Why do Local Governments Externalise Public Service Delivery? An Empirical Analysis of the Drivers of Corporatisation, Public-public Collaboration and PPP in the Flemish Elderly Care Sector

  • David Vos Ghent University, Department of Public Governance and Management
  • Joris Voets Ghent University, Department of Public Governance and Management
Keywords: externalisation, local public service delivery, corporatisation, public-public collaboration, PPP


Based on a study of 22 Flemish local governments and their respective delivery of elderly care, this article analyses the drivers of three local public service delivery externalisation options: corporatisation, public-public collaboration and public-private partnerships (PPP). The analysis reveals a combination of financial and economic efficiency underlying externalisation. Further, while political ideology appears to impact the choice for PPP, the findings suggest that externalisation is guided by pragmatic rather than political-ideological motivations. Overall, the results show that smaller and more financially strapped local governments are more inclined to choose for public-public collaboration and PPP. Rather than the overall financial situation of local governments being a underlying factor, the (potential) impact of the service-related costs on local finances drive externalisation. We also find that policymakers do not solely motivate their choices based on past and current situations, but also anticipate future challenges.


Albalate, D., Bel, G., & Geddes, R. R. (2013) Recovery Risk and Labor Costs in Public-Private Partnerships: Contractual Choice in the US Water Industry, Local Government Studies, 39(3), pp. 332-351.

Albalate, D., Bel, G., & Reeves, E. (2021) Are we there yet? Understanding the implementation of re-municipalization decisions and their duration, Public Management Review, 1-24, https://doi.org/10.1080/14719037.2021.1877795

Alonso, J. M., Andrews, R., & Hodgkinson, I. R. (2016) Institutional, Ideological and Political Influences on Local Government Contracting: Evidence from England, Public Administration, 94(1), 244-262.

Andrews, R., Ferry, L., Skelcher, C., & Wegorowski, P. (2020) Corporatization in the Public Sector: Explaining the Growth of Local Government Companies, Public Administration Review, 80(3), pp. 482-493.

Argento, D., Grossi, G., Tagesson, T. & Collin, S.-O. (2010) The 'externalisation' of local public service delivery: experience in Italy and Sweden, International Journal of Public Policy, 5(1), pp. 41-56.

Bel, G., Brown, T. L. & Warner, M. (2014) Editorial Overview: Symposium on Mixed and Hybrid Models of Public Service Delivery, International Public Management Journal, 17(3), pp. 297-307.

Bel, G., Esteve, M., Garrido, J. C. & Zafra-Gómez, J. L. (2021) The costs of corporatization: Analysing the effects of forms of governance, Public Administration, https://doi.org/10.1111/padm.12713.

Bel, G., & Fageda, X. (2007) Why do Local Governments Privatise Public Services? A Survey of Empirical Studies, Local Government Studies, 33(4), pp. 517-534.

Bel, G. & Fageda, X. (2009) Factors explaining local privatization: a meta-regression analysis. Public Choice, 139(1-2), pp. 105-119.

Bel, G., & Fageda, X. (2017) What have we learned from the last three decades of empirical studies on factors driving local privatisation?, Local Government Studies, 43(4), pp. 1-9.

Bel, G., Fageda, X. & Mur, M. (2013) Why Do Municipalities Cooperate to Provide Local Public Services? An Empirical Analysis, Local Government Studies, 39(3), pp. 435-454.

Bel, G., Fageda, X., & Mur, M. (2014) Does Cooperation Reduce Service Delivery Costs? Evidence from Residential Solid Waste Services, Journal of Public Administration Research and Theory, 24(1), pp. 85-107.

Bel, G. & Warner, M. (2016) Factors explaining inter-municipal cooperation in service delivery: a meta-regression analysis, Journal of Economic Policy Reform, 19(2), pp. 91-115.

Bhatti, Y., Olsen, A. L. & Pedersen, L. H. (2009) The Effects of Administrative Professionals on Contracting Out, Governance, 22(1), pp. 121-137.

Boggio, M. (2016) From public to mixed ownership in local public services provision: an empirical analysis, Local Government Studies, 42(3), pp. 420-440.

Bouckaert, G. & Kuhlmann, S. (2016) Introduction: Comparing Local Public Sector Reforms: Institutional Policies in Context, In: Kuhlmann, S. & Bouckaert, G. (eds) Local Public Sector Reforms in Times of Crisis: National Trajectories and International Comparisons (London: Palgrave Macmillan UK), pp. 1-20.

Brown, T. L. & Potoski, M. (2003) Transaction Costs and Institutional Explanations for Government Service Production Decisions, Journal of Public Administration Research and Theory, 13(4), pp. 441-468.

Citroni, G., Lippi, A. & Profeti, S. (2013) Remapping the State: Inter-Municipal Cooperation through Corporatisation and Public-Private Governance Structures, Local Government Studies, 39(2), pp. 208-234.

Citroni, G., Lippi, A. & Profeti, S. (2015) Representation through corporatisation: Municipal corporations in Italy as arenas for local democracy, European Political Science Review, 7(1), pp. 63-92.

Cuadrado-Ballesteros, B., Garcia-Sanchez, I. M. & Prado-Lorenzo, J. M. (2013) Modes of Public Serivces Delivery The Case of Spanish Local Governments, Lex Localis-Journal of Local Self-Government, 11(2), pp. 119-137.

Cuadrado Ballesteros, B., García Sánchez, I. M. & Prado Lorenzo, J. M. (2013) The Impact of Political Factors on Local Government Decentralisation, International Public Management Journal, 16(1), pp. 53-84.

Eckersley, P., Flynn, A., Ferry, L. & Lakoma, K. (2021) Austerity, political control and supplier selection in English local government: implications for autonomy in multi-level systems, Public Management Review, 1-21. https://doi.org/10.1080/14719037.2021.1930122.

Elinder, M. & Jordahl, H. (2013) Political preferences and public sector outsourcing, European Journal of Political Economy, 30, pp. 43-57.

Feltenius, D. & Wide, J. (2021) Conservation or disappearance? The public provider of home care services in a system of choice, Public Management Review, 1-21, https://doi.org/10.1080/14719037.2021.1937685.

Foged, S. K. & Aaskoven, L. (2017) Public Sector Unions and Privatization: Evidence From the Eldercare Sector in Danish Municipalities, Journal of Public Administration Research and Theory, 27(1), pp. 135-149.

Girard, P., Mohr, R. D., Deller, S. C. & Halstead, J. M. (2009) Public-Private Partnerships and Cooperative Agreements in Municipal Service Delivery, International Journal of Public Administration, 32(5), pp. 370-392.

Girth, A. M. (2014) What drives the partnership decision? Examining structural factors influencing public-private partnerships for municipal wireless broadband, International Public Management Journal, 17(3), pp. 344-364.

Gonzalez-Gomez, F., Picazo-Tadeo, A. J. & Guardiola, J. (2011) why do local governments privatize the provision of water services? Empirical evidence from Spain, Public Administration, 89(2), pp. 471-492.

Gradus, R., Schoute, M. & Budding, T. (2019) Shifting modes of service delivery in Dutch local government, Journal of Economic Policy Reform, 24(3), pp. 1-14.

Grafenauer, B., & Klaric, M. (2011) Alternative Service Delivery Arrangements at the Municipal Level in Slovenia and Croatia, Lex Localis-Journal of Local Self-Government, 9(1), pp. 67-83.

Grossi, G. & Reichard, C. (2008) Municipal corporatization in Germany and Italy, Public Management Review, 10(5), pp. 597-617.

Guo, M. & Willner, S. (2017) Swedish politicians’ preferences regarding the privatisation of elderly care, Local Government Studies, 43(1), pp. 1-21.

Hefetz, A., & Warner, M. (2007) Beyond the market versus planning dichotomy: Understanding privatisation and its reverse in US cities, Local Government Studies, 33(4), pp. 555-572.

Hefetz, A., Warner, M. & Vigoda-Gadot, E. (2012) Privatization and intermunicipal contracting: the US local government experience 1992–2007, Environment and Planning C: Government and Policy, 30(4), pp. 675-692.

Hibbs, D. A. (1992) Partisan theory after fifteen years, European Journal of Political Economy, 8(3), pp. 361-373.

Hood, C. (1991). A Public Management For All Seasons, Public Administration, 69(1), pp. 3-19.

Jung, C. & Kim, J. (2009) Patterns and the Determinants of Interlocal Cooperation in American Cities and Counties, International Review of Public Administration, 14(1), pp. 11-25.

Lapuente, V. & Van de Walle, S. (2020) The effects of new public management on the quality of public services, Governance, 33(3), pp. 461-475.

Leavitt, W. M. & Morris, J. C. (2004) In Search of Middle Ground: The Public Authority as an Alternative to Privatization, Public Works Management & Policy, 9(2), pp. 154-163.

Leroux, K., Brandenburger, P. W. & Pandey, S. K. (2010) Interlocal Service Cooperation in U.S. Cities: A Social Network Explanation, Public Administration Review, 70(2), pp. 268-278.

Milward, H. B. & Provan, K. G. (2000) Governing the Hollow State, Journal of Public Administration Research and Theory, 10(2), pp. 359-380.

Mohr, R., Deller, S. C. & Halstead, J. M. (2010) Alternative Methods of Service Delivery in Small and Rural Municipalities, Public Administration Review, 70(6), pp. 894-905.

Petersen, O. H., Houlberg, K. & Christensen, L. R. (2015) Contracting Out Local Services: A Tale of Technical and Social Services, Public Administration Review, 75(4), pp. 560-570.

Petkovšek, V., Hrovatin, N. & Pevcin, P. (2021) Local public services delivery mechanisms: A literature review, Lex Localis-Journal of Local Self-Government, 19(1), pp. 39-64.

Picazo-Tadeo, A., González-Gómez, F., Wanden-Berghe, J. & Ruiz-Villaverde, A. (2012) Do ideological and political motives really matter in the public choice of local services management? Evidence from urban water services in Spain, Public Choice, 151(1), pp. 215-228.

Plata-Diaz, A. M., de la Higuera-Molina, E. J., Garrido-Rodriguez, J. C. & Zafra-Gomez, J. L. (2019) Contracting Out and Social Services: Responses to the Austerity Machine, Financial Condition and Political Parties, Administration & Society, 51(6), pp. 951-990.

Rodrigues, M., Tavares, A. F. & Araujo, J. F. (2012). Municipal Service Delivery: The Role of Transaction Costs in the Choice between Alternative Governance Mechanisms, Local Government Studies, 38(5), pp. 615-638.

Schmid, H. (2003) Rethinking the policy of contracting out Social Services to non-governmental organizations: Lessons and dilemmas, Public Management Review, 5(3), pp. 307-323.

Schoute, M., Budding, T. & Gradus, R. (2018). Municipalities’ Choices of Service Delivery Modes: The Influence of Service, Political, Governance, and Financial Characteristics, International Public Management Journal, 21(4), pp. 502-532.

Schoute, M., Gradus, R. & Budding, T. (2020) Drivers of service delivery modes in Dutch local government: an analysis over time and across domains, International Review of Administrative Sciences, 87(3), https://doi.org/10.1177/0020852320968906.

Skelcher, C. (2017) An enterprising municipality? Municipalisation, corporatisation and the political economy of Birmingham City Council in the nineteenth and twenty-first centuries, Local Government Studies, 43(6), pp. 927-945.

Stolt, R., Blomqvist, P. & Winblad, U. (2011) Privatization of social services: quality differences in Swedish elderly care, Social Science & Medicine, 72(4), pp. 560-567.

Tavares, A. F. (2017) Ten years after: revisiting the determinants of the adoption of municipal corporations for local service delivery, Local Government Studies, 43(5), pp. 697-706.

Tavares, A. F. & Camoes, P. J. (2010) New Forms of Local Governance. A theoretical and empirical analysis of municipal corporations in Portugal, Public Management Review, 12(5), pp. 587-608.

Turner, S. & Wright, J. S. F. (2021) The corporatization of healthcare organizations internationally: A scoping review of processes, impacts, and mediators, Public administration, https://doi.org/10.1111/padm.12724.

Van Genugten, M., Van Thiel, S. & Voorn, B. (2020). Local governments and their arm's length bodies, Local Government Studies, 46(1), pp. 1-21.

Voorn, B., van Genugten, M. L. & van Thiel, S. (2017) The efficiency and effectiveness of municipally owned corporations: a systematic review, Local Government Studies, 43(5), pp. 820-841.

Vos, D. & Voets, J. (2021) Explaining municipalities' (alternative) service delivery modes over time. The importance of coercive pressures, Local Government Studies, pp. 1-22, https://doi.org/10.1080/03003930.2020.1869546.

Vos, D., Voets, J., De Rynck, F., Verschuere, B., Carlens, I., Vandendriessche, F. & Warnez, B. (2019) Bestuurskundig onderzoek naar de tendens tot verdere verzelfstandiging en samenwerking bij de uitvoering van de zorgtaken van de OCMW’s en de mogelijkheid om vanuit de organieke regelgeving daarin te faciliteren met behoud van de regierol van het OCMW/de gemeente (Brussels: Agentschap Binnenlands Bestuur).

Walls, M., Macauley, M. & Anderson, S. (2005). Private markets, contracts, and government provision: What explains the organization of local waste and recycling markets?, Urban Affairs Review, 40(5), pp. 590-613.

Warner, M. & Hebdon, R. (2001) Local Government Restructuring: Privatization and Its Alternatives, Journal of Policy Analysis and Management, 20(2), pp. 315-336.

Wassenaar, M., Groot, T. & Gradus, R. (2013) Municipalities' Contracting Out Decisions: An Empirical Study on Motives, Local Government Studies, 39(3), pp. 414-434.

Williamson, O. E. (1997) Transaction cost economics and public administration, In: Boorsma, P. B., Aarts, K. & Steenge, A. E. (eds) Public Priority Setting: Rules and Costs (Dordrecht: Kluwer Academic Publishers), pp. 19-37.

Yin, R. K. (2018) Case study research and applications: design and methods (6th edition ed.) (Thousand Oaks: Sage).

Zafra-Gómez, J. L., Pedauga, L. E., Plata-Díaz, A. M. & López-Hernández, A. M. (2014) Do local authorities use NPM delivery forms to overcome problems of fiscal stress?, Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, 43(1), pp. 21-46.