Institutional work and accountability in public–private partnerships

This article was downloaded by: [Tampere University]On: 03 November 2014, At: 05:13Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

International Review of PublicAdministrationPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/rrpa20

Institutional work and accountability inpublic–private partnershipsVille-Pekka Sorsaa & Jan-Erik Johansonb

a Department of Political and Economic Studies, University ofHelsinki, P.O. Box 54, FI-00014, Finlandb School of Management (JKK), University of Tampere, FI-33014FinlandPublished online: 11 Jun 2014.

To cite this article: Ville-Pekka Sorsa & Jan-Erik Johanson (2014) Institutional work andaccountability in public–private partnerships, International Review of Public Administration, 19:2,193-205, DOI: 10.1080/12294659.2014.915497

To link to this article: http://dx.doi.org/10.1080/12294659.2014.915497

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Institutional work and accountability in public–private partnerships

Ville-Pekka Sorsaa* and Jan-Erik Johansonb

aDepartment of Political and Economic Studies, University of Helsinki, P.O. Box 54, FI-00014,Finland; bSchool of Management (JKK), University of Tampere, FI-33014 Finland

(Received 17 December 2012; revised 20 June 2013; accepted 8 July 2013)

The large-scale emergence of public–private partnerships (PPPs) has drawn attentionto the mechanisms of accountability in PPPs. However, there has been little researchyet on how the institutional logics of the mechanisms are instituted, and there is stilllittle knowledge on the role of accountability in the governance of PPPs. The pur-pose of this article is to develop a theoretical framework for studying the institu-tional logics of accountability in PPPs by including institutional work projects in ananalysis. The theoretical framework is applied in a single case analysis of the Finn-ish public–private pension system TyEL. The case study reveals accountability gapsand changes previous understanding of the role of public accountability ingovernance of PPPs.

Keywords: accountability; governance; institutional work; organization fields;pension systems; public–private partnerships

Introduction

Public–private partnerships (PPPs) have become common as ways of organizing theimplementation of public policies and the delivery of public goods and services allaround the world (e.g. Hodge & Greve, 2005). The large-scale emergence of PPPs hasdrawn a lot of academic attention, especially to the question of how private organizationscan be made publicly accountable (Mulgan, 2000a). Indeed, PPPs are hybrid institutionalarrangements that combine different institutional logics of public- and private-sector log-ics of governance (Skelcher, 2005), which have traditionally included very different kindsof mechanisms of accountability (Mulgan, 2000a; see also Erkkilä, 2007).

Most of the works addressing the hybrid logics of accountability in organizationfields have thus far focused on the design of the institutional arrangements (e.g. Forrer,Kee, Newcomer, & Boyer, 2010; Pongsiri, 2002), and on issues of institutional agencylike the management of competing logics in practice (Rautiainen & Järvenpää, 2012).In contrast, there has been little research yet on how the institutional mechanisms ofaccountability are in fact instituted, maintained and reshaped over time. This impliesthat the studies have put much weight on addressing change in institutional agency,while failing to grasp its influence on the institutions. The problem with this view isthat it provides a very narrow view of the role of accountability in the logics of gover-nance in PPPs. Indeed, the institutional logics of governance include not only the enti-ties to be governed and the methods of governing them, but also the ways ofinstituting and changing both of them (e.g. Carmel & Papadopoulos, 2003). Taking

*Corresponding author. Email: [email protected]

© 2014 The Korean Association for Public Administration

International Review of Public Administration, 2014Vol. 19, No. 2, 193–205, http://dx.doi.org/10.1080/12294659.2014.915497

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

institutional dynamics in agency and negotiations seriously is important in fields likePPPs where competing logics exist (Reay & Hinings, 2009).

In this article, we study empirically, in an in-depth single case study, what kind ofinstitutional logics of accountability are prevalent in one PPP-type organization field,what kind of institutional work processes are behind these practices, and what kinds ofmechanisms of accountability these institutional work processes have included. Thepurpose is thus to start an academic debate on the relationship between institutionalwork and accountability in the dynamic governance of PPPs. In the following sections,we develop a theoretical framework for analyzing the institutional logics of accountabil-ity in PPPs based on Mulgan’s (2000a, 2000b) notion of ‘core accountability’ and dis-cussion of accountability in public and private modes of governance, institutionallogics and organization fields. We then continue in the third section by elaborating howthese logics can be studied by including institutional work processes in analysis. In therest of the article, we apply the theoretical framework to an empirical case study onone PPP-type organization field, the Finnish mandatory private-sector workers’ earn-ings-related pension scheme TyEL.

PPPs, organization fields and the institutional logics of accountability

PPPs are cooperative institutional arrangements between public- and private-sectoractors, and hybrid organizational forms and fields that combine various public and pri-vate logics of governance (Skelcher, 2005). PPPs are typically collaborative activitiesaimed at producing products and services by public and private actors, in which theparties share risks, costs and resources (Van Ham & Koppenjan, 2001). PPPs by defini-tion combine some elements of public and private paradigms of governance, and theyare also likely to include mechanisms of accountability from both ‘families’ of gover-nance (Shaoul, Stafford, & Stapleton, 2012).

To address the mechanisms of accountability, we here rely on Mulgan’s (2000b)notion of ‘core accountability’, which is focused on issues of external scrutiny, justifica-tion, and sanctions and control through these mechanisms. In this conception, account-ability is the process of being called to account to some authority for one’s actions – aprocess of ‘giving an account’ characterized by ‘externality, social interaction andexchange and rights of authority’ (p. 555). Externality refers here to an external‘account-holder’ to whom an account is given, social interaction and exchange to com-municative processes of rectification and sanctioning, and the rights of authority to thesocial authority of the ‘account-holder’ to demand answers and impose sanctions overthe ‘accountor’.

Public- and private-sector mechanisms of accountability tend to each have somedistinct characteristics that the other domain is unlikely to have. For example, in thepublic sector, ministerial accountability is nearly always a key issue, even though thedegree of this issue varies, as many public organizations are less directly accountableto ministers and parliament than the core government (Mulgan, 2000a). In the privatesector, the mechanisms of accountability are very much dependent on the types of orga-nizations. For example, the traditional mechanisms of corporate accountability in publiccompanies include governance regulations, changes in boards of directors, financialreporting and disclosure, operations of audit committees, external audits and institu-tional investor influences (Brennan & Solomon, 2008), while most of these relationshave no direct relevance in, for example, non-profit organizations.

194 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

The institutional logics perspective draws attention to how organizational actorscome to practice and experience accountability in their everyday life within variousregulative, normative, discursive and habitual influences (Thornton, Ocasio, &Lounsbury, 2012). Fields are characterized by agreements about these influences ingeneral and more particularly about what is at stake, who are the players of the fieldand what positions they occupy, consensus regarding the rules by which the fieldworks, and shared interpretative frames that allow those in the field to make sense ofwhat other actors are doing in a particular situation (Fligstein & MacAdam, 2012). Thepositions and interpretative frames of public-sector and private-sector fields differ atleast in terms of products, goals, ownership, mutual relationships of actors, sources offinance, political influence, coerciveness and scopes of societal impacts (Nutt &Backoff, 1992).

In these terms, the institutional logics of accountability refer to the rules, norms, dis-courses and shared dispositions framing the elastic practices of collecting and assessinginformation on organization’s activities, ways of communicating between accountorsand account-holders, and ways of sanctioning, steering and re-regulating the accountor’sactivities. The focus here is more precisely on the field-level institutional influences andframes, which shape relations and activities between the organizations occupying differ-ent positions in the field. In corporate fields, for example, customers can hold businessesaccountable not only through ‘voice’ (e.g. formal complaints) but also by supplementingthis with the ‘exit’ option to a competitor’s benefit. In the public sector, where the usageof products may be compulsory, a similar exit option is not likely to be available and isnot likely to benefit any other agency. On the other hand, the complaints may be given amore powerful status in steering the accountor than in corporate fields.

There are at least five ideal type forms for PPPs that combine some field-level log-ics of public and private ‘families’ of governance: public leverage, contracting out,franchising, joint ventures and strategic partnering (see Skelcher, 2005). Perhaps thekey difference in terms of accountability is between what can be called mandated (con-tracting out and franchising) and open partnerships (public leverage, joint ventures andstrategic partnering). Mandated partnerships may include many logics of accountabilitysimilar to the corporate world but they are also likely to be based on special-purposeentities whose mandates can include clear public-sector accountability mechanisms. Forexample, in contracting out-type partnerships, members of the public often have diffi-culty in getting their complaints attended to in the normal way associated with publicprovision (Mulgan, 2000a).

The combination of public and corporate logics of accountability can produce atleast three kinds of ‘institutional gaps’ (Skelcher, 2005). The first gap is the limiteddegree of constitutional oversight over PPPs. The limitations are caused by the diffi-culty to set proper legal categories to the multiplicity of forms of PPPs and of pro-cesses where categorizations are made. The second gap is the habitual disparitybetween procedural regularity and transparency that informs the normative practice ofgovernment and the involvement of private actors with their conventions of commercialconfidence in pursuit of competitive advantage. Private actors might be public-spiritedand interested in advancing societal goals, but the accountability structures withinwhich they operate are fundamentally different to those applying in the government ser-vice and provide immunity to democratic control. This tension is likely to be relevantespecially in mandated partnerships. The third gap arises from the possibility that ahybrid PPP compromises the normative impartiality of government and thus its regula-tory role. The accountability structures of PPPs may subordinate public responsibilities

International Review of Public Administration 195

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

to private goals and thus compromise the regulatory oversight to assure that the PPPserves the public policies and fiscal interests.

Institutional work and accountability

In the institutionalist debates in organization studies, there has recently been a strongpush towards including a rigorous analysis of power in establishing, maintaining,changing and exhausting institutions, especially in conditions of various institutionallogics and in politicized fields like PPPs (Lawrence, 2008; Suddaby, 2010). When vari-ous institutional logics of governance exist in a field, the emergence and maintenanceof any dominant principle of governance is more a matter of social interactions involv-ing communication, moral relations and constant operation of power than any kind offixed or taken-for-granted combination of institutional logics as such (Ahrens &Chapman, 2002; Lounsbury, 2008). Competing institutional logics enable the actors inthe field to rhetorically employ various discourses and justifications (Green, Babb, &Alpaslan, 2008), and to find ways to manage and change the logics throughcollaboration (Reay & Hinings, 2009).

Although many approaches have been developed to address these issues, the mostinfluential ones have been at least arguably the studies based on the notion of institu-tional work (see Lawrence, Suddaby, & Leca, 2009, 2011). The notion describes thepurposive action of individuals and organizations aimed at creating, maintaining anddisrupting institutions (Lawrence & Suddaby, 2006). It highlights intentional actions,from highly visible and dramatic changes to nearly invisible day-to-day adjustments,adaptations and compromises of actors attempting to maintain institutional arrange-ments, and from highly institutionalized forms of negotiations to sporadic ad hocefforts of entrepreneurship (Lawrence, 2008). It brings the contingency of institutionalinfluences to the forefront of analysis and provides a dynamic perspective to institu-tional logics that shape organizational practices.

The notion of institutional work draws attention on different kinds of projects forcreating, maintaining and disrupting institutions (Lawrence & Suddaby, 2006). Crea-tion includes overtly political work in which actors reconstruct rules, property rightsand boundaries that define access to material resources, actions in which actors’belief systems are reconfigured, and actions in which the boundaries of meaning sys-tems are altered. Maintenance includes both maintenance of institutions throughensuring adherence to rule systems, and the efforts to maintain institutions throughreproducing existing norms and belief systems. Disruption includes attempts to dis-connect rewards and sanctions from some set of practices, technologies or rules, todisassociate the practice, rule or technology from its moral foundation as appropriatewithin a specific cultural context, and to undermine the core assumptions and beliefsof institutions.

In this sense, the prevalence of some institutional logics of accountability is notonly a matter of institutional agency but also a matter of negotiating the institutionalinfluences that frame this agency. The notion of institutional work suggests that every-day practices and experiences of accountability in organizational activities are depen-dent on intentional negotiation efforts by the members of an organization field and theoutcomes of these negotiations. The recent literature suggests that the key actors offields greatly define how they can be effectively called to account, for example byadjusting the boundaries of the field, by controlling access to relevant information, byqualifying appropriate modes of and discourses used in communication by and between

196 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

the field members, and by strategically distributing and mediating the effects andcoverage of external control within the field (see e.g. Green et al., 2008; Levy &Scully, 2007; Mazza & Pedersen, 2004; Perkmann & Spicer, 2007).

Accountability is related to institutional work in two different ways: as institutionalwork over the mechanisms of accountability, and as accountability in institutional workefforts (whatever the institutions that are ‘worked upon’). Including both domains in anal-ysis is inevitable if we wish to provide comprehensive understanding of the mechanismsof accountability and their role in the governance of hybrid fields. Indeed, the institu-tional logics of governance include both what are the entities to be governed and how,and the ways of instituting and changing these ways (e.g. Carmel & Papadopoulos,2003). In practice, including both domains broadens the scope of analysis into two direc-tions. Addressing the institutional work over the mechanisms of accountability requiresan analysis of the historical background behind the prevalent mechanisms, while address-ing the mechanisms of accountability in institutional work broadens the scope of analysisto the accountability of key mechanisms of institutional change in organization fields.

Mechanisms of accountability in a public–private partnership: the case of FinnishTyEL pension scheme

The Finnish TyEL (abbreviation derived from työntekijän eläkelaki, i.e. the law thatdefines the system) pension scheme has been in operation since 1962, and it hasincluded numerous small parametric reforms (Kangas, 2006; Kangas, Lundberg, &Ploug, 2010). It is a so-called first-pillar, second-tier pension scheme: a legallymandatory, earnings-related, defined-benefit, partly funded – one fourth of inflowingcontributions are funded and the current total funding ratio is around 36% – but primar-ily pay-as-you-go (PAYGo) pension scheme co-sponsored by the Finnish private-sectoremployers (roughly three quarters of contributions) and employees (roughly one quarterof contributions) with obligatory pension contributions. The scheme is mandatory forall private-sector workers in Finland.

As a PPP, the TyEL scheme can best understood as an institutional arrangement offranchising (Sorsa & Johanson, 2011). Franchising is characterized by the governmentgiving a license to a business, non-profit organization or some special-purpose entity todeliver a legislated service in which the provider’s income is in the form of user fees(Skelcher, 2005). The TyEL laws dictate the functions and roles of different actors inthe field, but most importantly the product, or the pension insurance contract definingpension benefits and pension provider liabilities. The private special-purpose entitiesthat are allowed to provide only this insurance are also defined by law and regulatedextensively (Hietaniemi & Ritola, 2007).

There are three available types of authorized pension providers: pension insurancecompanies (PICs, työeläkevakuutusyhtiö, seven in 2012), company pension funds(eläkesäätiö, 14 in 2012) and industry-wide pension funds (eläkekassa, seven in 2012).The PICs, which can be either mutual companies (the five largest) or joint-stock com-panies (the two smallest), dominate the market with over 90% of all assets of thescheme under their management. The key obligations of the pension providers includethe payment of pensions and the investment of funded assets. The pension providersmake pension decisions but otherwise have little say over the implementation of pen-sion policy. On the other hand, the authorized pension providers legally own all theassets of the scheme, and they are just required to collect contributions and pay benefits

International Review of Public Administration 197

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

according to the law. The investments are regulated and controlled extensively with sol-vency and other rules conditioning investment-making (see Sorsa, 2011).

The TyEL field includes a number of so-called governance units (Fligstein &MacAdam, 2012). Formally, the highest regulative power over the boundaries of thescheme is held by the parliament, which sets the laws on which the scheme is based.The Ministry of Social Affairs and Health (STM) supervises and coordinates manyvariables of the scheme. The Finnish Financial Authority (Finanssivalvonta, FIN-FSA)regulates pension provider investments and other operations in practice. A semi-publicauthority, The Finnish Centre for Pensions (Eläketurvakeskus, ETK), is the primarybody mediating and storing all kinds of information on pension contributions andaccrued benefits, and one coordinating many avenues of cooperation in the field. TheFinnish Pension Alliance (Työeläkevakuuttajat, TELA) is the ‘industry association’ ofpension providers, which among other tasks coordinates the common opinion-formationof pension providers in reform committees.

The relationships of these actors in the TyEL field can be described briefly with aschematic process description. The employers take the insurance to their employeesand select the type of pension provider they wish to use. If they choose a PIC, theythen choose between the PICs that compete on the basis of investment returns (whichcan generate the so-called customer premiums to the employers) and a few additionalservices. The pension providers have a joint liability, and the last provider in theemployee’s career makes the pension decision. The provider collects the mandatorycontributions and invests contributions exceeding the PAYGo payments according to itsinvestment strategies. STM grants the providers the permits to operate, FIN-FSAprovides more detailed regulations and supervises the investment activities, and TELAprovides some guidelines for investments and coordinates the common operations ofproviders. ETK keeps accounts of pensions individuals have accrued in different jobsand with different providers, and calculates how much other providers need tocontribute to the last provider paying the benefits.

There are two key accountors in the field: the pension providers and the develop-ment groups coordinating the field. The relationships between the pension providersand its key account-holders (policyholders, the insured, public agencies and other pen-sion providers) are without doubt the accountability relations with the broadest scopeof issues in the process described above. Moreover, it is these accountability relationsthat are essentially hybrid in terms of combining public- and private-sector accountabil-ities. However, the development groups, and more specifically the influential top-levelreform group that mostly consists of the representatives of the key trade union andemployer associations, are the key accountors when it comes to negotiating institutionalchanges in the field. The social partners have been able to isolate the field from publicinfluence, which suggests that ministerial accountability has little relevance in the field.

The data used in the original study consisted of documentary data and interviewsgathered in 2008–2009. The documentary data used in this study include legislativeand regulatory documents and all official pension system development reports from1962 to 2011, and annual reports of the six largest PICs. In this analysis, the annualreports studied range from 2005 to 2011. The interviews consist of in total 17 closedialogue interviews conducted in 2008 and 2009. The interviewees included 16 seniorofficials of the pension insurance companies and representatives of two other keyorganisations in the field.

198 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

Institutional work and institutional logics of accountability in the TyEL field

As noted, there are two key accountability relations in the field. The relationshipbetween pension providers and their stakeholders can be considered the key account-ability relation within the field, while the relationship between the development groupsof the field and their external stakeholders is a key domain concerning institutionalwork over the field. First of all, the pension providers can be called to account by theirkey stakeholders financing the pension scheme, the policyholders (employers) and theinsured (employees), via a few strongly institutionalized channels. To be more exact,the legal framework of the field is strong in both senses, in that it defines the activitiesof the field and in that these channels are more or less the only ones available for thesestakeholders. As individuals, the insured have very limited channels for calling pensionproviders into account. Individual policyholders can choose their providers, and theycan thus supplement their voice with an exit option and change their provider. ThePICs also distribute client bonuses to policyholders on the basis of investment returns,which makes accountability in investment a central issue for policyholders.

As collective actors, the main interests concern investments with employers’ inter-ests in gaining customer premiums and having stability in domestic equity holdingsand with employees’ interest in increasing domestic real investments (see Sorsa, 2011).Both the employers and the employees have paritarian representation on the boards ofall pension providers, and they can thus use voice and impose direct sanctions to theprovider almost any time. However, the ability of these groups to call to accountdepends on the type of pension provider. The representation is equal in PIC boards andsupervisory boards, but not equal in annual meetings, whose representation is dividedaccording to the shares of pension contributions. The industry-wide funds are weightedto benefit the employees, and the company funds to benefit the employer (Kallio,2005). While individual employers can intentionally change both the type of the pro-vider and, in the case of PICs, the individual provider, the employees have no formalmeans to hold their employer accountable for these choices. In terms of immediateinstitutional work, the design of accountability among pension providers favors theemployee-clients as they can choose who holds power in their pension provider. A con-densed representation of these developments is given in Table 1.

The pension providers have been called to account for various issues by publicauthorities, including for example a recent FIN-FSA inspection of the risk managementprocedures in investment functions and police inspection of insider trading issues inone PIC. Most contingency in pension provider activities resides in investments, whileother domains of activities are very much regulated and thus under rather traditionalregulative control. In the case of investments, the key mechanism of accountability isrelated to a Nordic traffic-light mode of financial regulation. This means that if the pro-viders fall under certain solvency position limits, they must justify their activities andprovide a plan to improve their solvency position. If they fail to do this, they can betaken under more or less direct operational control of the government or even bestripped of their operating license.

The institutional work processes behind these mechanisms of accountability havechanged little over time. Initially, the pension scheme was a product of two-level gameamong political parties in the late 1950s and early 1960s: ‘labor markets againstpolitics’ (Kangas, 2007), and employers against employees. The Centre party and thefar left united to introduce a flat-rate, government-financed pension scheme, whereasSocial Democrats (SDP) and Conservatives (Kokoomus) joined together to promote

International Review of Public Administration 199

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

earnings-related pension benefits with the initiative and support from trade unions andemployer associations. As a compromise, the flat-rate, government-managed, nationalpensions were augmented with the earnings-related pension managed by social partnersand stipulated by its own law. The TyEL field, in which decision-making over pensionassets was decentralized to private providers, served the interest to distance the pensionsystem from political influence and to hinder the formation of a single large capitalbase (i.e. avoiding ‘pension fund socialism’).

Over time, the field has evolved in institutional work projects in three ways. First,the public control over the boundaries of the field has been strengthened by extendinglegal mandates and regulations. Still, the changes have not resulted in any significantincrease of public influence to the pension providers. The social partners have success-fully eliminated public influence within the field. For example, during the financial cri-sis of 2007–2008, the solvency positions of PICs fell rapidly. Public control was notenacted, but the pension providers and social partners succeeded to get STM to draft(and Parliament to accept) a temporary law to relax the solvency requirements. At thesame time, STM demonstrated its limited capability to control PICs with the failed pro-posal to abstain from paying customer premiums in order to improve solvency posi-tions. In this sense, accountability of pension providers towards public bodies isdominated by the principle of external intervention limited to an arm’s-length relation-ship.

Second, the formal power of the social partners within the field has been increasedby nearly all members of the field. For example, the social partners’ presence in theadministration of the pension insurance companies as shareholders has been graduallyincreased. Originally, a third of the board members in PICs were distributed amongemployer and employee organizations according to informal agreement in the earlystages of the scheme. In the 1990s, labor market organizations’ representation was leg-ally defined to be at minimum half of the pension insurance company boards. However,the pension providers’ accountability towards employees has not been institutionallystrengthened even though the employees began to co-sponsor the scheme with theintroduction of employee pension contributions in the early 1990s.

Table 1. Institutional logics of accountability in the Finnish TyEL field.

Accountor –account-holder

Pension providers –policyholders & the insured

Pension providers– public authorities

Pension negotiation group– external actors

Maincharacteristicsof first-orderaccountability

Appeal procedures,paritarian representation inaccountor governance

Control byoperating licensesand ‘traffic light’supervision

Public ad hoc mandatesand public post hocdecisions

Institutionalwork overfirst-orderaccountability

Employers’ exit option onthe accountors, incentivesto choose pension insurancecompanies

Redesign ofregulations bysocial partners andthe government

Selective mandates,guaranteedimplementation of groupnegotiation outcomes

Characteristicsof second-orderaccountability

Favoring employers overemployees in controlmechanisms

Limitations inpublic interventionand control overinvestments

Selective interactionprojects, limitations ofpublic control overparitarian negotiations

Overallinstitutionallogics ofaccountability

Accountability dependenton employer consent

Collectivecorporate self-regulation

Elimination of publicaccountability

200 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

Third, pension provider types other than PICs have been suppressed, as employershave decided to shut down a significant number of company funds and opted for PICs.This means that stakeholderism in the scheme has been strengthened. The choice ofPICs has been made more favorable by STM with the social partners’ consent byenabling the employers to seize extra solvency capital accumulated to the funds. MostPICs are mutual companies in which the governance systems are otherwise paritarian,but employers have more say in the key venue for accountability, the annual meetings,than employees. Before the reforms of the late 1990s, most PICs were joint-stockcompanies, in which investors had more say in annual meetings. However, given thatonly employers have an exit option, the employees’ ability to call pension providers toaccount has not been substantially strengthened even though employer-dominatedcompany funds have become rare.

The discussion of the institutional work on mechanisms of accountability forpension providers already identifies the engine of change in the field – it is the socialpartners who govern most of the organizations in the field. However, the preparationand coordination of regulative changes in the field takes place in a highly decentralizedworking-group structure. The coordinative power of social partners resides in a signifi-cant scope in these permanent, project-based or otherwise temporary groups typicallyset by STM, ETK or TELA. The constellation of this coordination network representsa ‘power law’ (Barabási, 2002) in which few actors hold a central position and manyactors hold a peripheral one. It is often the case that central actors marked by multipleconnections are able to set the pace for the entire network (Provan, Fish, & Sydow,2007). This is why all development groups serve not only as spaces for meso-levelinstitutional work as such but also as essential channels to bring issues to and for mak-ing alliances for the macro-level institutional work.

The macro-level coordination of the scheme has for the last two decades debated inone development group: the social partners’ paritarian committee, literally called the‘pensions negotiation group’. The group consists of the representatives from the mainlabor market organizations, PICs, and ETK (and sometimes ministries), while excludingpoliticians and political parties. The ad hoc group, which has addressed various issuesfrom investment regulations to corporate governance and pension policy over time, pro-vides a high-level forum for the overall development of the logics of the field and forhandling disputes within the field. The group was originally based on purely informalnormative mandate but was later given formal regulative roles through public ad hocmandates. In 1995, STM mandated the group to draft a proposal on how to developinvestments and investment rules. The key investment rule reforms have been negoti-ated in the group with broader but field-insider-dominated expert group consultation.The composition of the group later changed to cover more stakeholders and it has haddifferent chairs, but it continues to play the same vertical role in the field.

As noted, the regulative power of this group arises from mandates they receive forpreparing new legislation and other institutional reforms. In this sense, the publicaccountability of the group is clear – it gets a specific mandate from the government,and the government can call the group to render an account of its activities if necessarybefore making any institutional changes. However, this is not the case when we look atthe institutional work that actually sets the process. The status of the group typicallyexceeds even that of the legislature and the government. Although STM first providesthe group a legal mandate to draft suggestions to be considered by the parliament, mostmandates have been suggested by the social partners and the reports drafted by thegroup have been transformed into bills by the parliament without any changes. Indeed,

International Review of Public Administration 201

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

perhaps no single effort in Finnish public policy has proved more difficult than to holdthe group accountable and to sanction it.

For example, the Finnish government suggested in 2009 that the mandatory retire-ment age should be raised and discussed in an STM-led committee independent of thepension negotiation group discussions of the time, because they could not be called toaccount. The central labor market organizations did not accept the government’s inten-tions. The main employer association (EK) expressed that this was not something thegovernment could do by its own right, and the blue-collar employer association (SAK)even gave an implicit threat of general strike in the case that any committee would startworking without social partner dominance. The resolution between the labor marketparties and the government explicitly stated that the labor market organizations woulddictate the ways in which the reforms were made.

The long-term relationships between public actors and social partners in the TyELfield has been more broadly a selective osmosis that enables institutional interactionprojects between Social Democrats and employee organizations on the one hand andbetween Conservatives and employer organizations on the other, but inhibited the Cen-tre party or individual ministries from having any interaction projects in the field. Inthe case that institutional changes are aspired to, the traditional coalitions of interestbetween the political parties and social partners are always at risk, and the mixed inter-action projects ensure that there will always be some kind of dissent in negotiations.This is why only the compromises the social partners succeed in drafting and suggest-ing to the government are likely be enforced as institutional changes (see e.g. Johanson& Sorsa, 2010; Kangas, 2007). One reason for maintaining the lock-in situation is thatit has been politically rational for the political parties. If difficult pension policy choicesare to be made, politicians are not willing to claim credit for these measures but avoidblame by letting the social partners decide on the major pension policy issues.

All in all, from the perspective of institutional work, the decentralized preparationgroups addressing individual policy issues are largely unaccountable to the outside ofthe field, because all the negotiations are channeled through the pension negotiationgroup, which cannot be called into account or sanctioned in public. Any political actorwho tries to sanction the group is likely to be sanctioned themselves by the social part-ners. Of course, the representatives in the group can be held accountable informally bytheir parent organizations (i.e. labor market organizations, PICs, ETK). Yet there are noformal channels for other pension providers to call the present PIC representatives toaccount, nor have individual employers, employees, public bodies or voters any sub-stantive means for calling the pension negotiation group to account. The reason for thislack of substantial accountability mechanisms is the political lock-in situation in institu-tional work efforts discussed above.

Conclusions

In this article, we have argued that in order to study the role of accountability in thegovernance of hybrid fields such as public–private partnerships (PPP), the research oninstitutional logics guiding the mechanisms of accountability ought to include institu-tional dynamics in the form of institutional work. As our empirical analysis shows, thisapproach reveals issues that a non-dynamic approach would fail to grasp. Includinginstitutional work in the analysis reveals two issues on the role of accountability in thegovernance of the pension field (TyEL). First, it shows that the public accountabilityhas been constantly eliminated within the field and especially in the development of

202 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

the field. While the first-order accountabilities in the TyEL field resemble classic fran-chising-type PPP, the dynamics of institutional work indicate that the government orlegislature simply cannot call the field to account effectively. Second, it reveals that themechanisms of accountability towards the employers have been maintained andstrengthened despite the seemingly paritarianism-prizing developments. The account-ability of pension providers as well as that of development groups is always dependenton the consent of the employers, either individually or collectively.

In practice, Finnish earnings-related pension institutions provide some implicationsfor further examination of the pension fields in other European countries. The PPP formof pension provision has recently gained popularity in many European countries. Itmay be that the Finnish exceptionalism is turning into European business as usual. Thisraises interesting questions about the purpose of public–private arrangements in otherEuropean countries. Are they meant to be government-protected safe havens for busi-nesses to evade international competition, or do they represent new competition-prizingparadigms in European pension provision? Whatever the answer is, our case studyshows that these goals can be combined, possibly without excluding the virtues orincluding the vices of the other, but more than likely not without compromises withlocal institutional characteristics.

All in all, the case study shows that the TyEL system is more a collective agree-ment between the social partners based on a ‘regulatory capture’ of public regulationsand laws than a public franchising arrangement. This suggests that looking at the insti-tutional dynamics of mechanisms of accountability can significantly change the under-standing of the governance of PPPs. This is also the main implication for furtherresearch – studying institutional work over institutional logics of accountability canprovide a more realistic account of PPP governance.

On the basis of the findings, we propose three agendas for further research in thegeneral field of institutional mechanisms of accountability. First, the nature of institu-tional work projects behind the prevalent logics of accountability should be addressedin more detail in order to understand how accountabilities might vary in differentmodes of governance in organization fields. Second, the role of different mechanismsof institutional changes (e.g. bricolage, translation) and of changes in different types ofinstitutional logics (regulative, normative, discursive and habitual) should be taken intoaccount in order to provide a better understanding of how logics of accountability areshaped and changed. Third, we need better descriptions of micro-level accountabilitypractices and of field- and macro-level negotiations on their institutional logics in orderto provide a more rigorous analytical framework for institutional dynamics ofaccountability.

Notes on contributorsVille-Pekka Sorsa is University Lecturer in Political Science at the Department of Political andEconomic Studies, University of Helsinki, Finland. He currently studies the organization,governance and political economy of European pension systems. He holds a DPhil from OxfordUniversity.

Jan-Erik Johanson is Professor of Public Financial Management at the Tampere UniversitySchool of Management, Finland. His previous published work has appeared in PublicAdministration, International Journal of Information Management, and Public OrganizationReview. His research interests include public organizations, strategic management, and socialnetwork analysis.

International Review of Public Administration 203

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

ReferencesAhrens, T., & Chapman, C. (2002). The structuration of legitimate performance measures and

management: day-to-day contests of accountability in a UK restaurant chain. ManagementAccounting Research, 13(2), 151–171.

Barabási, A.-L. (2002). Linked: The new science of networks. Cambridge: Perseus Publishing.Brennan, N. M., & Solomon, J. (2008). Corporate governance, accountability and mechanisms of

accountability: An overview. Accounting, Auditing & Accountability Journal, 21(7), 885–906.Carmel, E., & Papadopoulos, T. (2003). The new governance of social security in the UK. In

J. Millar (Ed.), Understanding social security (pp. 31–52). Bristol: Policy Press.Erkkilä, T. (2007). Governance and accountability: A shift in conceptualisation. Public Adminis-

tration Quarterly, 31(1), 1–38.Fligstein, N., & McAdam, D. (2012). A theory of fields. New York: Oxford University Press.Forrer, J., Kee, J. E., Newcomer, K. E., & Boyer, E. (2010). Public–private partnerships and the

public accountability question. Public Administration Review, 70(3), 475–484.Green, S. E., Babb, M., & Alpaslan, C. M. (2008). Institutional field dynamics and the competi-

tion between institutional logics. Management Communication Quarterly, 22(1), 40–73.Hietaniemi, M., & Ritola, S. (Eds.). (2007). The Finnish pension system. Finnish Centre for Pen-

sions Handbooks. Helsinki: Finnish Centre for Pensions.Hodge, G., & Greve, C. (Eds.). (2005). The challenge of public–private partnerships: Learning

from international experience. Cheltenham: Edward Elgar.Johanson, J.-E., & Sorsa, V.-P. (2010). Pension governance in Finland: A case study on public

and private logics of governance in pension provision. Finnish Centre for Pensions Reports2010:2. Helsinki: Finnish Centre for Pensions.

Kallio, I. (2005). Vakuutuksenottajan Oikeudet Työeläkevakuutusyhtiön Varallisuuteen. Helsinki:Suomen vakuutusalan koulutus ja kustannus.

Kangas, O. (2006). Pensions and pension funds in the making of a nation-state and a nationaleconomy: The case of Finland. Geneva: United Nations Research Institute for SocialDevelopment.

Kangas, O. (2007). Finland: Labor markets against politics. In E. M. Immergut, K. M. Anderson,& I. Schulze (Eds.), The handbook of west European pension politics (pp. 248–296). Oxford,UK: Oxford University Press.

Kangas, O., Lundberg, U., & Ploug, N. (2010). Three routes to pension reform: Politics and insti-tutions in reforming pensions in Denmark, Finland and Sweden. Social Policy & Administra-tion, 44(3), 265–284.

Lawrence, T. B. (2008). Power, institutions and organizations. In R. Greenwood, C. Oliver,K. Sahlin, & R. Suddaby (Eds.), Sage handbook of organizational institutionalism(pp. 170–197). London: SAGE.

Lawrence, T. B., & Suddaby, R. (2006). Institutions and institutional work. In S. Clegg,C. Hardy, T. Lawrence, & W. R. Nord (Eds.), The sage handbook of organization studies(2nd ed., pp. 215—254). London: Sage Publications.

Lawrence, T. B., Suddaby, R., & Leca, B. (2009). Institutional work: Actors and agency in insti-tutional studies of organizations. Cambridge: Cambridge University Press.

Lawrence, T. B., Suddaby, R., & Leca, B. (2011). Institutional work: Refocusing institutionalstudies of organization. Journal of Management Inquiry, 20(1), 52–58.

Levy, D., & Scully, M. (2007). The institutional entrepreneur as modern prince: The strategicface of power in contested fields. Organization Studies, 28(7), 971–991.

Lounsbury, M. (2008). Institutional rationality and practice variation: New directions in the insti-tutional analysis of practice. Accounting, Organizations and Society, 33(4–5), 349–361.

Mazza, C., & Pedersen, J. S. (2004). From press to E-media? The transformation of an organiza-tional field. Organization Studies, 25(6), 875–896.

Mulgan, R. (2000a). Comparing accountability in the public and private sectors. AustralianJournal of Public Administration, 59(1), 87–97.

Mulgan, R. (2000b). ‘Accountability’: An ever-expanding concept? Public Administration, 78(3),555–573.

Nutt, P. C., & Backoff, R. W. (1992). Strategic management of public and third sector organiza-tions: A handbook for leaders. San Francisco: Jossey-Bass.

Perkmann, M., & Spicer, A. (2007). ‘Healing the scars of history’: Projects, skills and field strat-egies in institutional entrepreneurship. Organization Studies, 28(7), 1101–1122.

204 V.-P. Sorsa and J.-E. Johanson

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14

Pongsiri, N. (2002). Regulation and public–private partnerships. International Journal of PublicSector Management, 15(6), 487–495.

Provan, K. G., Fish, A., & Sydow, J. (2007). Interorganizational networks at the network level:A review of the empirical literature on whole networks. Journal of Management, 33(3),479–516.

Rautiainen, A., & Järvenpää, M. (2012). Institutional logics and responses to performancemeasurement systems. Financial Accountability & Management, 28(2), 164–188.

Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics.Organization Studies, 30(6), 629–652.

Shaoul, J., Stafford, A., & Stapleton, P. (2012). Accountability and corporate governance ofpublic private partnerships. Critical Perspectives on Accounting, 23(3), 213–229.

Skelcher, C. (2005). Public–private partnerships and hybridity. In E. Ferlie, L. E. Lynn Jr., &C. Pollitt (Eds.), The Oxford handbook of public management (pp. 347–370). Oxford: OxfordUniversity Press.

Sorsa, V.-P. (2011). Pension fund capitalism in Europe: Institutional organisation and governanceof Finnish pension insurance companies. (Unpublished doctoral dissertation). Oxford, UK:Oxford University Press.

Sorsa, V.-P., & Johanson, J.-E. (2011). Hallinnolliset Jännitteet Julkisyksityisten Eläkejärjestelm-ien Uudistumiskyvyn Lähteenä [Administrative tensions as a source for reform capacity inpublic–private pension systems]. Hallinnon Tutkimus [Administrative Studies Journal], 30(3),177–190.

Suddaby, R. (2010). Challenges for institutional theory. Journal of Management Inquiry, 19(1),14–20.

Thornton, P. H., Ocasio, W., & Lounsbury, M. (2012). The institutional logics perspective: Anew approach to culture, structure and process. Oxford, UK: Oxford University Press.

Van Ham, H., & Koppenjan, J. (2001). Building public–private partnerships: Assessing and man-aging risks in port development. Public Management Review, 3(4), 593–616.

International Review of Public Administration 205

Dow

nloa

ded

by [

Tam

pere

Uni

vers

ity]

at 0

5:13

03

Nov

embe

r 20

14