Impact of the institutional environment on the development of Public Private Partnerships in the Road Sector. comparison of two settings: the Netherlands and Tamil Nadu.

Due to the complex current financial situation, many governments in developing and developed countries are procuring road projects through Public Private Partnerships (PPPs). The institutional environment where PPPs take place influences project performance and program continuity. In a propitious environment, PPPs entail advantages for public and private parties in the form of Value for Money (VfM). Nonetheless, institutional deficiencies can lead the partnership to failure, predominantly when conflicts emerge between public and private parties. To understand how the institutional setting influences project performance there is a need for a context specific approach. As stated by Jooste, Levitt and Scott (2011), understanding the particular dynamics of PPP development in different environments expands on the knowledge about the link between the institutional environment and project performance to ensure project success. Given that different contexts present different institutional environments, we analyze two different settings with similar project volume and age implementing PPPs in the road sector: the Netherlands and Tamil Nadu. In this research, we examine the institutional environment in both contexts, the evolution of these two institutional settings from the implementation of the first PPP projects in the road sector, and the impact of the institutional environment on project outcomes at different points of time. Our goal is to study the influence exerted by the institutional environments in PPP program’s progress. Firstly, we evaluate the policy interventions in both environments since the implementation of the first PPP projects in the road sector through secondary data analysis. Secondly, we analyze the influence of these policy interventions on the institutional environment for PPP development by applying the framework proposed by Mahalingam (2011) which categorizes the institutional environment in specific institutional capabilities necessary for PPP success. Thirdly, we follow a case study approach to collect data about four projects developed in different points of time for each location. Our results show that the institutional environment has an influence in project development, extending the framework proposed by Mahalingam (2011). We find support for Jooste, Levitt and Scott’s (2011) statement which recognizes that PPPs are implemented differently in different regions, progressing beyond a “one size fits all” view of PPP programs. Starting from a similar degree of maturity, we observe a completely different evolution in Tamil Nadu and the Netherlands as a result of the different institutional settings present. Interestingly, we find that, once applied in the project, the institutional capabilities react affecting other institutional capabilities in return, confirming Jooste, Levitt and Scott’s (2011) proposed link between structuration theory and PPP development. We find support to state that later developments depend upon earlier developments directly influenced by political willingness. We conclude that how the institutional capabilities have been built plays a key role for project performance and political willingness is a key factor to determine the evolution of the institutional environment towards PPPs.