Public goods theories highlight an incentive system that rewards "free ridi
ng" on the contributions of early contributors toward collective actions. H
owever, because such theories focus on creation of the good, they may under
estimate returns that accrue to early contributors subsequent to the good's
realization. The concept of formative investment is introduced here to des
cribe the extent to which organizations help to create public goods such as
interorganizational linkages like participatory federations. Data from the
CEOs of 48 organizations involved in a participatory federation were used
to assess how an organization's level of formative investment is related to
later patterns of dependency and interaction among federation members. Fin
dings suggest that from a long-term perspective, and for goods that involve
communication and interaction, the incentive structure may not be so favor
able for free riders. To the Extent that organizations with high formative
investment have the capability to envision the future and communicate that
vision to potential federation partners, they may be able to both reduce fr
ee riding and secure for themselves advantageous positions in the subsequen
t network of relations.