Effects of three forms of local government service provision on transparency, accountability and innovation

This paper compares three organizational forms of local government service delivery and their effects on transparency, accountability and innovation. The three selected forms are in-house provision, inter-municipal company... [ view full abstract ]

This paper compares three organizational forms of local government service delivery and their effects on transparency, accountability and innovation. The three selected forms are in-house provision, inter-municipal company delivery and delivery by municipal limited company. The purpose is to compare traditional in-house forms with externalized corporate forms. Further, the paper explores the operating logics of these organizational forms in terms of hierarchy, market, and network. However, we also hold the door open for the existence of hybrid forms consisting of two or all three of these mechanisms.
A basic idea behind NPM-inspired reforms has been that arm’s length service delivery will improve transparency, accountability, efficiency and innovation in public services, compared to in-house service delivery. However, two or three decades of experience and research do not provide convincing or at least not final answers to these questions. Some observers claim that we are now entering a neo-Weberian era, which is supposed to restore transparency and accountability and remedy the disintegrating and other negative effects of NPM. Other scholars maintain that the neo-Weberian idea of returning to the past when public organizations were supposedly more integrated, neglects the immense growth in size and complexity that has happened in the meantime. Therefore, one has to live with this complexity and instead develop cooperative networks built on trust and relational contracting. According to this perspective, neither market nor hierarchy can solve the challenges of public service delivery, at least not alone.
The basic question of this paper is: Which organizational form and which operating logic will provide the highest degree of transparency, accountability, and innovation under what conditions?
To provide data for this paper we perform three case studies of municipal service provision; one case focusing on in-house delivery, another case studying a public law inter-municipal company, and a third case exploring a private law municipally owned limited company. The approach is exploratory, aimed at uncovering how the involved actors themselves understand the functioning of forms and logics and what effects thereof they see.