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BASXXX10.1177/0007650316684822Business & SocietyLin

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Business & Society
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Government–Business © The Author(s) 2016
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DOI: 10.1177/0007650316684822
https://doi.org/10.1177/0007650316684822
Eco-Innovation journals.sagepub.com/home/bas

Haiying Lin1

Abstract
This study assessed whether and how government–business partnerships
(GBPs) offer a unique platform that targets profound environmental impacts
via the promotion of radical eco-innovation. It applied transactional cost and
complementary logics to explain the rationale of GBP formation for radical
eco-innovation, and further assessed the operation of GBPs from governance,
learning, and rulemaking aspects. This study applied propensity score
matching technique to empirically test these theoretical associations using 225
observations representing 166 U.S. firms’ participation in 192 environmental
alliances between 1985 and 2013. The study results confirmed GBPs’ role in
channeling public and private efforts in pursuing transformative environmental
change via the adoption of radical eco-innovation goals. Results highlight four
critical elements of GBP operation—effective governance, exploration learning,
cognitive learning, and rulemaking—that enable participants to embrace these
radical environmental solutions.

Keywords
corporate social responsibility (CSR), political strategy, self-regulation,
sustainable development

In recent decades, the magnitude and urgency of significant environmental

challenges—natural resource depletion, the grand scale of species distinction,

1University of Waterloo, Ontario, Canada

Corresponding Author:
Haiying Lin, School of Environment, Enterprise and Development, Faculty of Environment,
University of Waterloo, 200 University Avenue West, Waterloo, Ontario, Canada N2L 3G1.
Email: h45lin@uwaterloo.ca
2 Business & Society 

widespread deforestation, increasing desertification, transnational air pollution,

and water usage (all related intimately to the meta-environmental issue of cli-
mate change; Heintzman, 2006)—require a call for transformative change that
bypasses existing routines and initiates new mechanisms of knowledge sharing
and invention (Hart & Milstein, 2003). Radical eco-innovation is a means of
achieving such transformative change as it involves the development of new
products, the formulation of new markets, and identification of new means of
sustainable servicing existing markets (Etzion, 2007; Kemp, 1994). Emerging
environmental challenges associated with global sustainability may be cata-
lysts for a new round of radical eco-innovation offering unprecedented busi-
ness opportunities (Hart & Milstein, 1999). For instance, businesses may seek
to redesign current product systems, and launch new products and services with
fewer or zero environmental impacts.
These sustainability-related business opportunities, in incorporating envi-
ronmental and social concerns into development of new markets, create pub-
lic goods with unpredictable private benefits, the promotion of which thus
calls for public sector involvement. In recent years, governments have begun
fostering more decentralized approaches in policy and production of scien-
tific knowledge in an effort to better accommodate the complexity of envi-
ronmental decision making (Lalor & Hickey, 2014). They increasingly act
beyond the traditional role of regulator (Manring, 2007), becoming active
participants in government–business partnerships (GBPs) in an attempt to
produce public goods that foster more significant environmental change (Lin,
2014; Van Tulder, Seitanidi, Crane, & Brammer, 2015). Such GBPs are a
form of cooperation between government and business sector, which enable
them to share resources, risks, and mutual benefits with an eye toward trans-
forming existing environmental practices through eco-innovation (Lin, 2014;
Van Tulder & Pfisterer, 2014).
Despite the significance of GBPs for transformative change, the formation
and operation for such an endeavor have limited coverage in the literature, as
is their in-depth empirical investigation (Roehrich, Lewis, & George, 2014).
The extant cross-sector partnership (CSP) literature has investigated CSP for-
mation for sustainability-related improvements (Selsky & Parker, 2005,
2010). This scholarship, however, has its limitations as it concentrates on the
collaborative interface between businesses and non-government organiza-
tions (NGOs; Bryson, Crosby, & Stone, 2006; Le Ber & Branzei, 2010;
Selsky & Parker 2005), and GBPs received relatively limited attention. While
a few innovation-related studies have investigated GBPs by means of a case-
study design (Kaiser & Kuhn, 2012; Robin & Schubert, 2013), those studies
focused on conventional innovation and a limited European Union (EU)
context.
Lin 3

However, the growing body of public–private partnership (PPP) literature

involves both GBPs and government–NGO partnership. This stream of GBP
literature has traditionally taken two directions: either GBPs as an alternative
financial mechanism that attracts private investment in public infrastructure,
or GBPs as an alternative public service delivery mechanism with enhanced
efficiency (Brinkerhoff & Brinkerhoff, 2011; Lin, 2014; Selsky & Parker,
2005; for an overview, Song, Zhang, & Dong, 2016). These traditional GBP
arrangements are normally found in sectors where substantial initial capital
investments are required, which offer cost recovery, private finance initiative,
and risk-sharing opportunities (Bouman, Friperson, Gielen, & Wilms, 2013;
Song et al., 2016).
This literature stream thus assesses GBP performance from an instrumen-
tal or efficiency gain aspect (e.g., cost savings; Hartwich & Tola, 2007). It
indicates that GBP formation is mostly based on resource mobilization
motives rather than for effectiveness reasons (Bouman et al., 2013;
Brinkerhoff & Brinkerhoff, 2011).
However, GBPs formed in addressing daunting environmental problems
may go beyond instrumental aims. GBPs as a deliberated strategy mechanism
that champions transformative environmental change are rarely covered in
the extant GBP literature. Even though a few studies (Lin, 2014; Stadtler,
2015) have specifically explored the antecedents of GBP formation for envi-
ronmental improvements and the governance of such partnerships, they have
not fully explained how these GBPs are operated, nor whether they encour-
age partners to pursue more radical innovation goals or simply incremental,
and reactive, environmental improvements. The normative aspects of these
GBP operations have not been fully analyzed in the extant literature.
Given the complexity and scope of environmental challenges, it is impor-
tant to assess and understand whether and how GBPs offer a unique platform
that targets profound environmental impacts via the promotion of radical eco-
innovation. This study attempts to fill this literature gap by systematically
assessing the formation and operation of GBPs in pursuit of radical
eco-innovation.
In this article, I ask “whether” and “how” GBPs offer a unique platform
that targets profound environmental impacts via the promotion of radical eco-
innovation. It advances the business sustainability, CSP, and PPP literature by
highlighting GBP’s significant and positive role in channeling public and pri-
vate efforts in pursuing transformative environmental change via the adop-
tion of radical eco-innovation goals. It further advances the alliance and
environmental innovation scholarship by explaining “how” GBPs facilitate
participants in their pursuit of radical eco-innovation from four operational
dimensions—effective governance, exploration learning, cognitive learning,
4 Business & Society 

and rulemaking. While these elements have both instrumental and normative
aims, my study highlights the normative aspect of GBPs for radical eco-inno-
vation. These elements expand the literature regarding “What is an effective
governance” and “What is an effective learning” in alliance pertaining to
radical eco-innovation. It highlights the limitation of instrumental means
(e.g., financial risk sharing under the traditional GBP infrastructure project),
and proposing more normative aspects, such as “reciprocal commitment,”
that govern GBP formed for radical eco-innovation, and cognitive learning
that help participants build transformational change vision.
The article begins with a literature review of eco-innovation, followed by
the application of transaction cost and complementary logics to view the
rational of GBP formation for radical eco-innovation. I then illustrate GBP’s
four operational elements from instrumental and normative perspective, and
came up with five hypotheses. The method session explains the sample, sta-
tistic model, measurements, and results. The study concludes by discussing
the theoretical and policy implications of the findings.

Theory Development: Formation and

Operationalization of GBPs for Radical Eco-
Innovation
Typology of Environmental Solutions
Scholars conceptualized eco-innovation as a continuum with reactive and
radical eco-innovation anchoring both ends of the spectrum (Aragon-Correa,
1998; Hart, 1995).

Reactive environmental solutions. Reactive environmental solutions respond to

changes in environmental regulations and stakeholder pressures via invest-
ments in end-of-pipe pollution control measures (Aragon-Correa & Sharma,
2003). End-of-pipe pollution control technologies include a multitude of bio-
logical and chemical systems used for treating water, barrier systems used for
treating air, and disposal methods for other forms of solid waste (Henriques
& Sadorsky, 2005). These solutions usually involve the use of pollution-elim-
inating or sorting instruments. This is an off-the-shelf compliance-based or
legislation-push response (Roome, 1992) mainly utilized to reduce business
risks while hoping that the environmental response meets regulatory and
community standards (Bansal & Roth, 2000). Such reactive environmental
solutions align with, and are enforced by, command-and-control regulatory
measures specified by legislation and rule prescribing which environmental
technologies are permitted and which are illegal (McManus, 2009).
Lin 5

Incremental environmental solutions. In the 1990s, environmental regulations

shifted toward more flexible “cap and trade” schemes. For instance, the U.S.
Pollution Prevention Act of 1990 was a national policy decreeing that pollution
should be prevented or reduced at the source wherever possible (U.S. Environ-
mental Protection Agency [USEPA], 2012). Pollution prevention technologies
extract and use natural resources more efficiently, generate products with fewer
harmful components, minimize pollutant releases to air, water, and soil during
manufacturing and product use, and involve the design of durable goods that
can be reused or recycled (Organisation for Economic Co-Operation and
Development [OECD], 1995). Such a scheme encourages better maintenance,
material substitution, recycling, and innovative procedures to decrease, or pre-
vent, toxic emissions and waste during manufacturing processes and product
use (Hart, 1995). Pollution prevention not only saves costs related to installing
and managing end-of-pipe pollution control mechanisms, but it can also
increase productivity and efficiency levels because reduced waste translates
into a more efficient use of inputs, which results in lower raw material and
waste removal costs (Schmidheiny, 1992; Young, 1991).

Radical eco-innovation. Pollution prevention allows firms to maintain their core

practices through incremental environmental solutions. Such measures may,
however, face constraints when dealing with grand environmental challenges
such as deforestation, biodiversity loss, and climate change. Such complex envi-
ronmental issues have driven demands for clean technologies or radical eco-
innovations that produce cleaner fuels and power, developing new methods of
sustainability within existing markets, or driving a major transition that alters
existing markets or creates new ones (Christmann, 2000; Etzion, 2007; Hoff-
man, 2005; Sroufe, Curkovic, Montabon, & Melnyk, 2000). This is the most
radical environmental solution and is variously referred to as a “leading edge”
approach (Roome, 1992) or “business redefinition” (Sharma & Henriques,
2005). There is growing voice within the business community and civil society
for decisive corporate changes via the adoption of radical eco-innovation
(Heintzman, 2006). Within the government authority, the scope of complex
environmental issues has made instituting multi-jurisdictional controls a chal-
lenge (Lin & Darnall, 2015). Increasingly, many governmental agencies are
going beyond the limitations inherent in regulatory system requirements and
collaborating with businesses to foster more radical solutions.

A Risk Perspective of Eco-Innovation

Environmental problems (and the societal expectations that come with them)
create decision-making risks. The structure, consequences, and probabilities
6 Business & Society 

of many environmental problems are not fully known (Baird & Thomas,
1985). Firm managers are often not fully aware of the extent of the risks, the
available options to address them, and how large and immediate the out-
comes would result from the impact of those risks (Baird & Thomas, 1985).
In the meantime, firms are facing increased societal pressures to adopt radical
eco-innovations that will require identification of alternative energy and
material, redesigns of their current product systems, and/or the launching of
new products and services.
For instance, climate change issues increase business risks, insurance
costs, and the possibility of more stringent regulation and public sanctions
(Kolk & Levy, 2001). As public concerns about destructive environmental
degradation related to climate change (e.g., floods, hurricane, drought)
increase, public and civil society (especially environmental NGOs) play
increasingly important roles to mobilize public sentiment, alter accepted
norms, and impose new roles on the business to phase out fossil fuel econ-
omy that radically addresses climate change issues. Yet, undertaking such a
transition from fossil fuel to renewable energy (e.g., use fuel cells to replace
fossil fuels such as coal, oil, and natural gas as the world’s primary energy
source) generates great uncertainty and financial risk for business, as such
radical innovations are costly to develop and are limited to commercializa-
tion (Lin & Darnall, 2015).
In this context, unresponsive firms may face public scrutiny and regula-
tory sanctions, while responsive firms may increase their investment risk
when undertaking measures to address these environmental problems. These
consequences make most firms cautious of pursuing environmental solu-
tions. Consequently, firms may invest in reactive (end-of-pipe) pollution con-
trol technologies and only tackle environmental problems after they have
occurred, or cautiously invest in pollution prevention approaches when the
technologies have proved to be technically and financially suitable for com-
mercial adoption. Firms confront increased investment uncertainty when
they advance toward the adoption of radical eco-innovation. Such a radical
approach requires significant research and development (R&D) investment
for new technologies or products; however, the investment outcomes are dis-
tant or highly uncertain, and frequently do not produce the intended payoffs.
This radical eco-innovation goal has thus a high chance of termination as a
result of “perceived lack of fit with the current strategy and high risk” (Greve,
2007, p. 950).
Comparing the three types of environmental solutions (specifically reac-
tive, incremental, and radical ones), one point of departure is the distinction
between reactive/incremental solutions, “which advance existing technology,
and radical innovations, which develop new technology” (Greve, 2007, p.
Lin 7

947). The distinction lies in whether the environmental innovation requires

extensive and radical modification to firms’ current business domain, opera-
tion, and the underlying values, assumptions, and cognitive frameworks.
Reactive/incremental eco-innovations focus on maintaining and refining
extant business practices and grabbing low-hanging fruits that ameliorate
immediate environmental concern. In contrast, radical eco-innovation “antic-
ipates future regulations and social trends, and designs or alters operations,
processes, and products to prevent” (rather than merely ameliorate) negative
environmental impacts (Aragon-Correa & Sharma, 2003, p. 73). Such a dis-
tinctive feature results in different environmental impacts for adopting firms.
The required scale of change (reactive/incremental vs. radical) related to
the continuum of eco-innovation extends different levels of risks and cost–
benefit structures to focal firms. In this context, pursuing these varied envi-
ronmental solutions reflects firms’ stance toward the natural environment and
the extent of risks they are willing to embrace in addressing environmental
problems. Transaction cost and risk-sharing logic become relevant in justify-
ing the rationale of GBP formation for radical eco-innovation.

GBPs Formation for Radical Eco-Innovations: A Transaction Cost

Logic
Public goods are non-rival and non-excludable, in that individuals cannot be
effectively excluded from use and where use by one individual does not reduce
availability to others (Varian, 1978). However, private goods are rival and
excludable, and they yield positive private benefits (Walter, 2004). In between
private and public goods are mixed goods (or impure public goods) that have
elements of both public and private goods (Ramesh, Nagadevara, & Naik,
2010). They include common goods that are rival but not excludable. Its supply
can be depleted, but people are not restricted in their use of the good, which are
susceptible to the Tragedy of the Commons (Hardin, 1968). Example includes
fish in the ocean. Mixed goods also include club goods that are non-rival but are
excludable. Examples include highway and membership of an industry club.
Environmental issues create negative externalities, and the states and the
markets are two of society’s main mechanisms for coordinating activity
related to the treatment of these hazards (Coase, 1960). As addressing these
issues provides both public and private benefits, Coase (1960) used the
proper allocation of cost and benefits related to the treatment of environmen-
tal externalities to determine whether the market or state should be in charge
of the treatment (Ramesh et al., 2010). Building on Coase (1960), Ramesh
and colleagues (2010) suggest that when environmental treatment generates
public goods, it will be the responsibility of public organizations. For instance,
8 Business & Society 

the tackling of many complex transboundary pollution problems such as

chlorofluorocarbons (CFCs) produces public goods, as the benefits (costs)
derived from limiting (not limiting) the pollutant are non-rival and non-
excludable (e.g., to a set of nations; Murdoch & Sandler, 1997). Therefore,
addressing these issues will be the responsibility of public sector as it is dif-
ficult to charge for individual’s welfare gain associated with the CFCs reduc-
tion (Elsig & Amalric, 2008).
However, if private goods are derived out of the environmental treatment,
private organizations are expected to be in charge (Ramesh et al., 2010). For
instance, reactive eco-innovation tends to create private goods as firms that
“fail to adhere to command-and-control regulatory mandates risk obtaining
unwanted negative media attention, community scrutiny, consumer com-
plaints, and public boycotts” (Lin & Darnall, 2015, p. 551). In such instances,
firms mainly focus on their own environmental hazards, risks, and threats
when pursuing reactive eco-innovation approach, which derives direct com-
pliance-related private benefits. According to Coase (1960), it is possible to
let private sectors handle such reactive environmental solutions directly due
to their stronger connection to private interests. For instance, in the late 1980s
and early 1990s, many inter-firm alliances were formed in the United States
to spread pollution control product and services in response to the command
and control legislations (SDC Platinum, 2013).
Nevertheless, in some environmental solutions the distinction between
public and private goods is not very clear. These are deemed mixed goods,
and hence to be provided by GBPs to meet dual public and private benefit
purposes (Ramesh et al., 2010). Radical eco-innovation tends to generate
such mixed goods, which could be club goods that are non-rival but are
excludable (e.g., clean energy generated through wind-turbine that benefits
certain users). It could also be common goods when it generates positive
externalities (e.g., research spillovers) and alternative environmental solu-
tions that are rival bur not excludable to the public.
The mixed goods generated by radical eco-innovation have both public
and private goods elements. In the existence of negative externalities, the
cutting-edge solutions created through radical eco-innovation may allow
firms to give back to society at large by driving significant ecological and
societal change (public goods). In the meantime, these solutions may offer
tremendous private benefits as they manage to increase brand value and shift
environmental and social concerns into new markets. They enable businesses
to outperform their rivals and achieve first-mover advantage (private goods).
However, the social value of radical eco-innovation, partially due to the exis-
tence of research spillovers, may lie above its private return. As such, com-
pared with reactive/incremental eco-innovation, radical eco-innovation
Lin 9

requires greater resource commitments, is more explorative in nature, is risk-

ier to pursue, and is thus hard to fully internalize the private benefits of their
R&D efforts. This external effect and the enhanced business risk leads to
underinvestment in eco-innovation from a social point of view, and thereby
justifies governmental intervention and involvement.
Building on the transaction cost framework articulated by Coase (1960)
and Ramesh and colleagues (2010), GBP is superior to both the government
bureaucracy and competitive markets in promoting mixed goods such as
radical eco-innovation, where public actors will be involved because of the
positive externalities but would not do it alone because of internal inefficien-
cies. Similarly, private sectors will be involved, provided they receive the
necessary returns, but would be reluctant to undertake these activities on their
own because they might not give them sufficient private benefits (Ramesh
et al., 2010).

GBPs Formation for Radical Eco-Innovations: A Complementary

Logic
In addition to transaction cost logic, other GBP scholars justify GBP formation
from a complementary logic, where the multi-actor partners from business,
government, and civil society sectors need to join forces to, integrated resources
and solutions required by the scope and nature of the problems being addressed
(Brinkerhoff & Brinkerhoff, 2011). Bouman and colleagues (2013) recognized
the comparative advantages as well as the differences in incentives between
public and business sectors that, whereas business partners “tend to be more
capable in providing incentives to maintain productivity (compared to their
public counterparts), the public sector is usually better equipped to account for
collective externalities” (p. 48). GBPs may become a preferred option to bal-
ance these mixed motives in a cost-effective manner.
Moreover, GBPs operate in between the market and state to undertake
deliberate actions that initiate, shape, and/or enforce a radical innovation path
diverging from current practices and routines. Given the complexity and
scope of environmental challenges, GBPs have the potential to generate rapid
and far-reaching environmental change impacts, partially due to the comple-
mentary logic when the public and private partners share critical resources
(e.g., power, funding, technical expertise) that cannot be easily exchanged by
means of market transactions. This setting thus offers unique advantages as
government partners can provide firm partners better access to decision mak-
ers and opinion makers, and they have better bargaining skills, reputations,
coalition building abilities, and possess political entrepreneurship (Frynas,
Mellahi, & Pigman, 2006). Government partners may provide incentives and
10 Business & Society 

infrastructures in a way that can help firms develop, deliver, promote, and
evaluate various policies, programs, or initiatives, which may accelerate the
search for and adoption of radical innovation.
In this context, firms aiming to launch radical eco-innovation increasingly
turn to governments for additional policy endorsement, financial subsidies,
and technical support. Developed nations, especially Organization for
Economic Cooperation and Development (OECD) countries, tend to provide
public support for innovative activity in the business sector through an appro-
priate mix of direct and indirect instruments such as tax credits, direct sup-
port, and well-designed GBPs (OECD, 2007). GBPs for inventions, since
legalized by the EU and Northern American policy makers in the mid-1980s,
have become popular over time (Caloghirou, Ioannides, & Vonortas, 2003),
and gradually evolved to the principal form of research cooperation
(Hagedoorn, 2002; Kaiser & Kuhn, 2012). Related to the R&D for radical
eco-innovation, many developed nations have increasingly leveraged GBPs
to promote clean technology and renewable energy.

The Operation of GBP for Radical Eco-Innovation

The dual purpose (public and private) of GBP brings both comparative
advantage and challenge. In addition to GBP acting as a catalyst for attracting
private funding and the skills of the private sector, such a cross-sector col-
laboration brings complexity to partnership design and operation beyond the
metrics of efficiency (transaction cost) and synergy (complementarity;
Bouman et al., 2013). Common challenges with dual structure and purpose of
GBP relate to developing a GBP design that allows aligning the partners’ dif-
ferent interests and priorities (Huxham & Vangen, 2000; Stadtler, 2015). To
this end, it is important for GBP partners to negotiate and design the opera-
tional elements of the partnership based on the dual partnership structure,
manifesting through informal and formal agreements on partnership objec-
tives, missions, activities, funding, governance, resource and risk sharing,
and distribution of benefits (Bouman et al., 2013; Bryson et al., 2006;
Hartwich & Tola, 2007).
The dual structure and purpose of GBP suggest that “the rationales for
government partnerships with the for-profit private sector encompass both
instrumental and normative aims” (Brinkerhoff & Brinkerhoff, 2011, p. 5).
From an instrumental perspective, GBP may follow a governance structure
that channels resource commitment and risk sharing. For infrastructure GBPs
that are contracted under build–operate–transfer (BOT) or build–own–oper-
ate–transfer (BOOT)1 agreement, gaining access to private financing and
public–private risk sharing is the main drivers (Brinkerhoff & Brinkerhoff,
Lin 11

2011). Such GBP setting also allows complementary resource sharing and
technical expertise and established networks access (Brinkerhoff &
Brinkerhoff, 2011) that enable exploration learning.
In addition, governing GBPs formed for radical environmental innovation
may require more normative aspects that “contribute to a broader, more stra-
tegic vision of the public good” (Brinkerhoff & Brinkerhoff, 2011, p. 5). This
aspect should go “beyond the metrics of efficiency, effectiveness, and syn-
ergy” to act on principles, accountability, ethical behaviors, and paradigm
that respond to the question of “effectiveness for whom?” (Provan & Kenis,
2007, p. 229). I thus hypothesized the operation of cognitive learning in GBP
that helps build shared vision that is consistent with its ultimate social envi-
ronmental goals. Another normative dimension of GBP operation relates to
rulemaking, associated with public good purpose of GBP that seeks to scale
up radical environmental change to the industry and system level. The fol-
lowing hypothesis development explains these operational elements in detail.

Effective governance. One aspect of GBP operation relates to governance that

enables GBP partners to coordinate and monitor behavior through a set of
rules, norms, and trust (Bryson et al., 2006). GBP provides scope for deriving
substantial benefits including for sharing risks more efficiently. For infra-
structure GBPs that access private financing, public–private risk sharing is
one of the drivers (Brinkerhoff & Brinkerhoff, 2011; Song et al., 2016). To
embark on the highly risky radical eco-innovation, GBP needs effective gov-
ernance that ensures both resource commitment and flexibility in innovation
search. Strategic alliance governance literature has outlined a continuum of
governance structure, with formal equity ownership and informal trust
anchoring both ends of the spectrum. This spectrum of governance encom-
passes a trade-off between degree of control and flexibility that are both
important for radical eco-innovation.
There are variances of the contractual mechanism within the formal gover-
nance, which range from equity alliances (e.g., joint venture) to non-equity
alliances (e.g., joint R&D; Dacin, Oliver, & Roy, 2007; Gulati, 1995b). A for-
mal equity structure takes more time to negotiate, more resource to maintain,
and their rigid governance structure is seldom feasible for innovation develop-
ment (Linnarsson & Werr, 2004). An increasing number of studies have related
firms’ innovation (e.g., new product development) to their choices of non-
equity structure (Kogut, 1988; Kok & Creemers, 2008), due to the flexibility
this type of structure allows for firms to engage in exploration. Therefore, GBP
for eco-innovation may choose a non-equity alliance structure to maintain firm
partners’ independence, innovativeness, and flexibility, so that they can respond
quickly to changing market conditions in pursuing innovation.
12 Business & Society 

While the non-equity structure provides the flexibility needed for GBPs to
pursue radical eco-innovation, such structure also increases opportunism
risks due to its relatively weak governance control (Lin & Darnall, 2015). In
this context, alliance literature suggests an investment-based (Williamson,
1983) and a trust-based (Gulati, 1995a) mechanism as alternative self-enforc-
ing safeguards.
According to Williamson (1983) and Dyer and Singh (1998), investment-
based mechanisms are examples of effective governance created intention-
ally to control opportunism “by aligning the economic incentives of the
transactors” (p. 669). In case of GBP, a mutual resource commitment or “eco-
nomic hostages” from the government and business partners could act as an
effective governance structure. These hostages may include “the commit-
ment of nonrecoverable, symmetric investments in specialized or cospecial-
ized assets, which constitute a visible collateral bond that aligns the economic
incentives of exchange partners” (Dyer & Singh, 1998, p. 669). Specifically,
such economic hostages may incentivize government and business partners
to collectively engage in value-creation initiatives (radical eco-innovation) as
opportunism will decrease the common investment in value, whereas proper
collaboration creates collective value (Dyer & Singh, 1998). Moreover, such
a governance model diminishes the need of an expensive and rigid equity
control, while providing the flexibility and commitment needed for radical
eco-innovation.
For example, in the United States, the National Renewable Energy
Laboratory, which is part of the U.S. Department of Energy, has signed more
than 300 cooperative research development agreements with companies to
research wind, solar, and energy conservation, as well as other initiatives. Its
partnerships with Boeing, Shell Solar Industries, and Siemens Solar are
engaged in leading edge research to develop thin-film solar electricity tech-
nologies.2 Such radical innovation makes it faster and cheaper to create films
that gather sunlight to produce electricity compared with conventional solar
panels. To properly incentivize and govern these alliances, these GBPs estab-
lish a visible collateral bond between the government and business partners:
For every dollar of public investment from a government source, these GBPs
receive US$6 in business sector resources to jointly accelerate the technol-
ogy. Such a governance structure mobilizes government and business invest-
ment, as well as direct R&D support toward clean technology projects that
hedge the business sector’s investment risks related to the exploration of
eco-innovation.
However, GBP formed for radical innovation may require a governance
form that is beyond resource sharing, as investment hostage in such projects
may not be the indispensable means or may not work as effectively as the
Lin 13

infrastructure-oriented GBP projects. Referring to Vieira and Hartwich

(2002), Hartwich and Tola (2007) argue about the difficulty in ensuing “real
sharing of resources, knowledge, risk, and funding” in practice “because each
partner’s benefits depend on the other partners’ commitment and input.” For
this kind of GBP, a trust-based, reciprocal commitment could be a more
important governance mechanism that helps increase the synergy resulting
from the joint use of complementary resources (Hartwich & Tola, 2007).
Based on the above analysis, GBP may lend itself to an informal self-
enforcing mechanism—a non-equity, investment or trust-based governance
structure—to ensure efficiency (transaction costs reduction) and effective-
ness in mobilizing mutual commitment toward radical eco-innovation goals.
I thus propose the following:

Hypothesis 1: GBP is likely to be associated with non-equity investment

or trust-based governance in the pursuit of radical eco-innovation.

Strategic alliances provide platforms for learning (Kogut, 1988) through

which partners may enhance their collective ability to accept, make sense of,
and respond to internal and external change (Cyert & March, 1963). Such
learning may be reflected in organizational behavior change in routines, pro-
cedures, processes, and actions, and/or cognitive change in understanding
and beliefs (Arya & Salk, 2006; Fiol & Lyles, 1985). I used exploration and
cognitive learning to capture the co-learning and capacity building in GBPs
in their pursuit of radical eco-innovation goals.

Exploration learning. In view of the uncertainty involved in developing inno-

vative eco-friendly technology, products, and services, radical eco-innova-
tions are a form of organizational exploration. Exploration learning,
emphasizing the development of the new and unknown, may offer firms a
chance to break away from the extant knowledge path and a shift to a differ-
ent technological trajectory (Benner & Tushman, 2002, p. 679; March, 1991).
Exploitation learning, in contrast, emphasizes things already known, thereby
helping the partners maximize their returns from knowledge developed in the
past (March, 1991). Compared with returns from exploitation, returns from
exploration are highly “uncertain,” “more remote in time,” “more distant
from the locus of action” (Lavie, Stetter, & Tushman, 2010, p. 116; March,
1991).
GBPs are likely to be leveraged for exploration learning in their pursuit of
radical eco-innovations. GBPs bring partners together from the government
(e.g., lab) and business (e.g., corporate research center) sector, thereby
increasing their capabilities’ complementarity regarding exploration. This
14 Business & Society 

partner structure allows the combination of heterogeneous competencies and

perspectives to stimulate organizational learning, and create the “technology
fusion” that has become increasingly important in the search of innovation
(Sakakibara, 1997). During this process, multiple actors are involved in tech-
nological paths emerging in real time (Pinch & Bijker, 1987). These actors
generate learning while experimenting with new technologies (Garud &
Karnoe, 2003). GBPs provide firms with the framework under which to
undertake such experiments.
Furthermore, in GBPs, government and business partners are less con-
cerned about competitive risks and knowledge leakage (Gimeno, 2005),
which may boost the exchange of tacit knowledge and enhance GBP partners’
likelihood to conduct exploration learning. As such, partners are likely to
share valuable information, knowledge, technology, people, and other critical
resources. For example, the Advanced Energy Centre (AEC) is a Canadian
GBP that works with Canadian clean-tech start-ups and SMEs with the mis-
sion to foster innovative energy technologies in Ontario and Canada. Within
this GBP, partners extensively shared knowledge and expertise; and the
human resources were highly mobile. Staff members communicated inten-
sively, acting as both a bridge and a think tank by pooling their public knowl-
edge and business expertise to explore alternative solutions for complex
environmental problems. Such intensive interaction and communication
increase the likelihood of knowledge spillovers and explorative learning in
GBPs. Based on the above analysis, I suggest the following:

Hypothesis 2: GBP is likely to be associated with exploration learning

and new product (technology) development in the pursuit of radical
eco-innovation.

Cognitive learning. Compared with reactive/incremental eco-innovation, radi-

cal eco-innovation targets complex environmental problems, is more difficult
to design, and exhibits greater market risks and political uncertainty. This
creates conceptual barrier for business managers who may view the pursuing
of radical eco-innovation a risky and expensive initiative. Government sector
may not understand business sector’s financial insecurity and private interest.
Differing cultures, values, missions, and cognitive framework cross-govern-
ment and business partners add to the difficulties in reaching a shared vision
and common understanding. Facilitation of radical eco-innovation thus calls
for cognitive learning, which involves the facilitation of partners to develop
new understandings of surrounding events, and develop different interpreta-
tions of new and existing information (Sharma & Vredenburg, 1998). Such
learning may help involved organizations to build awareness and understand
Lin 15

the urgency to launch transformative change in addressing grand-scale envi-

ronmental challenges. Such a learning with purpose may eventually help
develop shared vision across partners to reach a common goal, resulting in
the development of knowledge and problem-solving skills related to radical
eco-innovation.
Cognitive learning in GBPs can take multiple means, including education,
training, and awareness enhancement workshops and seminars. Moreover,
cognitive learning can be conducted over regular alliance activities. Building
on Lavie and colleagues’ (2010) findings, maximizing the value of existing
resources in an exploitation alliance means that there is less need for inten-
sive interaction regarding knowledge creation and transfer. In contrast, the
joint knowledge and capability building in exploration alliances require close
interaction, which exposes firms to their partners’ norms, values, cognitive
thinking, and mind-set. This intensive interaction, communication, and co-
learning between government and business partners help develop strong per-
sonal connections and relationships. Such interactions facilitate cognitive
learning, wherein managers, through their association with their government
partners, gradually develop different interpretations of environmental prob-
lems and the means to address them.
This cognitive learning allows managers to grow awareness of the urgency
to pursue radical eco-innovation to address grand-scale environmental chal-
lenges, and recognize the associated private benefits and market opportuni-
ties. These managers may experience major cognitive reorientations involving
changed norms, values, worldviews, and frames of reference, become more
positive in their thinking and approach, and develop shared sustainability
vision with government partners. This mind-set shift through cognitive learn-
ing remains an incentive for GBP partners to discover new products and mar-
kets, which may, in turn, facilitate their ability to create transformative
environmental changes through the pursuit of radical eco-innovation. As
such, I suggest the following:

Hypothesis 3: GBP is likely to be associated with cognitive learning in

the pursuit of radical eco-innovation.

While exploration and cognitive learning in GBPs may stimulate the

emergence of radical eco-innovation, the spread and enforcement of such an
innovation path rely on rulemaking.

Rulemaking. The role of power and politics in innovation has been thoroughly
researched (see Frost & Egri, 1991; Hardy & Dougherty, 1997; Simon-Lee,
2015). GBPs are likely to be involved with policy sanctions and rulemaking,
16 Business & Society 

mainly due to the power and politics resource controlled by the government
partner, which include information, know-how, funding, network, rewards,
and the ability to impose sanctions. As the government controls the critical
resources on which the business sector depends, managers who know the
importance of power tools may seek government partners when they aim to
initiate a new eco-innovation path. In parallel to the power resource of gov-
ernment, the urgency of grand-scale environmental challenges and the neces-
sity to trigger transformative environmental change also calls for government
to play stronger roles in directing and enforcing a radical eco-innovation path
through the mechanism of GBPs.
In such a context, profound environmental impacts could be achieved by
the deliberate actions of GBP partners to develop new rules or policy that
transform corporate operation, the industry landscape, or even institutional
environment. For example, the San Diego city alliance is a typical GBP with
a policy focus, where corporate partners (GE and CleanTECH San Diego)
obtained policy support from the city government to modify existing rules
related to the commercialization of electric vehicles. As a result of rulemak-
ing effort of this GBP, the city government evaluated city policies and
refined existing disincentives to innovation and urged real-estate businesses
to develop infrastructure (e.g., electric vehicle chargers) that help speed up
the adoption of electric vehicles. Policy changes, in turn, encourage firms to
devote more resources into this GBP for radical innovation (SDC Platinum,
2013).
In moving radical eco-innovation into new markets through rulemak-
ing, businesses need both preferential policies from government and mar-
keting (e.g., branding) support from the civil society. It thus calls for
tri-sectors—government, business, and civil society—to collaborate
toward such a common cause (Hart, 2005). Such a tri-sector GBP offers
various opportunities for businesses to gain access to diverse perspectives
(Selsky & Parker, 2005) and knowledge from an extensive network, and
enables them to work constructively with representatives from the state
and civil society actors. This tri-sector GBP platform helps launch policy
dialogue, put issues to the agenda (Elsig & Amalric, 2008), and enable
businesses to lobby for policy change that is in favor of radical eco-inno-
vation. Based on the above analysis, rulemaking expedites radical eco-
innovation and stimulates the search of transformative change possibilities,
thereby lending a GBP an edge in initiating and/or shaping a radical inno-
vation path.

Hypothesis 4: GBP is likely to be associated with rulemaking in the pur-

suit of radical eco-innovation.
Lin 17

In sum, the above transactional cost and complementary logic explain the
rationale of GBPs formation for radical eco-innovation. The follow-up expla-
nation of GBP operation from governance, exploration learning, cognitive
learning, and rulemaking aspects further illustrates how GBPs help shape and
institutionalize a radical eco-innovation pathway with significant environ-
mental change impact. Based on the above analysis, I posit the following:

Hypothesis 5: GBPs are more likely to be associated with firms’ pursuit

of radical eco-innovation.

Method
Sample
I tested the hypotheses on the subset of environmental alliances listed in
Thomson’s Platinum SDC database between 1985 and 2013. The SDC data-
base centers on publicly declared strategic alliances and joint ventures, and
includes agreements in which two or more organizations have pooled their
resources to create a new, mutually beneficial business arrangement to realize
individual and collective objectives. More specifically, this database also
incorporates agreements between NGOs, universities, and different levels of
government. To search for environmentally related alliances in the Thomson
SDC, this study used two search elements: alliance venture economics and
industry codes (VEIC) and alliance activity code. Content analysis is con-
ducted to determine whether the alliance had an environmental activity com-
ponent, which derived a sample of 921 environmental alliances formed
between 1985 and 2013.
I also built on firm-based financial data from Compustat and firm-based
environmental concern data from the KLD Research & Analytics, Inc. (KLD)
database. KLD data are commonly used measures of corporate social perfor-
mance (Sharfman, 1996). Despite ongoing controversy, Chatterji, Levine,
and Toffel (2009) found KLD’s environmental “concern” ratings to be fairly
good summaries of firms’ past environmental performance. Combining SDC
and Compustat databases derives a sample of 411 observations representing
341 U.S. firms’ participation in 348 environmental alliances formed between
1985 and 2013. However, the combination of SDC, Compustat, and KLD
databases arrives at another sample of 225 observations, representing 166
U.S. firms’ participation in 192 environmental alliances formed between
1985 and 2013. Every firm’s participation in an environmental alliance is
counted as one observation. Taking a business perspective, Government-
NGO collaboration is excluded from this study. For robust analysis, I applied
18 Business & Society 

both samples for statistical testing of the developed hypotheses and obtained
similar results. I report results using the sample of 225 observations, as build-
ing on Lin’s (2014) GBP study, it enhances result robustness by including
KLD environmental concern data.

Statistical Model
In testing Hypothesis 5, “whether firms choosing GBPs are more likely to be
associated with a radical rather than an incremental or a reactive eco-innova-
tion goal,” there is a possibility of a selection bias, as factors that influence
the likelihood of a GBP choice may, in turn, be associated with an alliance’s
eco-innovation goal choice. I assume the existence of similar selection bias
when I predict Hypotheses 1 to 4 on the operational elements of GBPs. One
approach to eliminate sample selection bias is through the adoption of the
matching theory, which is developed mainly in the medical and biological
research fields and has been widely used in economics and finance (Shen &
Chang, 2009). Ideally, this theory can simply compare two outcomes for the
same unit to examine the average treatment effect (ATE) when the unit is
assigned to the treatment and when it is not (Imbens & Wooldridge, 2009).
The ATE on the outcome variable in the population of interest can be
expressed as ATE = E[Y1 − Y0], where Y1 is the outcome variable with treat-
ment and Y0 is the outcome variable without treatment.
However, a practical problem that arises given my cross-sectional dataset
is that I can only observe either Y1 or Y0, because the assignment to the treat-
ment is mutually exclusive. An alternative method to estimate the ATE that
has gained a growing recognition in the social science research is to match
observations in both the treatment (e.g., GBP participants) and control groups
(e.g., non-GBP participants) with similar observable characteristics to enhance
comparison validity (Shen & Chang, 2009; Uematsu & Mishra, 2012).
In coming up with these two matching samples, Rosenbaum and Rubin
(1983) proposed the propensity score matching (PSM) technique, for which
one can use predicted probability of being in the treatment estimated in either
logit or probit model (Uematsu & Mishra, 2012) using exogenous character-
istic variables as the explanatory variables. Then for each firm in the treat-
ment sample (e.g., GBP participants), firms in the control samples are selected
as matched samples according to the closeness of the above-estimated prob-
ability, thus coming up with a control group of firms (e.g., non-GBP partici-
pants). An important feature of the propensity score model is that it
summarizes information contained in the multi-dimensional vector (e.g.,
varieties of observable characteristics) into a single-index variable (Becker &
Ichino, 2002).
Lin 19

I thus employed PSM to create control group for firms with similar attri-
butes and predicted whether firms choosing GBPs are likely to be associated
with effective governance (H1), exploration learning (H2), cognitive learning
(H3), rulemaking (H4), which enable them to pursue more radical eco-inno-
vation goals (H5), compared with control groups.

Measurements
Eco-innovation goals. Following Lin (2012), I measured the radical scale of
eco-innovation by examining the “deal synopsis” element in SDC database,
and assigned three intended eco-innovation scales: reactive eco-innovation—
pollution control (Scale 1), incremental eco-innovation—pollution preven-
tion (Scale 2), and radical eco-innovation—clean technology (Scale 3). Refer
to Table 1 for the detailed measurement schemes and statistical distributions
of eco-innovation.

GBP participation. GBP was coded “1” if an alliance involved participants

from the public government and business sector, otherwise 0. I used Thom-
son SDC’s data elements, such as “deal text,” “participant’s public status,”
and “participant’s business description,” to determine whether the alliance
involves government and business partners.

Alliance governance. “Ownership” was measured using a joint venture dummy,

checking whether the partners signed a joint venture agreement. A “contrac-
tual agreement number” index was created to measure the total number of
alliance agreements firms signed in the partnership. “Financial investment”
dummy was created to examine whether the partners invested in the environ-
mental partnership. “Reciprocity” was measured using “future ties”—the
number of future partnerships with the present partner after the current part-
nership. According to Heide and Anne (1992, p. 267), the success of reciproc-
ity strategies usually depends on “future returns” (prospects of future
interactions), as partners are less likely to act opportunistically in the present
when they anticipate possible reciprocal future responses.

Exploration learning. To measure “exploration learning,” I tracked whether

firms signed an R&D agreement (dummy variable), as such agreement
involves basic research, invention, risk taking, organizational learning, and
entering new markets (Koza & Lewin, 1998). To examine the content of the
R&D agreement, I create “technology” and “product” dummies by specifi-
cally coding whether the partnership focused on technology and product in
the partnership. The interaction term of “R&D agreement” and “technology,”
20
Table 1. The Measurements of Key Variables and Their Descriptive Distribution.
Variable Category Coding Frequency % Measure

Partnership Reactive 1 32 14.22 Alliance activities involved in “waste to energy (incineration),” “water and waste water
goals: Eco- (pollution treatment services,” and “environmental cleanup” received a coding of “1”
innovation control)
Incremental 2 80 35.56 Alliance activities involved in “enhanced energy efficiency,” “reduce,” “reuse,” “recycling,” and
(pollution “source reduction” received a coding of “2”
prevention)
Radical (clean 3 113 50.22 Alliances involved in “alternative fuel/material,” “clean technology,” and “renewable energy”
technology) (including solar, wind, biomass, geo-thermal, fuel cell vehicle, hydrogen-based energy)
received a coding of “3”
GBP GBP 1 32 14.22 Partners were from public and for-profit private sectors
Alliance Ownership 1 60 26.67 If the alliance signed a joint venture agreement, it received a coding of “1,” or was otherwise
operation coded “0”
Financial 1 16 7.11 If partners invest in the alliance, it received a coding of “1,” otherwise coded “0”
investment
Reciprocity 1~13 19 8.44 The total number of future alliances firms form with the current partners
Exploration 1 54 24.00 If the alliance signed an R&D agreement, it received a coding of “1,” or was otherwise coded “0”
learning
R&D × 1 31 13.78 The R&D agreement focused on improvements in technology, process, and infrastructure to
Technology address environmental issues
R&D × Product 1 5 2.22 The R&D agreement focused on developing new products for end consumers, communities,
and society or the public
Cognitive learning 1 27 12.00 The partnership focused on awareness raising. Related keywords include education, educate,
information, campaign, knowledge, and knowledge sharing
Rulemaking 1 19 8.44 The partnership focused on developing a new policy or modifying existing ones. Policy
referred to standards, norms, regulation, mandate, and activism. Related keywords included
norm(s), standard(s), and code(s) of conduct

(continued)
 Table 1. (continued)
Variable Category Coding Frequency % Measure

Environmental Hazardous waste 1 85 37.78 The company’s liabilities for hazardous waste sites exceed CAD$50 million, or the company
concerns has recently paid substantial fines or civil penalties for waste management violations
Regulatory 1 89 39.56 The company has recently paid substantial fines or civil penalties for violations of air, water, or
problems other environmental regulations, or it has a pattern of regulatory controversies under the
Clean Air Act, Clean Water Act, or other major environmental regulations
Ozone-depleting 1 9 4.00 The company is among the top manufacturers of ozone-depleting chemicals such as
chemicals Hydrochlorofluorocarbons, methyl chloroform, methylene chloride, or bromines
Substantial 1 61 27.11 The company’s legal emissions of toxic chemicals (as defined by and reported to the
emissions Environmental Protection Agency from individual plants into the air and water are among
the highest of the companies followed by Kinder Lydenberg Domini (KLD) research &
analytics.
Agricultural 1 13 5.78 The company is a substantial producer of agricultural chemicals, that is, pesticides or chemical
chemicals fertilizers
Other concerns 1 20 8.89 The company has been involved in an environmental controversy that is not covered by other
KLD ratings

Note. GBP = government–business partnership; R&D = research and development.

21
22 Business & Society 

as well as “R&D agreement” and “product,” creates two inter-term dummies

“RD tech” and “RD product” representing whether firms focused on generat-
ing alternative technology and product in their R&D agreements.

Cognitive learning. I measured cognitive learning with a dummy coding mea-

suring whether an alliance’s primary activity focused on awareness raising.
Related keywords include education, educate, information, campaign, knowl-
edge, and knowledge sharing.

Rulemaking. I create “rulemaking” dummy to examine whether the alli-

ance focused on developing and/or implementing a new policy or modifying
existing policy. Related keywords included “norm(s),” “standard(s),” “regu-
lation,” “mandate,” and “code(s) of conduct,” such as the “forest stewardship
council” and “energy star.”
To address potential bias related to personal judgment in the content cod-
ing, a colleague coded the above variables independently. The result of this
separate coding rate specifically matched 90.5% in eco-innovation, 92.0% in
cognitive learning, and 93.5% in rulemaking, indicating a sufficient inter-
reliability rate (Cohen, 1960). When coming across variances, raters com-
pared notes and discussed to consolidate the final coding.

Firm-Level Exogenous Attributes

I used PSM technique to test Hypotheses 1 to 5, estimating the treatment
effects of GBP on radical eco-innovation goals and predicting GBPs’ four
structural elements. To eliminate the potential sample selection effect, it is
important to carefully choose the observable characteristics (exogenous char-
acteristic variables) and use probit (or logit) estimation to come up with the
matching index. These parameters in the probit model are selected based on
empirical findings in the literature.
Specifically, Lin (2014) argued the antecedents of GBP formation from two
aspects, that firms with vulnerable strategic positions (e.g., substantial environ-
mental concerns) and strong resource positions (e.g., large firms) are likely to
partner with governments. I followed Lin (2014) to select KLD environmental
concern ratings as proxy of firms’ vulnerable strategic positions, used firm size
and market share as proxy of firms’ social status and influence in the industry,
and used firms’ prior profitability (return on equity [ROE]) and risk-taking pro-
pensity as proxy of firms’ resource and strategic positing. Organizational risk is
important to strategic management, as income variation can have negative con-
sequences (Palmer & Wiseman, 1999) for firm’s strategic decision to select
alliance partners in pursuing more radical eco-innovation.
Lin 23

I also followed Lin (2012) to include firms’ environmental alliance experi-

ence as a proxy of firms’ capacity to manage complex alliances that involved
CSPs. These key indicators of a firm’s exogenous resource attributes are criti-
cal in influencing firms’ decisions to select GBPs. In the probit model, I also
included alliance formation time and firms’ industry variances in terms of
their competitive industry environment and industry sectors.

Firms’ environmental concerns. I measured firms’ environmental concern based

on the “environmental” dimension of the KLD index, which include “hazard-
ous waste,” “regulatory problems,” “ozone depleting chemicals,” “substan-
tial emissions,” “agricultural chemicals,” and “other concern.” These six
dummies measured specific environmental concern as “0” (no concern) and
“1” (concern). Refer to Table 1 for the detailed measurement schemes and
statistical distributions of environmental concerns.

Firms’ other characteristics. I also extracted other firm-level characteristics

from the Compustat database: (a) Size was measured as the logarithm of
firms’ asset prior to firms’ participation in the current alliances. Market share
can be expressed as a company’s sales revenue (from that market) divided by
the total sales revenue available in that market. (b) Prior profitability was
measured as return on assets (ROA). (c) Organizational risk is measured
using variance in ROA (firms’ income stream uncertainties; Palmer & Wise-
man, 1999). (d) I also included firms’ environmental alliance experience,
which is measured by counting the total number of environmental alliances
firm participated prior to the current one.
In analyzing a firm’s industrial competitive environment, I used the total
number of competitors in an industry as a proxy of the complexity of industry
environment. I also controlled for a firm’s industry sector variance using four
dummies: mining and construction standard industrial classification (SIC) 10
~ 27; heavy manufacturing SIC 28 ~ 39; transportation and public utilities
SIC 40 ~ 49. For each firm, I collected the above firm-level data 1 year prior
to a firm’s participation in the focal environmental alliance. For alliance-level
attributes, “formation time” was measured using five ordinal scales repre-
senting five time periods between 1985 and 2013.

Empirical Results
Table 1 summarizes the key constructs and their operationalization. Table 2
presents the descriptive statistics and a correlation matrix. As shown in Table
1, I noted that there are 32 GBPs among the 225 observations (14.22%).
Among the 225 observations, 113 (50.22%) pursue radical eco-innovation in
24
Table 2. Correlation Table.
Variable M SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

1. GBP 0.14 0.35 1.00

2. Eco-innovation 2.36 0.72 .19* 1.00
3. Exploration learning 0.24 0.43 .13* .11 1.00
4. Cognitive learning 0.12 0.33 .20* .27* −.08 1.00
5. Ownership 0.27 0.44 −.22* −.22* −.13 −.19* 1.00
6. Financial investment 0.07 0.26 .04 .13 .05 .004 .11 1.00
7. Reciprocity 0.16 0.94 .19* .03 .04 .01 −.06 −.03 1.00
8. Rulemaking 0.08 0.28 .11 .14* −.10 −.11 −.07 .10 .24* 1.00
9. Firm size 4.00 0.81 .16* .37* .13 .18* −.22* .04 .06 .14* 1.00
10. Market share 0.27 0.25 .03 .05 −.04 −.01 −.10 .06 −.01 .12 .14* 1.00
11. Industry competitors 3.27 1.23 .06 .14* .04 .18* −.13* −.05 −.07 −.07 .19* −.56* 1.00
12. Organizational risk 0.01 0.03 .06 .11 −.06 .07 −.02 .06 −.03 .05 −.18* .10 −.07 1.00
13. Profitability 0.13 0.31 .05 .05 −.04 .09 .08 .17* −.03 .17* .10 .06 .05 .11 1.00
14. Hazardous waste 0.38 0.49 .08 −.02 .25* −.03 .01 .14* −.02 −.07 .26* .01 .07 −.12 −.01 1.00
15. Regulatory problems 0.40 0.49 .17* −.01 .14* −.05 .05 .06 −.07 −.08 .18* −.001 −.06 −.12 .001 .51* 1.00
16. Ozone-depleting chemicals 0.04 0.20 .24* −.04 −.01 −.08 −.12 .12 .31* .18* .06 .14* −.11 −.03 −.03 .07 −.07 1.00
17. Substantial emissions 0.27 0.45 .15* .15* .20* .02 −.14* .06 −.06 −.04 .23* .10 −.04 .10 .001 .35* .41* .08 1.00
18. Agricultural chemicals 0.06 0.23 .12 .06 .04 −.09 −.11 .08 −.04 −.08 .03 .11 −.03 −.03 .01 .12 .23* .24* .28* 1.00
19. Other concern 0.09 0.29 .10 .13 .19* −.12 .02 .04 .01 .07 .19* .08 −.03 −.05 −.02 .21* .03 −.06 .02 −.01 1.00
20. Alliance experience 1.44 2.45 .21* .22* .24* −.02 −.09 .07 −.004 .06 .29* .15* −.11 .01 .01 .43* .33* .0004 .36* .26* .21* 1.00
21. Formation time 2.92 0.90 .01 .46* −.08 .26* −.21* .06 −.09 .12 .26* .14* .01 .18* .06 −.09 .03 −.08 .19* .11 −.06 .22* 1.00

Note. GBP = government–business partnership.

*p ≤ .05.
Lin 25

alliances, 80 (35.56%) pursue incremental eco-innovation, and 32 pursue

reactive eco-innovation. This sample thus offers a good setting to compare
GBPs and other alliances in the pursuit of radical eco-innovation. In predict-
ing the operational design of GBPs, I noted that the sample also provides
sufficient observations in equity ownership governance (26.67%), reciprocity
(8.44%), exploration learning (24%), cognitive learning (12%), and rulemak-
ing (8.44%).
In terms of exogenous firm attributes, on average firms have higher envi-
ronmental concern ratings in hazardous waste (37.78%), regulatory problems
(39.56%), and substantial emissions (27.11%). Most firms are from the heavy
manufacturing sector (30.67%), followed by light manufacturing sector
(21.78%) and transportation, communications, and utility sector (18.67%).
As shown in Table 2, firms in the sample are relatively large in size, with an
average of CAD$44.47 million in asset. Their average ROE is 12.7%. On
average, these firms have 57 competitors in their respective competitive mar-
kets, and their average market share is 26.5%. On average, these firms have
1.44 prior environmental alliance experiences. Regarding the alliance forma-
tion time, there are two peak periods of environmental alliance formation; the
first period is 1990-1995, 43.56% of observations are formed during this
period. The second peak period is between 2006 and 2009, during which
32.89% of the alliances are formed.
I ensured that collinearity was not a problem in the probit model prior to
running the PSM technique. I checked the correlational matrix and calculated
the variance inflation factor (VIF) through running ordinary-least-squares
(OLS) regression to specifically predict the likelihood for firms to be selected
in the treatment sample (GBP participants). The largest VIF value in these
models was 3.09. Thus, following the indicator of collinearity when its value
is greater than 10.0 (Meyers, 2006), I concluded that collinearity was not an
issue in my model. Note that in my study sample, not all observations are
independent, as some alliances may involve multiple firms in the sample rep-
resenting multiple observations participation in the same alliances. Following
Sampson (2007), I corrected for this lack of independence between some
observations using a cluster command when running probit (logit) regression
models to adjust standard errors of the regression models. This correction of
standard errors ensures that inclusion of multiple observations per alliance is
not driving significant findings.
Table 3 reports parameter estimates for the probit model. Consistent with
prior studies (Lin, 2012, 2014), results indicate that GBP participants (treat-
ment sample) tend to have regulatory problems (β = 1.03, p < .01), have
concern in ozone-depleting chemicals (β = 2.00, p < .01), and other environ-
mental concerns (β = 0.61, p < .10). These firms tend to be larger in size (β =
26 Business & Society 

Table 3. Probit Model Parameter Estimates.

Likelihood of GBP participation Coefficient SE p > |z|

Firm size 0.38 0.18 .04
Market share 0.41 0.61 .50
Industry competitors 0.37 0.14 .01
Organizational risk 5.03 3.76 .18
Profitability 0.51 0.40 .21
Hazardous waste −0.96 0.32 .003
Regulatory problems 1.03 0.30 .001
Ozone-depleting chemicals 2.00 0.63 .002
Substantial emissions 0.06 0.33 .85
Agricultural chemicals −0.17 0.59 .78
Other environmental concerns 0.61 0.37 .10
Sic2027new 0.39 0.49 .43
Sic2829new 0.57 0.43 .18
Sic3039new 0.77 0.40 .05
Sic4049new 0.46 0.43 .28
Alliance experience 0.11 0.05 .03
Formation time −0.19 0.16 .23
_cons −5.25 1.22 .000

Note. GBP = government–business partnership.

0.38, p < .05), have more environmental alliance experiences (β = 0.11, p <
.05), are from the heavy manufacturing sector (β = 0.77, p < .05), and operate
in a competitive industry environment (β = 0.36, p < .01).
I also checked the quality of balancing in creating the treatment and con-
trol samples by using covariate imbalance testing (pstest) Stata command,
using t tests for equality of means in the treated and non-treated groups before
and after matching. Table 4 illustrates the descriptive characteristics of treat-
ment and control groups before and after matching. To be considered as good
balancing, these t values should be insignificant after matching (Largoza,
Favorada, Reinante, Tan, & Thai, 2015). As shown in Table 4, none of the
chosen covariates (exogenous firm characteristics) demonstrate significant t
value. The estimated probit model satisfied the balancing property using the
algorithm detailed in Becker and Ichino (2002). Thus, I concluded that I have
obtained the balance matching sample for testing the treatment effect of GBP
participation.
As the sample and control groups have similar characteristics, the result-
ing difference between two matched observations is theoretically the ATE—
whether GBP participants are fundamentally different from non-GBP
Lin 27

Table 4. Pstest Checking the Balancing in Creating Treatment and Control

Samples.

Treatment Control
Variable M sample M sample M t p > |t|
Firm size 4.00 4.32 4.41 −0.55 .59
Market share 0.27 0.28 0.30 −0.27 .79
Industry competitors 3.27 3.46 3.71 −0.83 .41
Organizational risk 0.01 0.01 0.02 −0.87 .39
Profitability 0.13 0.17 0.25 −0.75 .46
Hazardous waste 0.38 0.47 0.41 0.50 .62
Regulatory problems 0.40 0.59 0.41 1.50 .14
Ozone-depleting chemicals 0.04 0.16 0.16 0.00 1.00
Substantial emissions 0.27 1.44 1.44 0.00 1.00
Agricultural chemicals 0.06 0.13 0.13 0.00 1.00
Other environmental concerns 0.09 1.16 1.22 −0.63 .53
Sic2027new 0.16 0.09 0.06 0.46 .65
Sic2829new 0.22 0.31 0.38 −0.52 .61
Sic3039new 0.31 0.34 0.34 0.00 1.00
Sic4049new 0.19 0.16 0.06 1.20 .24
Alliance experience 1.44 2.69 1.53 1.37 .18
Formation time 2.92 2.94 3.16 −0.95 .34

participants in the operationalization of effective governance (H1), explora-

tion learning (H2), cognitive learning (H3), rulemaking (H4), and in the pur-
suit of more radical eco-innovation goals (H5). In Stata software, the “teffects
psmatch” command (for PSM method) completes all these procedures related
to ATE testing simultaneously. This command allows sensitive analysis by
requesting the number of matches in the control groups in comparing with
treatment group. There is a trade-off in this request. For instance,

When m = 1, each treated observation is matched with an observation in the

control group with the closest distance, however, any unmatched observations
in the treatment are not utilized in estimating the ATE. When m is larger, on the
other hand, more observations can be utilized, but the quality of match may be
compromised. (Uematsu & Mishra, 2012, p. 58)

For the robust test, I requested one to four matches for each hypothesis test-
ing, and most results are significant regardless of the number of matches
requested. I reported results using one or two requested matches to ensure
match quality. Table 5 reports the testing results of these PSM models.
28 Business & Society 

Table 5. Average Treatment Effect for GBP Operational Elements and Innovation
Goal.

Requested
match
Models/hypothesis Variables numbers ATE SE p value
1. Governance Equity ownership 1 −0.28 0.04 .00
Contractual 1 −0.16 0.06 .00
agreement
number
Financial 2 −0.04 0.01 .01
investment
Reciprocity (future 1 0.59 0.31 .05
ties)
2. Exploration learning R&D agreement 1 0.44 0.25 .08
R&D × 1 0.52 0.25 .04
Technology
R&D × Product 1 0.46 0.24 .05
3. Cognitive learning Awareness 2 0.13 0.04 .00
4. Rulemaking Rulemaking 2 0.20 0.07 .00
5.  Radical eco- Eco-innovation 1 0.48 0.24 .05
innovation goal

Note. GBP = government–business partnership; ATE = average treatment effect;

R&D = research and development.

The PSM models in Table 5 specifically demonstrate testing results of

Hypotheses 1 to 5. All PSM models are significantly supported at .01, or
.05, or .1 levels. As predicted, results in Model 2 support Hypothesis 2 that
GBP participants are significantly more likely to conduct exploration learn-
ing, predicted by firms’ likelihood to sign R&D agreement (β = 0.44, p =
.08), and their likelihood to create new technology (β = 0.52, p = .04) and
new product (β = 0.46, p = .05) through these R&D agreements than non-
GBP participants. Moreover, as shown in Model 3, GBP participants are
significantly more likely to conduct cognitive learning (β = 0.13, p = .002)
than non-GBP participants (Hypothesis 3 is thus supported). Similarly, my
results in Model 4 support Hypothesis 4, which posit that firms selecting
GBPs are more likely to be involved in rulemaking (β = 0.20, p = .005) than
non-GBP participants. Furthermore, results in Model 5 show that the group
of firms selecting GBPs is more likely to pursue radical eco-innovation
goals than the non-GBP participants (β = 0.48, p = .05). Hypothesis 5 is also
supported.
Lin 29

Related to effective governance (Hypothesis 1) in Model 1, as expected,

GBP participants are significantly less likely to use ownership governance,
predicted by firms’ likelihood to establish a non-equity engagement (β =
−0.28, p = .000) than non-GBP participants, and they are less likely to sign
significant number of formal contractual agreements (β = −0.16, p = .003)
than non-GBP participants. These results indicate GBP participants’ likeli-
hood to employ self-control governance mechanism.
An unexpected governance result I obtained relates to financial invest-
ment that GBP participants are less likely to financially invest in the partner-
ship activities relative to non-GBP participants (β = −0.04, p = .01). In
contrast, using “future ties” as a proxy, the association between reciprocity
and GBP is significantly and positively supported. Results indicate that GBP
participants have a stronger likelihood to continue to collaborate with the cur-
rent partner after the present alliance (β = 0.59, p = .05) than non-GBP
participants.

Discussion
This study applied both transactional cost and complementary logics to
explain the rationale of GBP formation for radical eco-innovation. Integrating
instrumental and normative perspective, this study explains how GBP is
operationalized from governance, explorative learning, cognitive learning,
and rulemaking aspects that facilitate the pursuit of more radical eco-innova-
tion goals. This study empirically tested these theoretical associations using
225 observations representing 166 U.S. firms’ participation in 192 environ-
mental alliances between 1985 and 2013. It used PSM technique to match
GBP participants with non-GBP participants to assess the treatment effect of
GBP participation on firms’ likelihood to choose their alliance operational
elements and pursue more radical eco-innovation goals. As predicted, the
study results suggest that GBPs play a significant and positive role in chan-
neling public and private efforts in pursuing transformative environmental
change via the adoption of radical eco-innovation goals. Results further high-
light four critical elements of GBP operation that enable participants to
embrace these radical environmental solutions. These insights make the fol-
lowing contributions to the academic literature:
First and foremost, environmental strategy scholars (Aragon-Correa &
Sharma, 2003; Hart, 1995) delineated a “roadmap” for sustainability and call
for firms to move beyond their reactive environmental stances and undertake
more radical environmental innovations. However, firms do not want to
embrace these radical eco-innovations alone due to resource constraints, and
that the targeted innovations generate mixed goods—public goods with
30 Business & Society 

unpredictable private benefits. Neither the state nor the firms make satisfac-
tory investments in the mixed goods, thus leading to the “underinvestment”
dilemma, especially evident in the energy sector (Kolk, van Tudler, &
Kostwinder, 2008, p. 263). Complex environmental challenges call for col-
lective actions from government, business, and civil society to transform
common practices, technologies, rules, and beliefs deeply entrenched in the
institutional environment (Hart, 2005). This study enriches business sustain-
ability, CSP, and PPP literature by highlighting GBP’s potential to combine
cross-sector effort in promoting radical eco-innovation that brings decisive
social and environmental change.
These insights confirm the government’s potential in designing and direct-
ing GBPs as an alternative policy scheme to channel government and busi-
ness efforts toward the promotion of radical eco-innovation. They resonate
with the propositions of Majumdar and Marcus (2001) and Starik and Heuer
(2002), who argue that environmental policies should move away from pre-
scribing technological solutions and allow for more flexible strategies that
promote innovation in products, processes, and technologies. They suggest
that governments may consider going beyond their traditional regulatory
role, and explore alternative roles as collaborators and enablers that bear
greater environment change potential.
Second, this study further enriches business sustainability, CSP and PPP
scholarship (Bryson et al., 2006; Stadtler, 2015) by explaining how GBPs can
be operated to facilitate participants’ pursuit of a radical eco-innovation path.
Consistent with the dual structure of GBP, its operational elements contain a
blend of instrumental and normative aims. Specifically, the study results
seem to highlight the normative operational elements that explain how GBPs
facilitate participants to embrace more transformational rather than incre-
mental or reactive environmental innovation. These identified operational
elements make the following contribution to alliance governance and learn-
ing literature:
The study contributes to alliance governance literature by illustrating
“What is an effective governance pertaining to radical eco-innovation.”
Examining governance from ownership, investment, and reciprocity dimen-
sions, my results suggest that GBP tends to lend itself to a reciprocity-based,
non-equity governance mechanism compared with non-GBP participants.
Contrary to my prediction, these participants are less likely to be governed by
financial investment as an economic hostage for participants. This unex-
pected result could be due to data availability. As SDC database does not
have funding agreement data, I contently coded “deal text” of every environ-
mental alliance to identify whether partners financially contribute to the part-
nership. However, in some scenarios such financial data were deemed
Lin 31

confidential and not manifested in the deal text. And partners’ other commit-
ment such as technical expertise or patent is not included in the “financial
investment” dummy. The data availability limits my result interpretation.
The second explanation of this counterintuitive result relates to the limita-
tion of instrumental means. Hartwich and Tola (2007) highlighted that GBP
may be originated from financial reasons, such as “competitive grant schemes
that provide funding conditional on a certain level of collaboration and co-
financing”; however, partnerships that originate in these contexts “do not
always make the best of their potential because they are biased toward the
interests of one partner or they originate solely from the search for funding
without regard to partner interests” (p. 12). Therefore, while financial
arrangement is an important element for GBP formation for infrastructure
projects, it seems that GBPs formed for radical eco-innovation goal tend to
go beyond instrumental consideration. The main rationale for such GBP is
“to bring together a pool of innovative talents, with complementary skills to
foster a mutual learning and the development of creative ideas” (p. 12). For
these kinds of partnerships, reciprocal commitment is a more important gov-
ernance mechanism that helps develop mutual understanding and commit-
ment, trust, and long-term vision toward more radical eco-innovation goals.
My results confirm this “reciprocal commitment” aspect of GBP. These
insights enrich alliance governance literature pertaining to radical
eco-innovation.
Furthermore, this study contributes to alliance learning (March, 1991) and
technological path constitution literature (Garud & Karnoe, 2001) by sug-
gesting GBPs’ potential in convening government, business, and civil society
(university) in exploration learning, cognitive learning, and rulemaking, with
an aim to initiate and/or shape a chosen innovation path. My results support
Robin and Schubert (2013), indicating that although knowledge transfer and
learning can occur through a variety of channels (see Schartinger, Rammer,
Fischer, & Frohlich, 2002, for an overview, Robin & Schubert, 2013), the
interaction between the government (especially public research labs) and the
business sector remains one of the most important institutional interfaces for
knowledge diffusion and organizational learning (Robin & Schubert, 2013).
In this regard, this study advances sustainability and alliance learning lit-
erature by delineating two types of learning (explorative and cognitive) that
help participants build transformational change capacity. Specifically, cogni-
tive learning moves beyond the instrumental “effectiveness thinking” to
encourage a triple-loop learning (Argyris & Schön, 1978, for an overview,
see Tosey, 2011). Based on Tosey’s (2011) review, such a cognitive learning
is driven by normative considerations (Roper & Pettit, 2002). Given the
unsustainability of the present system (which therefore requires radical and
32 Business & Society 

systemic change), cognitive learning enables individuals in the organizations

to understand the urgency of changes needed. It questions “the role or the
mission of the organization” (Lassey, 1998, p. 11), and “provides feedback
and a change mechanism for the individual” (Argyris, 1991; Dishman &
Pearson, 2003, p. 616; Tosey, 2011). As such, such a cognitive learning
encourages a reflective process regarding the “issues of ethics,” underlying
purposes, principles, or “paradigms” (Argyris & Schön, 1978; Isaacs, 1993,
p. 30). Such a cognitive learning thus has a potential to lead to “change in the
embedded tradition system within which the governing values of a behaviour
can be nested” (Nielsen, 1993, p. 118). From this end, this study advances
organizational learning, especially the triple-loop learning literature, by elab-
orating and empirically testing the purpose of learning as there is lack of
empirical study examining these learning aspects in literature (Tosey, 2011).
This learning aspect explains how organizations develop greater incentive to
go for radical innovation.
In summary, the four hypothesized operational elements of GBP (namely
effective governance, exploration learning, cognitive learning, and rulemak-
ing), advance business sustainability, CSP, and PPP literature by explaining
“how” GBPs facilitate radical eco-innovation. These four elements are com-
plementary and interlinked. For instance, effective governance ensures an
engaged and flexible support for the operation of exploration learning, cogni-
tive learning, and rulemaking. Reciprocity governance, with the prospects of
future ties, helps facilitate cognitive learning by building long-term commit-
ment and shared vision among government, business, and civil society part-
ners in the pursuit of radical eco-innovation. According to Hart (1995), such a
dedication to a compelling long-range vision “was the key to generating the
internal pressure and enthusiasm needed for innovation and change” (p. 1002).
Similarly, there is a strong complementarity between explorative and cog-
nitive learning as they involve transformational change in both technical and
mind-set aspects that constitute a holistic and more effective approach to
develop new, feasible innovation that addresses tenacious social problems
(Robin & Schubert, 2013). Furthermore, exploration learning and rulemak-
ing are complementary in that, while exploration learning stimulates the
emergence of radical eco-innovation, the spread and enforcement of such an
innovation path rely on rulemaking and policy development. Likewise, cog-
nitive learning and rulemaking are also complementary and reinforcing.
Working together, they have a potential to drive paradigm shifts that lead to
system change in addressing environmental challenges. Therefore, examin-
ing these operational elements in a GBP setting explains how GBPs facilitate
partners to move beyond incremental modifications in existing practice to
introducing systems change.
Lin 33

Conclusion, Policy Implication, and Future Study

GBPs work at the intersection of markets and regulations to bring about
social and environmental change that none of the partners could achieve
alone. The unique GBP platform has the potential to greatly reduce uncer-
tainty and mobilize critical resource sharing through effective governance.
They encourage innovative and knowledge-creation activities through explo-
ration learning, as various government, business, and civil society partners
are better able to share resources and risks associated with eco-innovation.
GBPs also engage partners for cognitive learning and environmental rule-
making in a way that may facilitate the scaling up and expedition of the envi-
ronmental change process. Therefore, within the promotion of GBPs, there
are potential opportunities for government, business, and civil society part-
ners to collectively respond to today’s environmental challenges, and jointly
promote a radical eco-innovation path with far-reaching impact to society
and the natural environment.
This study has important managerial implications. As firms’ unilateral
efforts to adopt more radical eco-innovation generally encounter risk and
resource constraints, they may embrace GBPs to hedge the business sector’s
investment risks and gain access to critical government resources related to
the exploration of radical environmental solutions. This study also has impor-
tant policy implications, which entails an increase in governments’ delibera-
tion regarding complementing environmental command-and-control policies
with voluntary strategies, such as GBPs, which incorporate greater stake-
holder involvement and environmental improvements (Starik & Heuer,
2002). GBP’s involvement in eco-innovation through exploration learning,
cognitive learning, and rulemaking may act as alternative policy mechanisms
that help transform extant practices, rules, and beliefs that are deeply
entrenched in the extant institutional environment.
Nevertheless, for governments to play a stronger role in this regard there is
a necessity to revisit extant policy schemes and ensure a consistent support of
radical eco-innovation. A radical eco-innovation path commitment requires
sustained access to critical resources, such as policy support and incentives, as
well as the associated market intelligence, technological expertise, selling and
distribution systems, and capital funding. However, if governments’ resource
power instead supports routine business practices, this can counter radical
innovation. Moreover, the promotion of GBPs for radical eco-innovation may
not be straightforward. There may exist potential conflict and trade-off between
the government and business partners regarding the alignment of public and
private benefits, and that firms’ economic interests linked to GBPs may be
materialized in a staggered way (Stadtler, 2015). In this regard, both sectors
34 Business & Society 

still face a considerable learning curve regarding the design of effective GBPs
for more radical eco-innovations. It is therefore important for future studies to
explore the potential conflicts and reconciliation among the government and
business partners in their pursuit of radical environmental improvements.
The study outlines four operational elements of GBPs. Future study can
further explore and test the complementarity and interaction of these ele-
ments that may help enforce the GBPs’ effectiveness in the pursuit of the
radical eco-innovation goals. It would be also interesting for future study to
explore a series of research questions related to business partner selection for
the pursuit of radical innovation through GBPs. For instance, what factors or
incentives are desirable in facilitating a legacy company to actively seek
GBPs for radical innovation that would risk making its former products/ser-
vices (and profits) obsolete? Should the promotion of GBPs focus on the
transformation of incumbents or on supporting new innovative entries?
Future studies can also extend the research to examine other inter-firm alli-
ances and CSPs (such as firm–NGOs partnerships) in the pursuit of radical
innovation goals. They can apply transaction cost, complementary logic, or a
learning perspective to compare the effectiveness of different environmental
partnerships in engaging business to tackle different environmental issues,
contingent on whether the collaboration target public, mixed, or private
goods. Furthermore, my analysis is based on a U.S. sample’s environmental
efforts, which limits the generalizability of the findings to other contexts. In
the future, scholars should explore this study’s research questions in other
geographical settings and crosscheck my research findings.
Finally, the financial crisis and its aftermath have revealed the limits of
economic value creation, which has turned academics’, public funders’, and
regulators’ attentions to CSPs, such as GBPs, to encourage the government
and business sectors to cross sectoral boundaries and achieve collective pros-
perity, rather than merely yielding to individual benefits. Future studies are
encouraged to continue this research theme and assess GBPs in a broader
social and environmental setting.

Acknowledgments
I thank Dr. Jennifer Oetzel, associate editor of Business & Society, and the two anony-
mous reviewers for their insightful comments and feedback that help improve the quality
of the article. I also thank Azin Ranstan and Xinya Yan for their research assistances.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research,
authorship, and/or publication of this article.
Lin 35

Funding
The author disclosed receipt of the following financial support for the research, author-
ship, and/or publication of this article: I also gratefully acknowledge the financial support
from Social Science and Humanities Research Council (SSHRC) Insight Grant (SSHRC
# 435-2012-1557) titled “Cross-sector solutions to complex environmental issues”.

Notes
1. It is a form of project financing, wherein a business entity receives a concession
from the public sector to finance, design, construct, and operate a facility stated
in the concession contract.
2. Daniel Arvizu as quoted in Vancouver Sun blog February 18, 2012; see http://blogs.
vancouversun.com/2012/02/18/renewable-energy-draws-public-private-invest-
ment-in-us/#_federated=1

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Author Biography
Haiying Lin (PhD, George Mason University) is an assistant professor of public pol-
icy and corporate sustainability at the School of Environment, Enterprise and
Development, University of Waterloo. Her research interests focus on corporate envi-
ronmental strategy, with a particular focus on strategic alliances for sustainability,
voluntary environmental programs, stakeholder involvement in environmental gover-
nance, and global corporate sustainability. She is the principle investigator of SSHRC
Insight Grant for a 5-year team-based research titled “Cross-Sector Solutions to
Environmental Issues in Canada” (2012-2017). Her articles have appeared in journals
such as Business & Society, Business Strategy and the Environment, Journal of
Business Ethics, Organization & Environment, and Sustainability.