experts in the underground utility infrastructure business. In addition, it offers the flexibility to research known factors from the private sector and explore new factors. Both the broader topic of public sector supply chain management, as the linkage between horizontal collaboration and public service providers remains relatively unexplored; therefore, a qualitative study fits well with the objective. The unit of analysis is horizontal collaboration between several public service providers on an organizational level.
3.2 Research setting
Availability and accessibility of roads and city centers serves goods delivery, public transportation and ambulance services. A disturbance in the availability or accessibility affects the travel time of citizens, goods delivery, revenues of shops etc. (SEO, 2007).
Part of these disturbances is rehabilitation of the underground utility infrastructure in
the Netherlands, which is the setting of this research. The underground utility
infrastructure sector consists out of stakeholders; such as, the municipality, the water
provider, telecom provider and the network operator (for electricity and gas). The
municipality is a governmental body, the water provider and network operator are
nonprofit organizations, and the telecom provider is a for-profit organization. These
stakeholders of the underground utility infrastructure independently engage in renewal
and maintenance activities. As a result, roads might be opened more than once in a short
period of time. Especially over the next twenty years, because many cables and pipelines
were put underground right after the second world war and are deteriorating due to
aging and inadequate management (Koo et al., 2009), which leads to a large amount of
17 rehabilitation projects. A complicating factor in this setting is that the different public service providers must comply with different legal frameworks and regulations; such as, the Drinking Water Act, Telecommunication Act, Independent Network Operator Act (Government, 1998, 2006, 2009).
3.3 Interviewee selection
For selecting the interviewees, besides the willingness of the interviewee to share
information of the organization, there are certain criteria adopted to ensure that useful
information is gathered during the interviews. Interviewees needed to work for one of
the stakeholders in the underground utility infrastructure. Also, the interviewee needed
to work in relation to maintenance and renewal, and preferably had taken part in
workshops about horizontal collaboration. Furthermore, the interviewee had to be in a
position within the firm with a form of authority to make decisions. It was important
that the interviewee knew the effects and issues with respect to managerial decisions. In
total, potential interviewees of three municipalities, eight public service providers and
one consultant have been approached. The final result was a total amount of seven
interviews with one municipality, five different public service providers and one
consultant, which is depicted in table 2. Four public service providers are water
providers, which enables us to take their perspective on horizontal collaboration as a
starting point, while still including the views of other stakeholders. Further research
should extent the number of other stakeholders involved. Except for the consultant, the
interviews followed a protocol (Appendix I) and the duration of most of the interviews
has been between 44 and 60 minutes.
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Table 2: The interviewees and corresponding position and duration
Type of service Position interviewee Duration of interview
Water provider A
Lead manager responsible for strategic aspects of rehabilitation and placement of underground water pipelines.
44 minutes
Water provider B Team leader asset management responsible
for development of rehabilitation strategies. 45 minutes Water provider C Advisor drinking water provision
responsible for research and advice. 45 minutes
Water provider D
Team leader responsible for
rehabilitation/repositioning of underground infrastructure in several municipalities / Project leader responsible for
rehabilitation/repositioning underground infrastructure projects
54 minutes (two
interviewees)
Municipality A
Management coordinator responsible for the coordination between disciplines; such as, sewerage, public spaces, roads, lighting, trees.
36 minutes
Electricity and gas operator A
Team leader responsible for rehabilitation
gas connections projects. 59 minutes
Consultant Consultant specialized in facilitating IT systems for the underground infrastructure.
27 minutes (unstructured)
3.4 Data collection
This research applied two methods to derive data from the underground utility
infrastructure sector; namely, semi-structured interviews and the analysis of documents
to ensure data triangulation. Both methods are part of the research protocol. The
interview protocol has been developed based on literature. The questions were aimed to
reflect the variables of horizontal collaboration within the public sector. Every interview
followed a procedure. The questions were sent to the interviewee in advance. Right
before the beginning of the interview the general outline was presented. In this way, the
19 interviewee was well-prepared and could indicate any problems with the questions.
None of the interviewees encountered any problems, and before starting the interviews a consent form was signed. Thereafter, the interview started and the questions can be found in Appendix I. The interviews were organized in a semi-structured way in order for the researcher to follow a guideline, but at the same time skip questions or ask for elaboration when deemed necessary. To be able to perform a proper analysis of the data all interviews were recorded. Furthermore, to familiarize with the organizations secondary data was obtained, mostly from the internet. Data was collected between December 2016 and January 2017.
The validity and reliability is maintained through developing a protocol based on literature (Eisenhardt, 1989; Miles & Huberman, 1994). Since only one researcher has done the interviews, an emphasis has been put on a careful transcription of the interviews. Moreover, transcripts of the interviews were sent back to the interviewee to prevent misinterpretations, and thus increase validity. The audio files have been deleted when the transcription was approved or when two weeks had passed without response.
Only minor changes have been made to clarify certain issues to the transcript by the
interviewees. See table 3 for an outline of the quality criteria of data gathering.
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Table 3: Outline of quality criteria
Quality criteria How?
Construct validity Use of 7 semi-structured interviews and additional documents as sources to ensure triangulation and obtain multiple sources of evidence. In addition, the interview transcripts were sent to the interviewees for verification.
Internal validity The transcription of the interviews has been done verbatim. In addition, in the discussion section, the findings have been partially confirmed by literature from a different context.
External validity Use of existing theory about horizontal collaboration and the public sector as foundation for this research. Also, the interviewees worked for public service providers in different parts of the
Netherlands. Multiple contexts are taken into account.
Reliability Use of clear protocols for the semi- structured interviews to enable other researchers to repeat the work in a
correct way to obtain the same results. As elaborated on in the data analysis section.
3.5 Data analysis
Based on the method of Miles and Huberman (1994), the first step was systematically reducing the obtained data. The transcripts were carefully read and segments coded according to the conceptual model. As the stakeholders are not active in the same region, pattern matching is achieved by comparing the results per variable. Thereafter, collaboration mechanisms and relationships were identified and flowcharts created as shown in the findings section.
A detailed example of the coding is given in table 4. The data was reduced by assigning
quotes to the four independent variables of the public sector and to the eleven
dependent variables of horizontal collaboration. After which they were ordered in Excel
to provide an overview of the quotes and by whom they were mentioned. This enabled
21 the identification of certain collaboration mechanisms that formed the link between public sector factors and horizontal collaboration factors. If mechanisms were identified that could not be related to both the public sector and horizontal collaboration, the mechanisms were left out, because it would not contribute to answering the research question.
Table 4: Example of coding
Quotes First order
concepts
Second order themes
Aggregate dimensions
“some parties – often telecommunication companies - cannot be trusted in fulfilling their commitments” [water provider D]
“meetings about long-term planning are preferred to take place without the telecom providers” [water provider C]
Trust among partners
Absence of joint vision
Horizontal collaboration
“Both privatization of telecom providers and short-term focus of municipalities due to changing city councils every four years impacts focus of organizations” [water provider A]
“Social responsibility has high priority at our organization which leads to different considerations compared to organizations focused on profit-maximization.” [water provider B]
“A telecommunication provider has a different mind-set” [municipality]
“With the mindset of our nonprofit
organization, sometimes we do something that is not necessary for our own project but for the sake of society. That is something that a telecom provider does not have.”
[water provider D]
Cultural fit
“It means that we have different
considerations than other organization, who have a for-profit mindset.” [water provider B]
“The telecom providers are not focused on infrastructure. They are in a competitive market and have strong competition.”
[water provider A]
“A telecom provider has a more profit- maximizing approach.” [water provider D]
“It works easiest with a network operator and water provider, because the telecom providers respond only to the market.”
[municipality]
Performance
measures
22 4. Findings
The findings show recurring aspects that affect horizontal collaboration in the public sector context. In order to achieve horizontal collaboration, the interviewees indicate a lack of certain collaboration mechanisms. This section depicts the different collaboration mechanisms per factor in accordance with the conceptual model. After which, a horizontal collaboration model is developed. Table 5 gives an overview of the recurring themes and the related horizontal collaboration factors.
Table 5: Collaboration mechanisms and the related horizontal collaboration factors
Mechanism Related factor(s)
Absence of supply chain leader Openness between partners External knowledge
Level of supplementary/complementarity Capable 3PL/4PL orchestrator
External innovation potential Absence of a joint vision Trust among partners
Cultural fit
External flexibility Complexity of regulated roles/tasks Legal framework
Joint IT system Level of supplementary/complementarity
In addition, table 6 depicts if the horizontal collaboration factors are currently a
facilitator or a barrier towards horizontal collaboration. Even though the underground
utility infrastructure is influenced by many factors, some factors are more dominant
than others. An attempt is made to depict this in table 6, the negative responses are
deducted from the positive responses. Also, if a stakeholder did not discuss a factor, it is
assumed not to be one of the most influencing factors for them. Therefore, the factor is
then neither deducted or added in the summation. The results show that the factors
cultural fit, third party orchestrator, external flexibility and the level of
supplementary/complementarity are mentioned most as influencing factors.
23
Table 6: Factors influencing horizontal collaboration in public sector
Facilitator Barrier Sum
Trust among partners WP B – D and M -3
Openness between partners WP A – D, M 5
Cultural fit WP A – D, NO and M -6
External knowledge WP A – D M and NO 2
Necessary investments WP B – D WP A and M 1
Legal framework WP C and D, NO and
M
-4
Effective commercial model WP C WP D, NO and M -2
Third party orchestrator WP A – D, NO and M -6
External flexibility WP A – D, NO and M -6
Level of
supplementary/complementarity
WP A – D, NO and M -6 External innovation WP B and C, and
NO
3 WP=Water Provider, NO=Network Operator, M=Municipality, A-D: Letters assigned to water providers corresponding to table 2.; stakeholder not mentioned means no finding;
sum=sum of interviewees considering a factor a facilitator or barrier.
Trust among partners
Except for one water provider and the network operator, who did not mention trust as a factor of influence regarding horizontal collaboration; all interviewees indicated a lack of trust as a barrier in horizontal collaboration. Stakeholders especially distrust telecom providers, because they do not fulfill their commitments or do not provide information.
The lack of trust is due to an absence of a joint vision or goal about horizontal collaboration. The absence of a joint vision is caused, inter alia, by the privatization of the telecom sector. Currently, telecom providers are for-profit organizations and that shifts their valuation of performance measurements from equity and effectiveness towards efficiency. Thus, the decision-making changes. Therefore, the lack of trust is a barrier in horizontal collaboration.
Openness between partners
As shown in table 6, all stakeholders are willing to be transparent towards each other.
Interviewees indicated that no hidden agendas, living up to agreements, tuning and
mutual understanding is the key to successful horizontal collaboration. Currently, the
willingness to be open between partners is not utilized yet. A reason for unutilized
openness between partners is the absence of a supply chain leader, who can coordinate
24 and stimulate horizontal collaboration. According to the interviewees, the initiator should be the municipality or a group of small municipalities. The need for a supply chain leader can be linked to the public ownership within the public sector. Due to the public ownership of most of the public service providers, there is no competition between the organizations. No competition leads to a lack in incentives to maximize efforts to achieve more efficiency. In conclusion, openness between partners is not a barrier towards horizontal collaboration; however, due to the absence of a supply chain leader the possibilities are not utilized yet.
Cultural fit
The interviewees indicate that there are cultural distances between the different stakeholders. One water provider mentions a cultural difference between municipality and the other stakeholders, due to the impact of changing city councils every four years.
But, the main point is that there is a difference in culture between the telecom provider and all the other stakeholders, which is confirmed by all stakeholders. As well as for the factor trust, as for cultural fit the absence of a joint vision makes it difficult to align the differences. The reason for a lack of joint vision is the privatization of the telecom sector.
The difference in valuation of the performance measures makes telecom providers not committing to horizontal collaboration agreements. The commercial interest prevails and thus the lack of cultural fit hampers horizontal collaboration.
External knowledge
As our findings show, external knowledge flows on the status of the underground infrastructure are limited. All stakeholders are willing to share knowledge; however, a municipality is not capable because it does not have the budget or expertise and a network operator is still in the dark about the energy transition that affects the need to rehabilitate gas pipelines, which also limits the capability of planning ahead (see table 7).
Table 7: External knowledge flows: willing versus capable
External knowledge flows
Willing to share All stakeholders
Capable to share Water providers
25 The willingness is not a barrier, but the incapability of municipalities and network operators is. The absence of a supply chain leader results in a lack of initiatives to set up joint research programs, and stimulate a national joint information and planning system.
Comparable to the factor openness between partners, an absence of a supply chain leader negatively affects horizontal collaboration. The interviewees indicate that there is a positive change in attitude towards collaboration, because of pressure of the society and government. However, structural horizontal collaboration requires a dominant organization to effectively channel the pressure for efficiency. As public ownership often lead to less efficient performance, due to a lack of competition.
Necessary investments
Regarding the necessary investments, there are two kinds of investments identified. The first form of investments is tangible. According to the stakeholders, no large investments are needed, only investments in labor hours and a small investment in the development of facilitating IT systems. The second form of investment is the investment in the relationship. This is the willingness to replace a pipeline that could lay in the ground for another 3 years, but for the sake of collaboration is still replaced. The limited amount of investments needed is considered a stimulating factor in horizontal collaboration;
however, the possible unwillingness to replace pipelines earlier makes it difficult to indicate if necessary investments are a barrier or a driver to horizontal collaboration. In addition, based on the interviews no links could be identified between the public sector characteristics and the positive or negative influence on horizontal collaboration.
Legal framework
On the one hand, the results show that the legal framework hampers horizontal
collaboration. Not as with a competitive market such as the chemical industry regarding
violating antitrust laws; however, in this case it is about the complexity of the
regulated tasks and roles of stakeholders. As mentioned in the methodology section,
every stakeholder must comply to different laws and regulations. Not only changed the
privatization the focus of telecom providers from nonprofit to for-profit, but also
regulations about which stakeholder is allowed or not to access the underground
infrastructure. Currently, a municipality can deny access to a water provider, but not to a
network operator or a telecom provider. In addition, a network operator must comply to
regulation that demands replacement of old steel pipelines before 2023. The complexity
26 of the regulated tasks and roles is caused by the public control of (local) government, which attempts to assign clear boundaries and responsibilities to the public service providers. In addition, water provider D expressed that “the licensing authority of the municipality imposes rules; however, his own colleagues of a different department are not complying”. This implies that there is a legal framework; however, noncompliance of the municipality remains without consequences. Thus, stakeholders have different incentives and the municipality has a powerful position concerning noncompliance, which lead to less common ground to engage in horizontal collaboration.
On the other hand, municipalities are increasingly developing regulations about excavation rest. If a stakeholder proposes rehabilitation activities within a certain area and other stakeholders do not want to join, a municipality demands an excavation rest for the next five to ten years. This policy forces stakeholders to engage in joint planning and focus more on horizontal collaboration.
The interviewees express that the current legal framework leads to different incentives of stakeholders, leads to unpunished noncompliance of a municipality and the excavation rest policy is not structural yet. Therefore, it is concluded that the absence of a plain and simple legal framework is a barrier in horizontal collaboration.
Effective commercial model
For organizations to engage in horizontal collaboration, the risks, costs and benefits need to be clear. The water provider that provides drinking water in the province Limburg states that the roles and responsibilities for water providers and network operators are written down in an ‘Agreement Municipality Public Service Providers’ as part of Synfra
1, which also contains price agreements. However, the rest of the interviewees from other regions indicated that contract management is still in an immature stage regarding horizontal collaboration. In addition, it must be noted that the aforementioned agreement is excluding sewerage and telecom cables. Based on the findings, no direct influence of the public sector on this factor of horizontal collaboration is found. Nevertheless, the absence of an effective commercial model in most of the regions of the Netherlands does hamper horizontal collaboration.
1 http://www.synfra.nl/Portals/0/20120823%20ogn-internet_1.pdf
27 Capable 3PL / 4PL orchestrator
As expected, a 3PL or 4PL provider is not relevant, because the focus is not on logistics.
However, a supply chain leader is mentioned as very relevant, because an overarching body can initiate structural collaboration. Since a supply chain leader is strongly influencing other factors of horizontal collaboration as well, this research identifies the absence of a supply chain leader as a missing mechanism that is needed in horizontal collaboration within the public sector. This is confirmed by new build projects that are successfully coordinated by overarching third parties; such as, Synfra and NONed
2. As mentioned in previous sections about openness and external knowledge flows, public ownership leads to a lack in incentives to maximize efficiency. The absence of a supply chain leader that can stimulate necessary developments hampers horizontal collaboration.
External flexibility
All interviewees state that they are willing to adapt their plans to increase horizontal collaboration. However, it is also stated by two water providers and the network provider that adapting the short-term planning is no longer doable (see table 8).
Therefore, they argue that a focus should be on joint long-term planning. Unfortunately, this goal is not shared by the politicians yet. Politicians have the urge to prioritize their own agenda and plans are often made for the duration of a city council. Due to the public control of the politicians, the public service providers need to adapt their short-term plans. One municipality that requests a change is manageable; however, the problem is to manage small requests from 33 municipalities. In addition, public funding leads to a short-term focus as well, because water provider B states: ‘Due to fixed budgets that are determined per year, I have little room for changes.” The same holds for the municipality.
Therefore, the public control of politicians and public funding result in an absence of a joint vision and difficulties in adjusting the planning on the short term. Since stakeholders are not capable of adjusting on the short term, the lack of external flexibility is a barrier in horizontal collaboration.
2 www.noned.nl
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Table 8: External flexibility: willing versus capable
External Flexibility
Facilitator Barrier
Willing to adapt WP A – D, NO and M
Capable to adapt* WP A – D, NO and M
*Not capable on a short-term perspective, which is demanded by politicians.
Level of supplementary/complementarity
In new build projects, one contractor can perform the construction of the underground infrastructure. The interviewees agree that in the case of renewal of the underground infrastructure, this is possible as well. Even though, the different cables and pipelines require a different set of skills of the employees and renewal of a sewer requires
“heavier excavators” [water provider C]. New build projects arrange the contractors via an overarching organization, which again leads to the absence of a supply chain leader within rehabilitation projects as a reason that certain possibilities are not utilized yet.
Although there are collaboration initiatives on an operational level, there are no structural horizontal collaboration initiatives with only one contractor yet. As with openness between partners as the external knowledge flows, public ownership results in a lack of competition. Therefore, public service providers are not forced to consider new ways of operating.
In addition, the current absence of a joint IT system results in limited complementarity between the stakeholders and has a negative effect on horizontal collaboration.
Although water provider A argued that it could be done without a modern IT system, the
other interviewees agreed that a standard IT system facilitates and improves
collaboration. The first developments are there, Synfra initiated the development of
coupling different IT systems. The different stakeholders need to process their data only
once and can work with their own system, while the data is still shared with the other
stakeholders. However, as water provider C states “not all municipalities have a budget
for developing joint information systems”. Public funding leads to fixed budgets that are
determined per year and result in a short-term focus. As long as the focus is short-term,
the added value of a joint IT system is not recognized by some municipalities and water
provider A. Thus, the limited utilization of complementarity opportunities hamper
horizontal collaboration.
29 External innovation potential
Regarding the innovation potential, only the network operator mentioned a new technique and emphasized the potential of sharing new ideas and perhaps joint research programs. All other interviewees focused especially on joint planning and joint rehabilitation and did mention new developments, such as, a new online IT system;
however, not to the extent of actively sharing new ideas or emphasizing the need for joint research programs. As is the case with openness between partners, external knowledge flows and the level of supplementary/complementarity, the possibilities are not utilized yet. Therefore, also in this case the supply chain leader is missing to stimulate developments utilizing the innovation potential. As competition is absent due to public ownership, pressure needs to be created to ensure a focus on new technology development.
An overview of the linkages identified between public sector characteristics, the collaboration mechanisms and the horizontal collaboration factors is given in figure 4.
Many linkages are found, which results in a complex environment for horizontal collaboration. For the horizontal collaboration factors ‘necessary investments’ and
‘effective commercial model’ no influence of the public sector characteristics could be identified. Nevertheless, both factors prove to be influencing horizontal collaboration.
To clarify the linkages that are found, the findings have been sorted based on the public
sector characteristics and their linkages to the collaboration mechanisms and the
horizontal collaboration factors (see figure 5).
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Figure 4: An overview of the linkages found
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Figure 5: Relating public sector characteristics to horizontal collaboration factors via collaboration mechanisms
