Academic journal article Public Administration Quarterly

The Role of Stakeholders in Municipal Contracting Out

Academic journal article Public Administration Quarterly

The Role of Stakeholders in Municipal Contracting Out

Article excerpt

The choice to privatize municipal services has commonly been characterized as complex and intractable (Fernandez et al. 2008; Warner and Hebdon 2001; Hefetz and Warner 2012; Brown and Potoski 2003; Levin and Tadelis 2010). The economics of outsourcing are typically unclear (Lowery 1998; Sclar 2000; Brown and Potoski 2003; Hefetz et al 2012) and the politics often contentious (Henig 1990; Starr 1987; Fenandez et al. 2008). In just such policy arenas, strategically reaching out to stakeholders may provide municipal governments' indomitable resources to manage the challenge (Head 2008; Haubold 2012; Bryson, 2004; Bryson et al, 2002). Theoretically, engaging and consulting stakeholders can provide information to reduce the risks and transactions costs to government as well as minimize the effect of conflictual politics. We seek to test these claims, as they are replete in the literature. We ask, to what extent do municipal governments engage and consult stakeholders about contracting out? Are municipalities strategic in the stakeholders they consult? Finally, how does engaging stakeholders affect the extent of contracting out in municipalities?

The literature on the determinants of municipal contracting out is rich, in part due to the International City/County Management Association's (ICMA) Alternative Service Delivery (ASD) survey which has been conducted every five years, since 1982. However, the role of stakeholders in the process has not been given a great deal of consideration to date. In fact, only a few estimations of outsourcing in local government has examined this factor (see: Fernandez et al. 2008; Warner 2006; Warner and Hefertz 2008; Hefetz et al. 2012). Moreover, these articles do not provide a clear theoretical explanation for the role stakeholders may play. However, the stakeholder literature offers some clear advice. We integrate these two literatures by articulating a theoretical argument for how engaging stakeholders may influence the extent of contracting out and test these claims with an empirical model. We find that the extent to which city officials engage external stakeholders has a significant and positive effect on the extent of contracting out in municipal government.

THE ROLE OF STAKEHOLDERS

Stakeholders are "Any person, group, or organization that can place a claim on the organization's attention, resources or output, or is affected by that output" (Bryson, 1995, 27). Engaging stakeholders' in decision making is a critical component of democratic society. Stakeholders' feedback is a powerful means for public administrators to fulfill their obligations in a democracy providing a conduit between the public at large and government and ensuring responsible and representative governance (Bingham et al, 2005). In addition, stakeholder engagement has been shown to build trust, develop learning and inspire confidence in public processes (Bierle and Konisky, 2000), all of which are critical elements of democratic practice. Deriving from these calls to engage stakeholders, several typologies have exhumed in the literature that define the extent to which stakeholders are engaged. For instance, an early typology depicted participation on a ladder (Arnstein's 1969). At the bottom, passive dissemination of information and at the top, active engagement. Emphasis is usually placed at the top. For instance, Lawrence (2006) calls for "transformative" participation by stakeholders, highlighting the need to educate stakeholders in order to develop transformational and systemic changes in beliefs and values (Lawrence, 2006).

More recently, some have begun to develop a more instrumental view of stakeholder engagement (Reed, 2008). Thomas (2013) claims that stakeholder management should be a practical matter. Stakeholders should be engaged strategically, when needed and at a level that is purposeful to the task. Similarly, Bingham et al (2005) suggest that public administrators should engage stakeholders to fulfill their own self and strategic interests. …

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