A new governance approach for multi-firm projects: Lessons from Olkiluoto 3 and Flamanville 3 nuclear power plant projects

We analyze governance in two contemporary nuclear power plant projects: Olkiluoto 3 (Finland) and Flamanville 3 (France). We suggest that in the governance of large multi-firm projects, any of the prevalent governance approaches that rely on market, hierarchy, or hybrid forms, is not adequate as such.

This paper opens up avenues towards a novel theory of governance in large projects by adopting a project network view with multiple networked firms within a single project, and by simultaneously going beyond organizational forms that cut across the traditional firm–market dichotomy. Our analysis suggests four changes in the prevailing perspective towards the governance of large projects.

First, there should be a shift from viewing multi-firm projects as hierarchical contract organizations to viewing them as supply networks characterized by a complex and networked organizational structure. Second, there should be a shift in the emphasis of the predominant modes of governance, market and hierarchy towards novel governance approaches that emphasize network-level mechanisms such as self-regulation within the project.

Third, there should be a shift from viewing projects as temporary endeavors to viewing projects as short-term events or episodes embedded in the long-term sphere of shared history and expected future activities among the involved actors. Fourth, there should be a shift from the prevailing narrow view of a hierarchical project management system towards an open system view of managing in complex and challenging institutional environments.