Decentralization and resource contributions within local governance networks: Evidence from health sector reform in Honduras

Abstract

Many public services are co‐produced through networks of governmental and non‐governmental organizations that choose to or are obliged to contribute resources, a trend that has been reinforced through decentralization reforms. We utilize original data for 826 organizations across 65 local governance networks to assess how decentralization affects resource contributions while accounting for municipality context, network environment, and organizational attributes. Drawing on a quasi‐experimental design in the context of health sector reform in Honduras, we find that decentralization is associated with a slight reduction in the number of resource ties an organization contributes to other organizations in its network. This association is most prominent where municipal governments, rather than non‐governmental organizations (NGOs) or associations, are lead intermediary organizations under decentralization. Additionally, NGOs contribute more resource ties relative to community associations or public organizations, and consistent with a crowding‐out dynamic, we find that this relationship is attenuated under decentralization. Our results suggest that administrative reforms can influence resource contributing behavior by organizations and the structure of inter‐organizational networks, which are important but underemphasized mechanisms potentially linking decentralization to service delivery outcomes. This is particularly relevant for policymakers working to support network governance for the joint production of public services in under‐resourced settings.