Contracting Out, an Empirical Study on Motives

Tinbergen Institute Discussion Paper 10-121/3

37 Pages Posted: 12 Dec 2010

See all articles by Tom Wassenaar

Tom Wassenaar

Joint Research Center of the European Commission

Tom Groot

VU University Amsterdam - Amsterdam Research Center in Accounting

Raymond H. J. M. Gradus

Vrije Universiteit Amsterdam; Tinbergen Institute

Date Written: December 9, 2010

Abstract

Municipalities may have various motives for decisions on the mode of their task execution. Empirical studies – based on both public choice and transaction costs theory - have not yet provided a fully comprehensive explanation for municipal contracting out decisions. Therefore, we held interviews with Dutch municipal managers about the motives for the actual mode of service provision. This study provided the opportunity to investigate the relevance of motives on contracting out, to explore of additional motives and to test these statistically. As we find, municipalities do not regularly evaluate the service provision of their activities. Only in case of structural underperformance, municipalities consider a change of service provider, and then, the efficiency motive is most relevant. However, we conclude that institutional motives – as the stability of service provision - are relevant for contracting out decisions as well.

Keywords: Contracting out, municipalities, institutional theory, motives

JEL Classification: L33, H72, D23

Suggested Citation

Wassenaar, Tom and Groot, Tom and Gradus, Raymond H. J. M., Contracting Out, an Empirical Study on Motives (December 9, 2010). Tinbergen Institute Discussion Paper 10-121/3, Available at SSRN: https://ssrn.com/abstract=1722547 or http://dx.doi.org/10.2139/ssrn.1722547

Tom Wassenaar (Contact Author)

Joint Research Center of the European Commission ( email )

IPSC, Agriculture unit, TP 266
Via E. Fermi 1
Ispra, VA Varese 21027
Italy

Tom Groot

VU University Amsterdam - Amsterdam Research Center in Accounting ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

Raymond H. J. M. Gradus

Vrije Universiteit Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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