Theoretical background In the last few decades, under the influence of New Public Management and Reinventing Government movements, public sector in European countries has undergone huge changes. These movements developed... [ view full abstract ]
Theoretical background
In the last few decades, under the influence of New Public Management and Reinventing Government movements, public sector in European countries has undergone huge changes. These movements developed from the idea that public sector must reduce its size and emulate the private sector: a greater competition and an effective and efficient use of resources are claimed. One of the main trends of public sector modernization was the introduction of less centralized and more complex patterns of service delivery and the externalization of public services (Hood, 1991; Pollitt and Summa, 1997; Torres and Pina, 2002). Service provision has changed from a linear structure to a networked one and public sector has increased in complexity. That implied a redistribution of responsibilities for the results achieved and poses the problem of performance measurement and accountability. Administrations have to consider the performance of all the entities involved in services delivery: in this way comprehensive evaluation and accountability are possible.
Objectives and method
Outsourcing in service delivery has become a frequent topic in literature, especially its advantages and risks. In the same way, accountability is a main issue and studies about non-financial reporting are well established. Some scholars have suggested that there are linkages between these topics: some argued that service delivery fragmentation erodes public accountability (Rhodes 1994); others highlighted that public administration remains responsible for public needs’ fulfilment and accountable for the management of public resources and the performance achieved (Grossi and Mussari, 2008). Nevertheless, there is a lack of studies on the relationship between outsourcing and non-financial reporting in the accountability perspective. This leads to a research question: how externalization in service delivery affects non-financial reporting in public sector? To answer the question, our study referred to agency theory and organizational information theory to derive some hypotheses about the relationship between indirect service delivery and the willingness of public administration to report non-financial information. An empirical analysis was carried out to test the hypothesis. We took a sample of 262 Italian public administrations (municipalities) and conducted a quantitative analysis based on the structure of their spending and on non-financial information they report. Therefore, the study used an empirical quantitative method.
Main findings
We found that administrations are more likely to disclose non-financial information if they deliver services indirectly through outsourcing strategies.
Conclusion
The study is aimed at giving empirical evidence about the effects externalization has on non-financial reporting in public sector. Scholars are generally interested in understanding the effect of externalization on public performance, above all regarding cost efficiency and service quality. In the same way, scholars should be interested in understanding how public sector implements a comprehensive accountability in order to report non-financial information to external stakeholder, interested in evaluating how public resources are used. Our study aims to contribute to this knowledge.
D5 - Working with the private sector: Externalisation and public procurement
