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dc.contributor.authorSmith, Craig Richard
dc.description.abstractThe decision to contract public services to outside organizations, while often controversial, has become an increasingly accepted feature of public management over the past three decades. Indeed, these so-called make-or-buy decisions are of paramount importance to public organizations because, in effect, they define the scope of direct governmental activity. The aim of this dissertation is to identify the factors affecting whether a service will be contracted out or not; to whom; and how individual contracts are designed. Together, these three components encompass the entire range of make-or-buy decisions in the public sector. I assert that public managers recognize service- and market-level characteristics which render some services better suited for hierarchical governance, while others are more easily governed by contracts. I theorize that managers are able to identify the core capabilities of public organizations, and thus avoid contracting them out. For ancillary services, public managers identify attributes which will likely lead to costly contracting and keep the services inside the hierarchy. Moreover, for those services which are contracted out, the government can protect against opportunism by structuring the contract to mirror hierarchy. I use a variety of quantitative methods to test these general propositions. The data for my analyses are drawn from two primary sources. First, I use local service delivery data from the International City/County Management Association to examine the factors affecting whether a service is contracted out or not, as well as to whom the contract is awarded. Second, I use federal contract data from the U.S. Environmental Protection Agency to examine the factors influencing how specific contracts are designed and structured. I find support for the hypothesis that managers protect core capabilities from contracting out, but also consider governance costs when deciding whether to contract out ancillary capabilities. When the decision to contract has been made, I find evidence that managers protect against opportunism by choosing cost-plus contracts and/or increasing the length of the contract. Finally, I test and find some empirical support for the proposition that make-or-buy decisions aligned with the theoretical predictions described in the dissertation will result in performance improvements.
dc.subjectContracting Out
dc.subjectContracting Decisions
dc.subjectContract Management
dc.subjectTransaction Costs
dc.subjectand Capabilities
dc.titleMake or buy?
dc.title.alternativea theoretical and empirical investigation of public sector contracting decisions
dc.description.departmentPublic Administration and Policy
dc.description.majorPublic Administration
dc.description.advisorLaurence J. O'Toole
dc.description.committeeLaurence J. O'Toole
dc.description.committeeAndrew B. Whitford
dc.description.committeeAnthony M. Bertelli
dc.description.committeeHal G. Rainey

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