Management control systems in public-private partnerships: the case of Sri Lanka

Public-Private Partnerships (PPPs) have increasingly been recognised as a key strategic policy for delivering public infrastructure services in developing countries. PPPs as an important part of the effort of the governments in developing countries are also expected to reduce the burdens on their budgets and excessive debt. With proper management controls, a PPP could further generate efficiency, effectiveness, innovations, and achieve value for money objective in the delivery of public services. However, the progress of PPPs in developing countries has been slow, often failing to achieve value for money objective. In many occasions, PPPs in these countries were either held up or terminated before proceeding to the physical development stage. The aim of this thesis is to examine the use of management control systems by public partners to minimise risk associated with PPPs with special reference to Sri Lanka. The thesis adopts ?thesis by publication? format and includes three research papers with specific objectives. The study finds that public partners use control archetypes, namely market, bureaucratic and clan, with control strategies, namely performance evaluation and trust, to minimise relational risk and performance risk in different combinations in different phases of PPPs. The study also reveals that while five contingent factors suggested by transaction cost economic theory are highly relevant in the context of PPPs in Sri Lanka, the institutional environment and the power differential also influence public partners? choice between various control archetypes. Further, the thesis provides evidence suggesting that the PPP policy innovated in industrialised countries was diffused into Sri Lanka with coercion from international aid organisations (IAOs) through the conditionality attached to financial assistance. The findings of the study contribute to literatures on PPPs, public policy, and new public management in general and management control in particular. The findings also have implications for governments in developing countries, IAOs, managers in both public sector and private sector organisations.