Exploring the Link between Privatization and Coproduction in Local Public Service Provision: Citizen Involvement, Contracting, and the Nonprofit Sector

Cheng, Yuan; Cheng, Yuan

Privatization and coproduction have become popular approaches public managers use to deliver better and more cost-effective public services. Privatization, especially government contracting out services to nonprofit organizations and for-profit businesses, is an important element in the New Public Management movement intended to increase the cost-effectiveness and efficiency of public service provision. Coproduction refers to the joint production of public services by “regular producers”-- paid service agents -- and “consumer producers” -- citizens -- in the service cycle (Parks et al., 1981). While interest in coproduction declined among scholars in the 1990s, this approach has regained great popularity as a central concept in the New Public Governance paradigm (Pestoff et al., 2012). Scholars increasingly recognize the importance of citizen participation in public service provision not only in service-delivery as originally intended by coproduction but also across the service-cycle. Thus, the scope of coproduction has expanded to include citizen participation in the co-commissioning, co-design, co-delivery, and co-assessment of public services (Cheng, 2019; Nabatchi et al., 2017; Voorberg et al., 2015).

Despite the popularity of both concepts in public and nonprofit management, few, if any, studies have addressed Brudney’s (1987) call to test empirically the relationships between privatization and coproduction in service-delivery, and the role that nonprofit organizations play in both processes. Taking advantage of a unique national survey of U.S. local governments, this study aims to contribute to the existing literature by answering the following questions: Does privatization promote or hinder the coproduction of public services? Does contracting services out to nonprofit or for-profit organizations have a differential effect on citizen coproduction of public services? Are citizens more likely to be involved in coproduction when public services are provided in-house or contracted out? Does government use of coproduction mechanisms “crowd in” (increase) the involvement of the nonprofit sector in delivering services or “crowd out” (decrease) the nonprofit role by involving citizens more directly?

Data to undertake this analysis come from the 2017 nation-wide International City/County Management Association (ICMA) Alternative Service Delivery survey (N = 2,344) administered to city and county governments in the United States. The survey includes comprehensive measures of service privatization in multiple for-profit and nonprofit service subsectors as well as different forms of coproduction. We have linked the ICMA survey to the 2017 American Community Survey, so that we have data on not only local government alternative service-delivery arrangements but also socioeconomic and demographic characteristics of these municipalities. The coproduction variable is measured in the ICMA survey in questions that ask public managers whether they include citizens in planning, designing, delivering, or assessing services. We construct privatization indexes for nonprofit and for-profit service providers by calculating the proportion of public services that are contracted out to these nongovernmental actors, respectively. We employ multilevel regression analysis to control for the socioeconomic and demographic characteristics of municipalities within a state. This research is situated at the intersection of the public and nonprofit sectors and should be of interest to scholars studying public management, public service provision, and government-nonprofit relationships.

Association for Public Policy Analysis & Management

Panel Paper: Exploring the Link between Privatization and Coproduction in Local Public Service Provision: Citizen Involvement, Contracting, and the Nonprofit Sector