Network analysis of private water companies: challenges, collaborations, and competition

This thesis consists of four papers, which together address questions about the private participation in the water sector since early 1950s. Water sector, as an essential infrastructure sector, has been the topic of extant research, and private participation in this sector has also attracted a lot of attention among scholars and policy makers. Many studies in the existing literature focus on cases of private companies’ involvement in the sector (for example, in specific regions or countries), while others discuss trends based on available data. This work attempts to build a multi-disciplinary framework in order to look at private participation in the sector from various aspects, including the overall trends of governments and companies’ tendencies to work together on water projects, and companies’ collaboration in projects. By investigating collaborations, some insight into competition between entities involved is also obtained. To achieve the goal for this study, World Bank database on Private Participation in Infrastructure (PPI), and Orbis database on companies’ parent-subsidiary information (used for Veolia Environment S.A. and Suez S.A.) are used. Various descriptive and statistical methods are then used to analyse the data, including Social Network Analysis (SNA) measures and metrics, Multiple Correspondence Analysis (MCA), and General Method of Moments (GMM). The first paper attempts to provide a wholistic view of the associated literature, while the second paper and third paper focus on the World Bank PPI data and its analysis. The inspiration behind paper three is the studies by Gulati on formation of strategic alliances, specially “Where do interorganizational networks come from?” (Gulati & Gargiulo, 1999). The last paper discussed two multinational companies, Veolia Environment S.A. and Suez S.A, which are known for the scope of their activities in the water sector. The results of analysis and the insight gained from this study have been discussed with close attention being paid to the specificities of the water sector. The descriptive analyses carried out in paper 2 document the extent, scope, and timeline of public-private partnerships in the water sector throughout the developing world, over almost 7 decades. The analyses show how commercial enterprises – both local/national and multinational – have seized the opportunities opened by privatisation policies in different national contexts. This chapter shows very clearly that water services are an international economic sector: if services are to be provided at infra-national level, providers are often positioned at supra-national level, and often operate in multiple national contexts simultaneously. The results of paper 3 suggest that there is an effect of the global structure of public-private partnerships on each new partnership that is created; one of the interesting findings is that the more private companies had collaborated in projects with public entities, the more they did again in consequent years. It is for this reason that the case-study approach misses some important explanatory factors, and it is for this reason that my approach contributes to the existing knowledge. I also find that local factors matter, as seen in the case of China, and that dyad-level factors matter too, such as geographical proximity and similarity between a government and a private company. These results suggest that despite its elements of novelty, my research is still consistent with what previous literature has found. In the fourth paper, it is found that the two prominent environmental services companies, Veolia Environment and Suez, follow different foreign penetration strategies, and through blockmodeling it is suggested that interaction between subsidiaries of the two firms is more or less between those in higher income countries. The analysis of these two companies, with specific attention paid to how their subsidiaries operate on a global level are discussed in view of the OLI paradigm, and reveals interesting insights which are useful for strategy decision making and policy implementations when it comes to private companies’ involvement in the water sector