How Project Governance Helps Navigate Public-Private 'Coopetition' Tensions

(MENAFN- The Conversation) The Ariane 6 project, Europe's new space launcher, is in the headlines as the European Space Agency (ESA) and ArianeGroup push for its first launch in 2024. This high-profile initiative has faced delays, but it remains a cornerstone of European ambitions in space. The project is a significant example of public-private collaboration, with private-sector partners playing a key role alongside the ESA.

Designed to compete with SpaceX's Falcon 9, Ariane 6 aims to secure a competitive edge in the commercial launch market. The project highlights Europe's broader strategy to maintain its place in the global space race. While the ESA provides essential funding and oversight, companies like ArianeGroup, Airbus Defense and Space, Safran, and a network of subcontractors drive the technological innovation necessary for success. This balance between cooperation and competition among stakeholders is known as“coopetition” – a common dynamic in public-private projects.

Coopetition blends collaboration and competition. In projects like Ariane 6, companies that are often fierce competitors in the market must cooperate to achieve mutual goals. The ESA, as the public authority, helps orchestrate the project, but private companies often have different, sometimes conflicting, objectives.

Research shows that coopetition can accelerate innovation by combining the strengths of cooperation, such as resource sharing, with the benefits of competition, such as efficiency and rapid decision-making. However, this setup also creates tension. Competing priorities can lead to conflicts, coordination challenges and even project paralysis – threatening progress on high-stakes initiatives.

Given the high societal, economic and political stakes, failure is not an option for public-private projects. Effective governance is critical for managing coopetition and resolving its inherent tensions. Our recent research on inter-organisational strategy suggests that project governance is essential to balancing cooperation and competition throughout a project's lifecycle.

The first generation of the Galileo satellite project – Europe's effort to develop its own satellite navigation system – offers valuable insights into how governance can navigate coopetition. Like Ariane 6, Galileo brought together major players of the European space industry, including both private and public stakeholders, who had to cooperate but also pursued different goals. Competitors such as Alcatel Space Industries, Alenia Spazio, Astrium GmbH, Astrum Ltd. and Galileo Sistemas y Servicios cooperated with each other to manufacture the Galileo satellites while staying fierce competitors in the marketplace.

The project's navigation system relied on the integration of components developed by different manufacturers. To ensure smooth integration, these manufacturers regularly exchanged information regarding the components and system architecture. At the same time, they cooperated with the public sector (led by the ESA) by pooling their complementary technological know-how and funding capacities. Simultaneously, the public and private sectors also competed to control the use of resources. While the ESA promoted the use of resources for social value, the companies were seeking profit. Everyone agreed that the project was of utmost strategic, military and economic importance for Europe.

However, critical tensions existed between Galileo's stakeholders. The public and private sectors first advocated for different value creation models, which we identified as“value tensions”. For example, the ESA aimed to create social value for European citizens with a unique satellite positioning system and a commercialised services model. However, satellite manufacturers, focused on profitability and competitiveness, doubted the model's long-term viability for the industry. The space manufacturers also confronted tensions as they pooled know-how for Galileo but competed outside it. Such tensions are“knowledge tensions”, referring to the need to balance sharing critical knowledge with trying to protect it. For Galileo's operations to succeed, effective management of these tensions appeared essential.

The Galileo project demonstrated that governance structures could make or break a coopetitive initiative. Our research found that centralized governance led by a primary public actor can be more effective than decentralised governance models. By the end of the study period, we identified an approach – lead-organization governance – that combined contractual and relational mechanisms to prevent competition and foster cooperation. We found that in a decentralised governance structure, the two coopetition relationships – among industry competitors and between the public agency and the consortium – were managed separately. Consequently, each relationship employed a unique blend of governance mechanisms. This was problematic because the mechanisms used for managing the relationships were focused on cooperation or competition, instead of both at the same time.

A dual governance strategy that encourages cooperation while managing competition among stakeholders is key. For example, in dual governance, contractual mechanisms (formal agreements, clear resource allocation) and relational mechanisms (trust-building, informal networks) complement each other. We found that contractual mechanisms were particularly effective in curbing competitive behaviours, while relational mechanisms fostered cooperative behaviours. The combination of mechanisms helped to reach balance.

Our study also showed that when governance falls short, it can actually heighten tensions. In the Galileo project, relational mechanisms between satellite manufacturers were prioritized to enhance cooperation. However, while robust contractual protections are crucial when direct competitors collaborate, the contractual safeguards put in place were inadequate, resulting in knowledge-related tensions.

Our analysis also indicated that an overreliance on contractual mechanisms, to the detriment of informal relational mechanisms, hindered mutual understanding between the public agency and the satellite manufacturers, stifling cooperation. This overreliance highlighted, rather than resolved, their competing objectives related to value creation, leading to heightened perceptions of opportunism.

Interestingly, these same tensions often lead to adjustments in governance structures, notably in terms of mechanisms (from contractual vs relational toward a combination of the two), goals (from cooperation or competition toward a coopetitive orientation) and form of governance (from decentralised toward lead governance).

This means that a dynamic, flexible approach to project governance is essential, as coopetition forces stakeholders to rethink and realign how they govern the project as it progresses. Ultimately, governance and coopetition evolve together in public-private projects, requiring ongoing attention throughout the project's lifecycle.

These insights are particularly relevant for managing long-term, complex undertakings. As the second generation of Galileo satellites enters production, the relationships between stakeholders will continue to evolve, requiring adaptive governance to maintain the balance between collaboration and competition. By understanding and managing coopetition through dynamic governance, public and private stakeholders can drive innovation while minimising conflicts that could derail critical projects.

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