Path Dependence and Public Sector Innovation in Regulatory Regimes

The overarching theme of this article is institutional analysis of modernization and innovation in the regulatory state, and in pursuing this, the concepts of ‘path dependence’ and ‘administrative traditions’ are used throughout. Self‐reinforcing or positive feedback processes in political systems represent a basic framework. The empirical point of departure is the EU public procurement directive linked to OECD data concerning use of outsourcing among Member States. The question is asked: What has caused the Nordic countries, traditionally not belonging to the Anglo‐Saxon market‐centred administrative tradition, to be ranked so high as users of the Market‐Type Mechanism (MTM) of outsourcing in the public sector versus inhouse provision of services? The reason may be complex, but might be found in an innovative Scandinavian regulatory approach rooted in a ‘small is beautiful’, small and medium‐seized businesses, and local and regional development planning tradition.