The efficiency and effectiveness of municipally owned corporations: a systematic review

Abstract

Municipally owned corporations (MOCs) are increasingly utilised to provide local public services, but little remains known about their efficiency and effectiveness. In this article, we offer a typology of MOCs, explore the variables that affect their behaviour, and perform a systematic review of public administration articles published between 2001 and 2015 on their efficiency and effectiveness. We find that MOCs are often more efficient than local bureaucracies in the provision of services such as refuse collection, water distribution, and transit services, although they also have high initial failure rates. We conclude that municipally owned corporations are a viable means for delivering some local public services for localities capable of initiating and managing complex contracts. In light of the scarcity of literature on this topic, our conclusions remain tentative, and we encourage additional research into this growing phenomenon.

The introduction of mandatory inter-municipal cooperation in small municipalities

“…On the same topic, Sørensen (2007) found, analyzing the case of refuse collection in Norway, that efficiency losses owing to many owners are greater than the cost reductions obtained by pursuing economy of scale. On the same line, Voorn et al (2017) highlighted, through a systematic review of previous studies, that more ownership dispersion implies a higher risk of failure. Briefly, in some cases IMC cannot work because individual municipalities, adopting opportunistic behaviours, can reduce the potential benefits of collaboration.…”

New development: Corporatization of local authorities in England in the wake of austerity 2010–2016

“…For example, local authorities across England have been experimenting with new forms of contracting-out, shared services, social enterprises and public-private partnerships (Sandford, 2016). Many of these alternatives have now been widely adopted in practice and are extensively covered in the academic and policy literatures, but the phenomenon of corporatisation has been relatively missing from academic debates and the wider policy implications are underdeveloped (Voorn et al, 2017). The process of 'corporatisation'the creation of local authority companies -is a significant and far-reaching development in the governance, performance and efficiency of local public services.…”

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

“…As Voorn, Van Genugten, and Van Thiel (2017) show, MOCs have independent corporate status, permit shared ownership and facilitate extensive cooperation between different local governments. Moreover, based on the review of the existing literature undertaken by these authors, MOCs are increasingly being used to provide local public services and are often more efficient than local bureaucracies.…”

“…Their relationship with local politics, however, is less clear which can limit managerial autonomy. This, according to Voorn, Van Genugten, and Van Thiel (2017), means that MOCs present a high risk of failure as a result of goal conflicts and agency problems. IMC is not, of course, exempt from these problems and governance research tackling these questions should be encouraged.…”