Neither Market Nor Hierarchy: Concurrent Sourcing in Water Public Services

2 Juin 2016
Simon Porcher, Journal of Public Administration Research and Theory

Abstract : Analytical frameworks of government service contracting decisions typically focus on the make-or-buy decision. In concepts, governments can either produce the service itself (make) or outsource production (buy). However, governments make and buy the same public services, a practice that is termed concurrent sourcing. Drawing on transaction costs economics and the resource-based view of the firm, this article examines empirically local governments’ propensities to concurrently source public services. Using a unique data set on water public services of more than 4,500 French municipalities for four years—1998, 2001, 2004, and 2008—we find that low transaction hazards, prior contracting experience, and low production capabilities have a positive impact on the level of concurrent sourcing. These findings demonstrate that organizations’ characteristics are a significant factor in sourcing decisions and suggest that capabilities and their interactions with transaction hazards deserve heightened attention in the study of public contracting.