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Taylor and Francis Group, International Public Management Journal, 3(17), p. 365-386

DOI: 10.1080/10967494.2014.935242

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Concurrent Sourcing in the Public Sector: A Strategy to Manage Contracting Risk

Journal article published in 2014 by Amir Hefetz, Mildred Warner ORCID, Eran Vigoda-Gadot
This paper is available in a repository.
This paper is available in a repository.

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Abstract

Public administration scholars utilize transaction cost theory to explain the contracting dichotomy between make or buy. However, recent theoretical developments point to a mixed position, “make and buy,” as a strategic management choice. We draw insights from the private sector management literature on what it terms “concurrent sourcing” to build a theory for public sector mixed contracting, but argue that public managers face a broader range of contracting agents (both private for-profit and public intergovernmental) than private sector managers. The choice of contract agent makes local government contracting important in elaborating a theory of concurrent sourcing. Our empirical findings show that local government managers use concurrent sourcing as a strategy to mitigate potential contracting risks. We find mixed contracting is more common with for-profit agents and total contracting out is more common in contracts to other governments. When contracting with for-profit partners, mixed delivery helps reduce risk, promote market complementarities, and ensure attention to citizen interests.