Is cooperation cost reducing? An analysis of public–public partnerships and inter-municipal cooperation in Brazilian local government

ABSTRACT

In local government systems worldwide, financial pressures have obliged local authorities to focus on cost-efficient methods for providing local services, including inter-municipal agreements and public–public partnerships. However, in comparison with municipal mergers, privatisation and other approaches to the problem, the cost impact of the cooperative provision has not yet been thoroughly examined empirically. Moreover, available empirical research has largely concentrated on waste disposal in developed countries. The present paper seeks to contribute to the empirical literature on inter-municipal agreements and public–public partnerships by comparing their impact on costs with ‘stand-alone’ provision in a range of non-waste local services. In contrast to the bulk of existing studies, our analysis takes place in a developing country context by examining Brazilian local government over the period 2013/15. We found that – on the whole – cooperative provision is less expensive than the ‘stand-alone’ provision for the services studied. Our results can be explained by the size and composition of the population, together with the politics for cooperation.     

Drivers and barriers of inter-municipal cooperation in health services – the Norwegian case

Inter-municipal cooperation in service delivery is widespread, as is the notion that this type of cooperation is primarily driven by economies of scale. However, the empirical results appear to be inconclusive, suggesting that additional explanatory factors are needed to explain why municipalities cooperate. This study aimed to identify the factors and conditions that influence the level of inter-municipal cooperation in health services by exploring a broad set of explanatory factors that go beyond simple economic concerns. In addition to confirming that a small population-size and fiscal stress constitute important drivers of inter-municipal cooperation, the results from this study also demonstrates the need to consider geographical location and heterogeneity relative to neighbouring municipalities as potential barriers to such cooperation.     

Inter-municipal cooperation,economies of scale and cost efficiency: an application of stochastic frontier analysis to Dutch municipal tax departments

Inter-municipal cooperation is increasingly popular in European countries. Saving cost is a key motivation. This paper analyses the relation between inter-municipal cooperation and cost efficiency among Dutch municipal tax departments between 2005 and 2012. Motivated by the notion that cost savings are ascribed to scale economies, the relation between cooperation and cost is modelled explicitly through scale. The size of the cooperation is incorporated as a determinant of cost efficiency. The results indicate that inter-municipal cooperation can contribute to reducing cost and that the relation can be explained by scale. Municipalities or cooperations sized around 10,000 inhabitants are estimated up to 30% inefficient. At 60,000 inhabitants, the benefits of scaling are largely exhausted. Other than through scale, municipalities that cooperate are not estimated to operate significantly more or less efficient.     

Cooperation,not cost savings: explaining duration of shared service agreements

Among local governments, inter-municipal cooperation is the growing reform; but the literature is silent regarding the determinants of longer-term shared service agreements. We conducted a survey of all local governments in New York State in 2013 to assess the level of sharing across 29 public services. The duration of shared service agreements varies from 1 to 80 years. What explains this difference? Our hierarchical linear model shows that service sharing agreements fall along a cooperation continuum, where cost savings are a determinant of shorter agreements, while the public values of service quality and cross-jurisdictional coordination explain longer-term agreements. We also find that positive past experience with sharing partners increases the duration of sharing agreements. Our analysis lays the foundation for new theories of shared services that build directly from the benefits of improved regional coordination, inter-municipal reciprocity and service quality, not from theories based solely on competition and costs.     

Municipal population size and the benefits of inter-municipal cooperation: panel data evidence from Japan

ABSTRACT

Intermunicipal cooperation (IMC) facilitates efficient public service delivery. This study measures how the benefits municipalities gain through IMC differ according to municipal population size and service provision type. Focusing on public health and fire protection services, this study employs panel data regression for 1,706 Japanese municipalities over a five-year period, 2012–2017. This study has several major findings. First, an increase in the IMC spending ratio reduces public spending in both the studied services. Second, the marginal effect of IMC varies depending on the size of the municipal population. More specifically, the marginal effect of IMC on public health has a narrow confidence interval with a wide ranging population scale, while the marginal effect of IMC on fire protection produces negative values for only 151 municipalities due to extensive standard error. These findings can help municipalities take advantage of IMC to improve public service delivery.     

Quality of Service,Expectation, Satisfaction and Trust in Public Institutions: The Abu Dhabi Citizen Satisfaction Survey

Structural equation modelling was utilised to develop and test three models while exploring the causality effect of constructs. The models hypothesised that trust in the government was a result of interactions of several other forces: namely, citizens’ expectation, perception of service quality and satisfaction with these services. The article validates and replicates the findings on the question of causality between performance and trust. The findings were very consistent with the previous ones. The model incorporating citizen's demographic data provided the best fit. According to this model, citizen demographics, expectations and quality of services influence citizen satisfaction; and ultimately, citizen satisfaction influences trust in government. The perceived quality of all services provides significant standardised estimates. However, congestion in streets, parking facilities, parks and recreation and schools are the most salient drivers of citizen satisfaction. The variables of income, education level, years living in Abu Dhabi and marital status exert the highest influence on this satisfaction construct. Perception of quality of services has a significant effect on overall satisfaction; and overall satisfaction drives trust in local government officials. In addition, citizen expectation influences perceptions of the quality of service and overall satisfaction.     

Privatisation,contracting-out and inter-municipal cooperation: new developments in local public service delivery

ABSTRACT

We briefly review recent advances in the empirical analysis of the privatisation and inter-municipal cooperation of local public services and discuss the potential of these studies. The core issues examined include the identification of factors driving delivery choices and the effects of privatisation and cooperation on service provisions. In addition to reporting the specific empirical findings of each study, we highlight the innovative methodologies that they each adopt. Finally, we outline a number of potential avenues for further research.     

THE ORDER OF QUESTIONS IN A SURVEY ON CITIZEN SATISFACTION WITH PUBLIC SERVICES: LESSONS FROM A SPLIT‐BALLOT EXPERIMENT

Surveys of citizen satisfaction with local public services have become widespread, with the results increasingly used to reorganize services, to allocate budgets, and to hold managers accountable. But evidence from a split‐ballot experiment that we conducted suggests that the order of questions in a citizen survey has important effects on reported satisfaction with specific public services as well as overall citizen satisfaction. Moreover, the correlations of specific service ratings with overall satisfaction, and thus the identification of key drivers of overall satisfaction, also turn out to be highly sensitive to question order. These findings are in line with research on priming and question order effects in the survey methodology literature, but these effects have not been carefully examined before in the context of citizen surveys and public administration research. Policy and management implications of these finding are discussed.     

Remapping the State: Inter-Municipal Cooperation through Corporatisation and Public-Private Governance Structures

The institutional setting of regional and local government in Italy appears to be characterised by an ongoing process of reform and adjustment ever since Regions were created in 1970. More recently, provinces and Municipalities gained wide autonomy in 1990, and the constitution itself was revised in 2001 to set up what is sometimes referred to as a ‘quasi-federal’ system of intergovernmental relations. In this context, inter-municipal cooperation also has witnessed several phases and dynamics, ranging from (very rare) fusions, through single-purpose cooperation, to integrated service management (Public-public partnership, and consortia for the management and/or regulation of public utilities). More recently, and most notably over the past decade, inter-municipal cooperation has taken on a new form, consisting in the shared ownership in joint-stock companies. The so-called ‘corporatisation’ of public bodies, i.e. the creation of public-owned (or mixed public-private), private-law companies and corporations for the fulfilment of public-interest activities, has come to constitute a network of inter-municipal cooperation that appears to represent a shift from an institutional intergovernmental structure of cooperation, to one that is pre-eminently played out in the arenas of public-private forms of governance. The article analyses the literature and overarching trends in inter-municipal cooperation in Italy, and draws on very rich original data on the companies owned by Municipalities in six Italian regions to show how these companies represent the locus of inter-municipal (and multi-level) relations that go well beyond the formal boundaries of local administrations, and are often brokered by powerful private partners.     

Bridging the accountability and transparency gap in inter-municipal collaboration

Municipal governments are increasingly showing interest in inter-municipal cooperation. Often overlooked in the discussion of such collaborative relationships are concerns related to accountability and transparency. In this article, we introduce a framework to measure accountability and transparency in inter-local relationships and test it with a brief case study of inter-municipal cooperative agreements collected from the Greater Toronto Area. Overall, the agreements collected score very low on our accountability scale, mainly because of low levels of public access and poor internal accountability. We conclude the study by examining the challenges of having multiple lines of accountability in local service collaboration.     

Management Discretion and Political Interference in Municipal Enterprises. Evidence from Italian Utilities

The attention of scholars and policy-makers is shifting from full privatisation to alternative measures as a means to improve the efficiency of public services. This article focuses on three restructuring measures adopted by local governments: partial privatisation (without transfer of control rights), inter-municipal joint ventures, and the presence of outside directors on the Board. Divergent hypotheses on these measures have emerged from two economic theories, namely public choice and the agency perspective. An empirical analysis investigates the effects of restructuring processes on a sample of Italian municipal utilities. Partial privatisation has been shown to play a significant and positive role, while Board independence from management has a less significant influence. Multi-government utilities have been found to suffer from severe coordination costs, which are not outweighed by scale benefits. Our findings reveal that management discretion is a significant source of inefficiency in municipal enterprises.     

IMPORTANCE‐PERFORMANCE ANALYSIS OF CITIZEN SATISFACTION SURVEYS

This paper introduces the method of importance‐performance analysis of citizen surveys, a useful approach to understanding citizen satisfaction with local government services. Using data from a US national online panel, we directly compare two approaches to importance‐performance analysis: one employing an explicitly stated measure of importance, the other using a measure of importance derived from regression analysis. The different results that the two approaches give suggest that local government administrators and policy analysts arrive at distinctly different conclusions depending on which importance measure they use. These differences are illustrated by simulating the change in citizen satisfaction that would result from improvement in the top‐rated services according to each measure. Research and policy implications are discussed.     

Inequality,discrimination, and service delivery: A recapitulation for the public administrator

The equitable provision of urban public services has begun to receive increased attention from researchers, administrators, and the courts. Recent research has questioned the view that minority and low-income groups are systematically deprived in the distribution of public services, e.g. police and fire services, libraries, street quality and maintenance, and parks and recreational facilities. This paper reviews empirical studies in urban service distribution and judicial responses to municipal service claims. The research reveals that discimination in service delivery does exist. However, it is difficult to determine empirically in larger cities if a consistent pattern of discrimination exists and whether or not it bears a significant relationship to race or class. Discrimination and inequality on the basis of race has been subject to meticulous judicial prowess benefitting at one time or another the citizen and the municipality. The courts are requiring overwhelming statistical documentation to substantiate racial discrimination in the provision of urban public services.     

Outsourcing,bureaucratic personnel quality and citizen satisfaction with public services

This article investigates the relationships between outsourcing, bureaucratic personnel quality (BPQ) and citizen satisfaction with public services. Our baseline expectation is of a negative association between outsourcing and service quality; however, we argue that this tendency can be counteracted when the government buyer has a more competent and motivated personnel, not only in managerial positions, but across the board. Better‐educated and paid public employees are likely to have an important moderating effect on service quality through their input into quality specifications, their ability to recognize the provider's consummate or perfunctory behaviour, and their willingness to act on the observed performance. Using data from a cross‐section of Sweden's municipalities, our analysis reveals a robust association between higher levels of outsourcing and lower levels of citizen satisfaction, but the data do not provide unambiguous support for the hypothesis that the strength of this association diminishes when BPQ is higher.     

PERFORMANCE MANAGEMENT AND CITIZEN SATISFACTION WITH THE GOVERNMENT: EVIDENCE FROM CHINESE MUNICIPALITIES

Despite the fact that performance management has been ubiquitously adopted in the public sector across the world today, there is limited and inconclusive evidence that it improves citizen satisfaction with the government. In this article, we use survey data and multilevel modelling to analyse the effects of multiple performance management components on citizens' perceptions of government performance across 19 major cities in China. The results reveal that performance management does have a positive impact on citizen satisfaction. In addition, citizen participation, performance feedback and accountability, and information openness are positively associated with citizen satisfaction along various performance dimensions in different magnitudes. While we should take account of and mitigate its unintended consequences, our results suggest that it is still promising for public organizations to implement performance management.     

How social capital shapes citizen willingness to co-invest in public service: The case of flood control

Why are citizens in some communities more willing to co-invest in public services than citizens in other communities? Citizen co-investment has become an important policy tool for governments to finance public services, yet little research has theorized and empirically examined the impacts of community contexts on citizens' willingness to invest their personal resources in public services. As social capital is often viewed as an important determinant of citizen behaviours, we propose two competing hypotheses explaining the relationship between social capital and citizen co-investment: the facilitation effect hypothesis and the inhibition effect hypothesis. Based on three data sources, our statistical analyses consistently show that citizens living in counties with more social capital are less willing to co-invest in local flood control. This finding provides empirical evidence to support the inhibition effect hypothesis. Key implications of our research and suggestions for future research are discussed in the conclusion.     

The effects of market concentration on costs of local public services: empirical evidence from Dutch waste collection

ABSTRACT

Different concentration indexes are calculated for the Dutch waste collection market and all show that this market was highly concentrated in 2002, 2006, 2010 and 2014. The estimation results in 2002 show that private collection is cheaper but high concentration increases costs of private collection and therefore (partly) offsets the advantage of contracting out. In 2006, the savings gained from privatisation and also the effect of concentration disappear, probably due to the introduction of a VAT-compensation fund. In 2010, for an area with a radius of 30 km, high concentration increases costs, but for larger areas, this effect mostly disappears. For 2014, in most estimations, this concentration effect disappears. If we include fixed effects for a panel, the cost advantage of inter-municipal cooperation is larger than that of private production and concentration effects also disappear. Overall, these estimation results are rather independent of the concentration indexes used, if we investigate several indexes as an alternative for the Herfindahl–Hirschman index.     

PUBLIC SERVICE USE AND PERCEIVED PERFORMANCE: AN EMPIRICAL NOTE ON THE NATURE OF THE RELATIONSHIP

Citizen surveys often measure service use as well as perceived performance, typically in the form of quality or satisfaction ratings. But little attention has been paid to the relationship between public service use and satisfaction. How do the service ratings or satisfaction judgements of frequent users differ from those of infrequent users? Is the direction of the use‐satisfaction relationship positive or negative? Or perhaps non‐linear? And does the direction or form of the relationship differ across services? Using data from New York, we examine the relationship between use and perceived performance for five services: buses, subways, parks, public libraries, and roads. Interestingly, this relationship often appears curvilinear, with satisfaction initially rising with use, to a point after which it begins to diminish. We offer some substantive interpretations of this pattern, as well as some practical implications for the analysis and understanding of citizen surveys for policy and management purposes.     

Tackling society's “detritus”: Stakeholder partnerships and Urban service delivery in India

In view of the emerging debate on a coordinated‐management perspective for resolving development improvidence, there is now a broadening of the scope of decentralization, emphasising not only vertical restructuring of powers and resources but also analogous horizontal restructuring at the local level to include collaborators outside the government arena. Grounded on this perspective, the present paper examines the process of stakeholder partnerships in urban service delivery, especially on urban environment maintenance service through refuse collection and disposal. The paper is reflective in nature, drawing on a case study of solid waste management processes in Bangalore, India. It examines the characteristic of stakeholder partnership in the delivery of public services, draws insights into the enabling environment and thereupon attempts to identify future interventions to strengthen the delivery of public municipal services. The paper argues that much more needs to be understood if institutional pluralism in local government is to become an effective development strategy.