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

Abstract

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.