Institutional Distance and Partnership Governance Arrangements: An Exploratory Study of the Implementation of a Large Cross-Border Reconstruction Project in China

ABSTRACT

Purpose

This research intends to investigate the effects of three-dimensional institutional distances, namely regulatory, normative, and cognitive distances, on the partner match and governance mechanisms in cross-sector and cross-border collaborations.

Methodology/Approach

We chose a major cross-border reconstruction project donated by Hong Kong SAR to Sichuan Province as the research setting regarding the explicit institutional differences, although both belong to China. Based on archival data and in-depth interviews with personnel in charge of project supervision and management from both partners, we gain further insights into the governance mechanisms for a successful cross-sector and cross-broader partnership.

Findings

We investigate the institutional distances between HKSAR and mainland China partners in regulatory, normative, and cognitive aspects during reconstruction. We reveal the patterns of partner match and various effective governance mechanisms that partners utilize to manage institutional distance, including cooperative roles, regulatory rules, project supervision, assessment, and formal and informal communications.

Research Implications

We introduce an institutional distance between partners as an important contingency and a constraint on the partner match (structure and governance) and the governance mechanisms used to manage the cross-border collaborative process, including business and non-business partners.

Practical Implications

The concept of institutional distances should help cross-sector partners with institutional differences better understand the differences and importance of mutual understanding and efficient governance mechanisms. Our findings provide practical governance mechanisms for managing cross-sector collaborations, such as government agencies and firms, especially in cross-border settings.

Originality/Value/Contribution of the paper

We propose a cross-border partner governance model for future researchers to investigate the effects of institutional distance on partnership governance structure and mechanisms. We extend the B2B partnership governances by incorporating the non-business actors into consideration.

KEYWORDS:

• A cross-border collaborative project
• institutional distance
• partnership governance strategy
• project performance
• China

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. 1 On May 12, 2008, at 14:28, a 7.9 magnitude earthquake struck Sichuan, China. It resulted in over 87,000 casualties and displaced 4.8 million people. Infrastructure, including homes and public buildings, was heavily damaged across 440,000 square kilometers, affecting around 46.2 million people. Economic losses were estimated at $191.9 billion, with reconstruction costs reaching $137.5 billion, as reported by the BBC in 2013.

2. 2 Project performance has also been assessed using two other methods which were not deemed to be appropriate for our case study setting: First is a participant perspective, which uses economic and social benefits attained by participants upon project completion as measurement criteria (Bhattacharya and Sen, 2004). The second approach emphasizes the attainment of project objectives or the extent of solving the target problem. For example, by the 3E (economy, efficiency, and effectiveness) theory (Yang and Ge, 2009) and the Comprehensive Performance Evaluation framework (Deng, 2003).