Bridging the accountability gap in hybrid organizations: the case of Copenhagen Malmö Port

Abstract

Previous research on hybrid organizations has drawn attention to the accountability gap that is believed to emerge when the provision of public services is transferred to a hybrid organization. In this article we take our point of departure in that research and use a case study method to explore whether this gap can be bridged by existing corporate governance systems or if governance systems specially tailored to hybrid forms need to be developed. The result of the study shows that the process is equally important as the system in place. That is, it is not only the actual system but also how the system is implemented and used that affects the ability to bridge the accountability gap.

Points for practitioners

This article provides insight into how the hybrid form alters the relationship between citizens, elected politicians and organizations performing public services and, consequently, how the ability to secure accountability in public services changes. The results presented in the article provide politicians and managers in the public sector with knowledge regarding how, by focusing on organizational processes, relationships between stakeholders and performance evaluation can work with improving accountability in hybrid organizations. Further, the article stresses the need for performance evaluation to encompass not only financial aspects, but also the societal values of the public services performed by the hybrid organization.

Keywords

accountability governance hybrid organizations mixed ownership partnerships

Introduction

The essence of democratic systems is the ability to hold elected politicians accountable for the decisions they make (Bovens, 2009; Mulgan, 2000). In the public sector, accountability is generally secured through a hierarchical system where citizens can access the information they need to hold elected politicians accountable for their actions (Barberis, 1998; Deleon, 1998; Hodge and Coghill, 2007).

In the wake of New Public Management (NPM), it has become common for public services to be performed by organizations operating at the intersection of the market and the public sector: the so-called hybrid organizations. According to Billis (2010), we are in a period of increased hybridization of organizations. Hybrid organizations are those that borrow components and logics from three different sectors: that is, the public, private and non-profit sectors (Billis, 2010; Koppell, 2003). By borrowing characteristics from different sectors, however, hybrid organizations are regarded as being complex and lacking accountability (André, 2010; Billis, 2010).

When the provision of public services is handed over to a hybrid organization, the question of ‘who is accountable to whom’ becomes more complicated since the relationships between politicians, citizens and providers of public services are altered (Deleon, 1998; Hodge and Coghill, 2007; Romzek, 2000; Van Ham and Koppenjan, 2002; Watson, 2003). Instead of only having to secure accountability hierarchically, accountability now also has to be secured horizontally, in the relationship between elected politicians and the hybrid organizations (Bovens, 2005; Grossi and Thomasson, 2011; Hodges, 2012; Shaoul et al., 2012; Willems and Van Dooren, 2011) as well as between the hybrid organizations and citizens (Humphrey et al., 1993; Shaoul et al., 2012).

With the introduction of hybrid organizations, there seems to be a tendency for focus to shift away from the relationship between elected politicians and citizens towards the relationship between politicians and managers (Deleon, 1998; Romzek, 2000; Sinclair, 1995) and a customer relationship between citizens and hybrid organizations (Humphrey et al., 1993; Shaoul et al., 2012). As there are no longer any mechanisms in place to ensure accountability in situations where government is doing business, an accountability gap has emerged (Sands, 2006).

Another issue that has emerged is the question of ‘for what’ hybrid organizations are to be held accountable. Hybrid organizations operate partly in the market and partly in the public sector. In the market, accountability is based on market mechanisms that focus mainly on financial performance and not on the creation of public and democratic values, which is the focus of public sector services (Shaoul et al., 2012). On this basis, Shaoul et al. (2012) raise the question whether a system based on market mechanisms is sufficient to ensure accountability in hybrid organizations subject to public sector values.

Previous studies draw attention to the potential problems of securing accountability when public sector services are performed by market-oriented organizations using different types of hybrid solutions (Deleon, 1998; Hodge and Coghill, 2007; Humphrey et al., 1993; Sinclair, 1995). Others state that accountability can be achieved but that it will require new solutions (Deleon, 1998; Sands, 2006) while Willems and Van Dooren (2012) suggest that the fact that accountability is claimed in different forums for different functions could improve the ability to hold politicians responsible for the decisions they make.

The purpose of this study is therefore to explore whether accountability is secured in hybrid organizations through the use of existing market-oriented mechanisms or if a more context-specific model is needed to ensure that public values are not lost. To begin this exploration, we conducted a case study of the horizontal relationship in one hybrid organization. An exploratory case study enables the researcher to generate hypotheses about the reasons for particular practices – hypotheses that may be tested subsequently in larger-scale studies (Ryan et al., 2002). In this case, the aim is to highlight crucial aspects for securing accountability in hybrid organizations which may be used as input to further studies.

The next section develops a framework for accountability in hybrid organizations, followed by a description of the methodology of a qualitative case study of a hybrid organization: Copenhagen Malmö Port (CMP). The model is applied to CMP and the results analysed. The article concludes with suggestions for future research.

Accountability and hybrid solutions

Accountability is about being held to account for one’s actions. A prerequisite is that the person to be held accountable recognizes the authority or the right of the other person to hold him or her accountable (Broadbent et al., 1996; Gray and Jenkins, 1993; Sinclair, 1995). Also, the accountable person needs to respond to the request by giving account (Greiling and Spraul, 2010). Accountability is thus a process that involves an exchange of information between persons or organizations. For this process to work, information needs to be available about the performance of those persons or organizations; this is the requirement of transparency (Bovens, 2005; Mulgan, 2000).

Accountability in the public sector

To ensure that the interests of citizens are protected, an accountability system is in place in the public sector. It rests on the fact that the principal is the citizen and the agent is the government (Barberis, 1998; Mulgan, 2000). The citizen has delegated the responsibility for the provision of public services to the government and has elected politicians to govern those public organizations and control the civil servants who staff them (Hodge and Coghill, 2007).

The public sector accountability system is built upon hierarchical or vertical relationships and consists of four different types of accountability: bureaucratic, legal, professional and political (Bovens, 2005; Greiling and Spraul, 2010; Mulgan, 2000; Romzek and Dubnik, 1987). Bureaucratic accountability refers to the relationship between superior and subordinate within the government. Legal accountability encompasses the rules and regulations that governments and public services are subjected to, while professional accountability is the control executed amongst peers. Political accountability then refers to the relationship between elected politicians and citizens. These four types of accountability constitute the essence of accountability in the public sector, and they all rest upon the notion that accountability there is claimed through vertical relationships (Bovens, 2005).

According to Behn (2001), the meaning of accountability is associated with one of three things: accountability for finances, accountability for fairness or accountability for performance. ‘Accountability for finances and accountability for fairness reflect concerns for how government does what it does. But we also care what government does – what it actually accomplishes’ [accountability for performance] (Behn, 2001: 9–10). Moreover, Behn highlights that NPM puts more emphasis on accountability for performance than accountability for process (compliance).

As a consequence of NPM reforms, the responsibility for the production of public services has been handed over to market-oriented hybrid organizations. Thus, the relationship between elected politicians, the government and citizens has changed as well as their roles towards the organizations providing public services (Deleon, 1998; Hodge and Coghill, 2007; Hodges, 2012; Luke, 2010; Romzek, 2000; Shaoul et al., 2012; Sinclair, 1995). This move towards business-like models poses a challenge to the traditional mode of accountability based on a closer public scrutiny of public service activities through parliamentary debates, legislative committees, administrative tribunals and other democratic means (Haque, 2001: 71).

Citizens have become customers and the government is now the purchaser of public services (Humphrey et al., 1993; Shaoul et al., 2012). In these new relationships, questions of ‘who is accountable to whom and for what’ (Romzek and Dubnik, 1987) are more complex. Accountability is no longer only claimed through vertical relationships, but also through horizontal relationships where performance is based on market mechanisms and judged by financial performance (Hodges, 2012; Shaoul et al., 2012; Willems and Van Dooren, 2012). Vertical accountability is linked to liberal political theory in which bureaucrats deliver outputs while politicians are responsible for outcomes. A diffusion of goals amongst policy and delivery organizations complicates the purposes of particular actions and leads to the need to consider horizontal accountability as public organizations need to work across departments and formal structures to tackle issues that cut across organizational and professional boundaries (Hodges, 2012: 30).

Accountability in hybrid organizations

A hybrid organization is one that is market oriented, operates in a business-like manner to provide public services with public funding and is politically governed (Broadbent and Guthrie, 1992; Kickert, 2001; Reichard, 2006; Thynne, 1994). Different types of hybrid organization exist and there is variation in the degree to which they combine these features and are under political control. Koppell (2003: 12) defines a hybrid organization as an ‘entity created by … government … to address a specific public policy purpose. It is owned in whole or in part by private individuals or corporations and/or generates revenue to cover its operating costs.’ Examples of hybrid organizations are public–private partnerships (PPPs) and various types of publicly owned corporations (Koppell, 2003).

Even though different types of hybrid organization exist, they have common features. One hybrid organization can differ from another in terms of financing, ownership and organizational structure, and the differences can be explained by dissimilar purpose and history (Kickert, 2001; Koppell, 2003). For example, all hybrid organizations operate outside the realm of the government (André, 2010; Forrer et al., 2010; Shaoul et al., 2012). Within NPM, it is generally regarded as an advantage to move the provision of services outside the government and subject them to market mechanisms (Hood, 1995). However, the question of ‘who is accountable to whom’ arises if the control of the provision of public services and public funding lies with an organization outside the hierarchical accountability system that is traditionally used in the public sector (Bovens, 2005). What is considered an advantage from the NPM perspective could thus be a disadvantage if considered from the public accountability perspective. According to Behn, there is a need to develop a ‘process, a mechanism, system, a concept, a something that not only permits public agencies – and their collaborators in the for-profit and non-profit sector – to produce better results but also ensure accountability to citizens’ (Behn, 2001: 33).

What also changes with the introduction of hybrid organizations is how information flows between citizens and elected politicians (Hodge and Coghill, 2007). In the hierarchical system, information is regarded as flowing from the top to the bottom as well as from the bottom up (Bovens, 2005). Now, a large part of the information on the performance of the hybrid organization depends on the willingness of hybrid organizations to report back and to be accountable to government and citizens.

Another important aspect is that all hybrid organizations are subjected to multiple and conflicting goals. Hybrid organizations provide public services and are politically governed at the same time as they are expected to behave in a business-like manner (André, 2010; Koppell, 2003); their performance is based upon market-based control mechanisms and financial performance indicators (Shaoul et al., 2012). The result is a conflict of goals and interest that is inherent in hybrid organizations (Thomasson, 2009). This conflict of goals complicates the ‘for what’ question, that is, ‘What are hybrid organizations to be held accountable for?’ Is it the way they live up to democratic values? Is it the way they perform financially? Or is it both of these things?

Most likely, hybrid organizations are expected to live up to both these goals (André, 2010; Luke, 2010; Skelcher, 2009; Thomasson, 2009). This expectation, however, requires that the accountability system in place for holding hybrid organizations accountable considers both aspects. According to Sands (2006) as well as Shaoul et al. (2012), this is not the case in current PPP solutions. The system traditionally used for claiming accountability in public sector organizations is thus perhaps no longer sufficient since it does not encompass the horizontal relationship. Neither does the existing system ensure the flow of information between the new hybrid form and citizens. The accountability system in place for holding governments accountable thus does not cover the hybrid forms (Sands, 2006; Shaoul et al., 2012); there is an accountability gap (Sands, 2006).

Instead, hybrid forms are held accountable based on market mechanisms, which do not consider democratic values. There are thus indications that the dual goals of hybrid organizations are not considered within existing accountability systems. The observations of Sands (2006) and Shaoul et al. (2012) are supported by previous studies, not only on PPP solutions but also on other types of hybrid solutions (Romzek, 2000; Van Ham and Koppenjan, 2002; Watson, 2003). To summarize the findings of previous research, accountability in the relationship between citizens and elected politicians (a vertical relationship) is traditionally claimed through a hierarchical system based on public values (see Figure 1). With the introduction of hybrid organizations, two other relationships have been identified, that between the hybrid organization and elected politicians (a horizontal relationship), and that between the citizen and the hybrid organization (a customer relationship). Today horizontal accountability as well as accountability in the customer relationship is considered to be secured through market mechanisms. The question asked here is this: Is it enough to have a system based on market mechanisms to ensure that hybrid organizations are accountable? Or does society need a context-specific system that also ensures that public values are secured in both horizontal and customer-based relationships?

Figure 1.

Relationships and mechanisms through which accountability is claimed in hybrid organizations

Method

Because of the exploratory nature of this study, the qualitative case study method was chosen. A case study is appropriate in studies whose aim is to understand the complexity of a phenomenon within its context, since it allows several aspects to be considered in the analysis (Bryman and Bell, 2003; Eisenhardt, 1989). The advantages of this method correspond with the need identified by Hodges (2012) for understanding how accountability is influenced by specific circumstances – in this study, the hybrid situation. The first step in the case was to develop a framework based on previous research in the field of public accountability and accountability in hybrid organizations. This resulted in the development of a model describing the various accountability relations and the mechanisms used for securing accountability for each of the three relationships identified. This model was then applied to the analysis of the chosen case: Copenhagen Malmö Port (CMP). CMP is an organization that is hybrid in more ways than one. First, it is a corporation owned by public authorities (two municipalities) and therefore an organization that combines public ownership with a private sector organizational structure (Thynne, 1994). Second, it is a PPP between two municipalities and several private corporations. As a consequence, the company combines a public mission with profit-oriented services. The PPP character thus further accentuates the combination of public mission and profit orientation. Third, one municipality is Swedish and the other is Danish, which adds yet another dimension to the hybrid character of this organization. The case thus fulfils several of the criteria in the literature (see, for example, André, 2010; Koppell, 2003; Thynne, 1994). It combines public sector ownership with a private sector profit-oriented organizational structure; in addition, it is an organization with dual goals, a public mission and a profit orientation.

The empirical data were collected through semi-structured interviews with board members and the CEO. The researchers encountered problems when trying to get in touch with Danish representatives on the board but finally managed to obtain an interview with one of the Danish board members. In total, five interviews were conducted by the authors in late 2011 and early 2012. Each interview lasted between one and two hours. Following the interviews, the material was transcribed and analysed. Besides interviews, documents such as the agreement between the owners, directives given by the owners to the company and annual reports and financial reports were studied.

The analysis of the material was conducted in accordance with the model developed (as illustrated in Figure 1). As the first step of the analysis, we aimed to answer the questions of ‘who is accountable to whom and for what’ in hybrid organizations and how accountability was secured in the three relationships identified in the model. The result of this first part of the analysis is presented in the next section of this article: ‘Accountability in the case of CMP’.

As a second step, we analysed the ability of existing mechanisms within these relationships to capture the dual goals of hybrid organization and to bridge the accountability gap. The results of this analysis are presented in the section of this article headed: ‘Bridging the gap through the accountability process’ which also presents the conclusions of the case study. Even though the analysis is based on one case, it is possible to make a theoretical contribution through a case study by analysing and comparing empirical data with existing theory (Bryman and Bell, 2003; Eisenhardt, 1989). Yin (2003) refers to this as ‘analytical generalization’ and this is the method chosen for this study.

Accountability in the case of CMP

Case background

Copenhagen Malmö Port was founded in 2001. The foundation of the corporation was the result of a merger between the port and terminal operations in Malmö, Sweden and the port and terminal activities in Copenhagen, Denmark. The reasons behind the merger were the changing conditions in the market due to the opening of the Oresund Bridge between the two cities. Board members of the corporations on both sides realized that the bridge would mean increased competition, but also new opportunities. To meet the new challenges, the decision was made to merge the two ports and accordingly be able to take advantage of the different strengths of each port. Today the company has 500 employees. CMP is the largest port operator in the Nordic region with a key position in the Baltic. The annual turnover in 2010 was 75,190,000 euros.

As the head office of the company is based in Malmö, Sweden, CMP is subject to the Swedish Company Act. All limited companies in Sweden, regardless of whether they are owned by public authorities or private interests, are subjected to this act and expected to be run for profit. CMP is a public–private partnership with one Danish owner and several owners on the Swedish side. On the Danish side, the CMP owner is City and Port Development, which owns 50 percent of the shares. City and Port Development is in turn owned by the city of Copenhagen together with the Danish state. The purpose of City and Port Development is to develop the port of Copenhagen and the areas around the Oresund Bridge. On the Swedish side, the ownership is divided between the city of Malmö, which owns 27 percent of CMP and various private corporations, which own 23 percent.

The board consist of 12 members. Eight of these are elected by the owners and four are employee representatives elected by the union (two from the Danish side and two from the Swedish side). The directors elected by the owners are appointed to the board by the annual general meeting, and the influence each owner has on this meeting is based on the number of shares. This means that the city of Copenhagen, as the largest owner, has a larger degree of influence over the company than do the other owners.

CMP operations cover a range of business areas from logistics and transport of consumer goods to passengers. CMP rents the land and the operational facilities from the owners. The city of Malmö owns the land and the infrastructure of Malmö Port, and City and Port Development owns the land and the infrastructure on the Danish side.

It is thus the owners that make all decisions regarding what investments to make; they also bear the risk. This solution gives the owners full control over the land and the infrastructure and enables them to make decisions about the development of the port areas and to coordinate this development with the development of the cities. How the owners may charge rent and the level of rent they can charge the corporation are regulated in agreements where the terms and conditions are equal for both owners. During 2010, the agreements were re-negotiated by the owners and the rent was increased. The reason for the increase was that the owners wanted to ensure that the operations were not subsidized by the public sector since this is not allowed according to EU regulations. When it comes to dividends, there are no formal agreements, but informally the figure is around 25 percent.

Relationships and mechanisms of accountability in the CMP case

As a first step of analysis, we present the three relationships of accountability as shown in Figure 1 as well as the mechanisms in play in these relationships. First, we have the horizontal relationship: that between the owners and CMP, as regulated by the Swedish Company Act and the agreements made by the owners. That is, the owners can only apply the governance mechanisms provided in the Company Act to control and govern CMP. Those mechanisms are to appoint members to the board, appoint auditors, attend the annual general meeting and at that meeting decide on directives to give the company.

Second, we have the vertical relationship: the relationship between elected politicians and citizens, characterized by democratic mechanisms. The citizens of Malmö and Copenhagen have the opportunity through general elections to hold their politicians responsible for the decisions they make. Third, we have the customer relationship between the company and the various actors that enter into customer relationships with CMP. Because of the character of services provided by CMP, these actors are mainly various types of companies and not individual citizens. In the CMP case, the citizens of Malmö and Copenhagen are not customers of CMP. Instead it is organizations (private companies as well as public sector organizations) that are the customers of CMP. In this article, we will focus only on the first two relationships and not the customer relationship.

Ownership and influence

The relationship between the city of Copenhagen and CMP differs from the relationship the city of Malmö has with the company. In Malmö, ownership and responsibility for the governance of the company lie with the public authority and the political assembly of the city, that is, the elected politicians in the assembly, who also appoint members to the board and decide on directives to the company. In Copenhagen, the responsibility for appointing board members and writing directives to the company has been delegated by the politicians governing the city of Copenhagen to the organization called City and Port Development. The fact that the vertical relationships encompass yet another organization might complicate the understanding of the citizens of Copenhagen as to who to hold responsible for activities conducted by CMP.

Election of directors and the role of the board

The representatives that Malmö city appoints to the board are two leading politicians in Malmö. The Danish owner appoints politicians as well as non-politicians to the board. Directors interviewed from Malmö stated that they elected politicians to the board with the purpose of protecting political interests and ensuring public scrutiny. One of the board members from Malmö explained it this way: ‘The directors on the board represent the owners’ interests before the interest of the corporation.’

The representatives on the Danish side had a somewhat different view on the role of the board members they appointed. The Danish point of view is first and foremost to ensure that the elected representatives have proper competence to run the company and have connections that are useful for the company. The protection of political interests is thus not stated, at least not openly, as the role of the Danish board representatives.

One may conclude from this, therefore, that there seems to be a closer connection between the board and the elected politicians in Malmö than there is in Copenhagen. The question is to what extent this influences the ability of politicians to hold CMP accountable and, in turn, to what extent it influences the citizens’ ability to know who to hold accountable for the activities conducted by the company.

According to the literature, to put politicians on the board could decrease the distance between elected politicians and the governance of the company and increase the political influence and the ability of the elected politicians to hold the company accountable, especially since this could facilitate the flow of information which is a prerequisite for accountability (Bovens, 2005; Mulgan, 2000). This indicates that the mechanisms of securing accountability in the horizontal as well as the vertical relationship ought to be better protected in the governance solution chosen by the city of Malmö.

Another aspect that surfaced during the interviews was that the work conducted by the board could be divided into formal and informal areas. According to one of the directors from the city of Malmö, several decisions are made in a dialogue between the chairman and the deputy chairman of the board during meetings that take place outside the formal board meetings. This indicates that the ability of the owners to hold the company accountable, through representatives on the board, is impaired since the flow of information and transparency is reduced and in the long run this can affect the accountability that the politicians have towards the citizens (Van Ham and Koppenjan, 2002; Watson, 2003; Wettenhall, 2003).

The interests of the owners and the ability to protect these interests

From the interviews it was possible to discern that the interest of the private owners was to secure the survival of the port services as their own businesses depend on the port. In interviews with representatives from the municipality of Malmö, it became apparent that the ownership of the port is of strategic importance to the governing politicians. For one, the port is a prerequisite for many companies; to have a viable port is thus a way to secure trade and commerce in the city. Also, to own the port gives the city control over a geographical area of strategic importance for the development of the city. The interests of the city of Copenhagen are similar to those of Malmö. In Copenhagen too there is an interest in preserving trade and commerce in the city and being able to control development of the port areas.

There is, however, a difference between the views of CMP expressed by the two public owners. During an interview with a Danish representative on the board, the question of selling the company came up, to which the representative answered: ‘The operations are commercial and do not have a clear public mission and we see therefore no reason why it should be owned and managed by the public sector.’ When the same question was put to one of the Swedish directors on the board, he answered, ‘The port activities are central to the municipalities and we want to keep the influence and control over the ports and that is why we are owners of CMP and we have no interest in changing this’. It thus seems that the interest of the Danish public owner is more short term, while the Swedish public owner and the private owners have a more long-term perspective on the ownership.

To summarize: the public and private owners all seem to share the view that the port services must be viable and sustainable in order to secure the future of the port. The difference between the public and the private owners is that the public owners are also interested in the role the port plays in the future development of the city and its residential and recreational areas. That is, the interests of the public owners are more multifaceted because of their interest in not only protecting the business, but also preserving what are regarded as public values.

Interesting to note here is that differences exist not only between the public and private owners but also between the two public owners. These distinctions could be a consequence of cultural and political differences between the two countries or the outcome of different political views.

The differences in regard to company interests in the organization have until now not presented any difficulty in the collaboration between the owners. One reason for this could be that all owners are primarily focused on securing return on investment, that is, the financial performance of the company, and the company has been able to live up to these expectations. Another reason could be that the current agreement is valid until 2024 and during the time of the agreement there is no reason to discuss the purpose of the company.

This latter explanation is supported by the fact that the CEO of the city of Malmö stated in an interview that the negotiations that preceded the latest contract were cumbersome. This was because of different views between the owners in regard to how to assess the rent. The CFO described the situation like this: ‘It is not easy to say that more income is generated on the Danish side. It could just as well be that some of the activities that were previously conducted in Copenhagen are now conducted in Malmö, which has opened up for other types of activities in Copenhagen that in turn generate a larger profit.’ This statement signals a potential conflict of interest as well as internal competition between the two public owners. However, if the owners begin discussing the question of selling CMP, the situation could be different and a conflict of interest could emerge even during the existing contract period. For example, if the city of Copenhagen decided to sell its share to a private investor, the city of Malmö would become a minority owner of a mainly privately owned company.

Evaluation of company performance

An extract from the CMP directives shows that the company has the following mission:

CMP is a commercial company that creates value for the transport and logistics sector and for the society we are part of. CMP is driven by a vision of being a leading port operator concerning market position, environment, quality and power of development. ‘We are the leader’ within our sector and location. This is our business vision and our business idea is to sell and provide port, terminal and transport services.

As the mission statement declares, CMP is foremost a commercial company. However, the company mission also encompasses other values, for the directives also state the mission to ‘Create a strong connection between port operations and the entire infrastructure and to take part in creation of growth and employment’. The two statements clearly reflect the interest of the public owners in stimulating business and the development of the infrastructure of the region as well as within the two cities. They are, however, only parts of the mission statement, which largely focuses on the commercial aspects of the company.

The directives not only contain the mission, but also declare on what factors the performance of the company is to be evaluated. According to the CEO, the main focus of the evaluation is the financial performance of the company. Because the transportation sector is highly competitive, directors also receive regular reports on the number of customers, including the number of new customers. The focus on financial aspects also corresponds well with the common interest of the owners and the focus of the company mission statement.

At the core of the evaluation of CMP is thus the commercial, profit-oriented part of the company. This raises questions as to whether the public owners are actually given the right information to hold the company accountable for how it protects the public interest. In discussions with representatives on the board, they seemed to be of the opinion that the public interest coincides with a profit-oriented focus, that is, to protect the owners’ investments and to secure the port services. This raises questions as to what extent the dual goals of hybrid organizations are considered in the evaluation of CMP. Further, it indicates that the public owners do not make full use of the directives, which represent one of the governance mechanisms available to them to secure accountability in the horizontal relationship.

Summary of results

The answer to the question ‘Who is accountable to whom and for what?’ in the case of CMP is that, in the horizontal relationship, CMP is accountable to the public and private owners through the governance system. This is also the channel through which information flows between the hybrid organization and the public authorities, and it is the relationship recognized by both parties (Bovens, 2005; Mulgan, 2000). In this relationship, the focus is on financial figures and performance. The results thus support those of Behn (2001) regarding accountability in the wake of NPM reforms; they also support the notion of mission drift in PPP (Sands, 2006; Shaoul et al., 2012).

The ability of the owners to hold CMP accountable for their actions is thus restricted to financial performance because of the focus on the horizontal relationship. These are consequently the parameters that the owners (the elected politicians), in turn, can present to citizens when asked about CMP. The emphasis will therefore also be more on performance in the horizontal relationship because the owners, due to their focus on the vertical relationship, have more information on performance than they have on fairness and process, the other parameters mentioned by Behn (2001). The ability to claim accountability in the vertical relationship thus rests upon how accountability is claimed in the horizontal relationship. In the case of CMP, the latter should be improved to secure not only financial performance but also public values.

The results of this study thus support the assumptions made in earlier research about the difficulties of combining the dual and often conflicting goals of hybrid organizations (Romzek, 2000; Van Ham and Koppenjan, 2002; Watson, 2003).The next question is whether the existing system can bridge the accountability gap or whether a context-specific system tailored for hybrid organizations is needed.

Bridging the gap through the accountability process

As the results of the case study show, the way that accountability is claimed in the horizontal relationship influences the extent to which elected politicians can be held accountable in the vertical relationship. That is, the information from the horizontal relationship will come to influence the information that elected politicians can provide to citizens and will influence the focus of performance in the hybrid organization. This means that if public values such as fairness in processes and public goals are not regarded in the vertical relationship, they will not influence the performance of the hybrid organization.

This, however, does not mean that the system in place is inadequate; rather, it means that the way the system is used is inadequate. The system in place is sufficient; the problem is the extent to which public interest is protected by elected politicians. The problem will thus not be solved by a new system, but lies with how elected politicians protect public values. The thrust of future research should therefore not be how to develop a context-specific system as suggested by Shaoul et al. (2012), but rather to what extent public values are incorporated into directives and mission statements of hybrid organizations and to what extent they are followed up by elected politicians. The results from this study are thus more in line with those of Willems and Van Dooren (2012): that the new horizontal ways of securing accountability do not necessarily need to be embedded in the previous vertical systems. Instead, they suggest that a multidimensional approach in which accountability is claimed in different forums could be a way to increase the ability to hold responsible people to account for their decisions.

What this study shows is that it is not the type of system in place that is of importance, but how this system is used, that is, the process is equally important as the system. This means that attention should be directed towards how people in and around hybrid organizations work with accountability issues. Another aspect to be addressed in bridging the accountability gap is how well aligned are the interests of the owners in cases where there is more than one owner. The lack of alignment of interest between the owners may be one possible explanation of mission drift. Previous studies have addressed the discrepancy between owners’ interest in the case of PPP (see, for example, Klijn and Teisman, 2000; Osborne and Murray, 2000; Shaoul et al., 2012). Yet what the present study shows is that alignment of interests can also be lacking between two public owners. If the interests of owners are not aligned, the question of ‘for what’ to hold the organization accountable as well as the actual evaluation of performance becomes more complicated. This further strengthens the conclusions that the process is of more interest than the system in place.

Concluding remarks

The purpose of this study has been to begin an exploration of whether accountability is secured in hybrid organizations through the use of existing corporate governance systems or whether a more context-specific model is needed. For this purpose, we developed a model based on previous research on accountability in hybrid organizations (Figure 1).

The theoretical contribution of this study is that, contrary to previous research, it is not the system in place that is the problem, but how the system is used and how accountability is secured within that system, i.e. the process. The need therefore is for more focus on how accountability is secured within the existing system. This requires attention to the extent to which public values are represented in the mission statement as well as the extent to which performance is judged on the basis of protecting these values. It also requires more research on how to reach alignment of interest between public and private owners, as well as between different public owners, for with the latter, the interests could differ because of political affiliation.

The practical implications of our findings are that politicians and public sector managers need to focus more on how accountability is secured in relation to hybrid organizations, and how performance is evaluated and reported back to the political organization. However, further studies are needed to provide more knowledge about how the process of securing accountability can be improved.

We need to further develop our knowledge of the processes of securing accountability within existing systems. Within processes of accountability, we need to ensure that the dual goals of hybrid organizations are protected in order to avoid mission drift. So further studies are necessary to increase our knowledge of how politicians and public sector managers can work with processes of securing accountability within existing systems.

The results presented in this article show the need for more studies on accountability in hybrid organizations – to understand the processes by which people in and around hybrid organizations work with accountability issues. These are issues that require more in-depth empirical studies.

Footnotes

Acknowledgments

The authors wish to thank the directors of Malmö-Copenhagen Port for their kind participation in interviews and for making material available. The authors are also grateful to the journal editor, anonymous reviewers, Irvine Lapsley, and Isabella Proeller for helpful comments and suggestions. The authors would like to thank the participants in the LARS Seminar in May 2012 in Lund University, and the 22nd Nordic Academy of Management Conference in Reykjavík in August 2013 for their helpful comments on earlier versions of this article.

Giuseppe Grossi holds a PhD and is Professor in Public Management and Accounting at the School of Health and Society, Kristianstad University. Grossi’s research focuses on public governance, whole-of-government accounting and performance budgeting. He is the co-chair of the Accounting and Accountability Special Interest Group, IRSPM. Grossi recently published the book, Public Sector Accounting, with two colleagues (Routledge, 2014).

Anna Thomasson holds a PhD and is Assistant Professor at the School of Economics and Management, Lund University. Thomason’s research focuses on corporate governance in public sector services, public procurement and privatization of public sector services. Thomasson recently published an article together with a colleague in Public Management Review regarding public procurement.

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