Structural Predictors of Contract Performance

Abstract

Government increasingly contracts out public functions to the private sector. While theory about contract performance management is abundant, there is little empirical evidence on contract performance. Additionally, the public management contract literature emphasizes management strategies to produce desired performance but largely disregards how the structure of ex post contract settings influences individual contract performance. In this dissertation, I develop theory and measures to assess how structural variables influence contract performance on quality dimensions. I focus on networked structures of exchange between contracted programs and government funders and the way exchange is situated in a larger environment. The empirical basis for my dissertation is a set of government funded residential services programs for delinquent youth. The outcome variable is a measure of program quality created by the government funder. Predictor variables include competition at the program and parent organization level and the overall presence of public and nonprofit programs in the contract network. I also examine the effects of organizational form on performance. Most programs are contracted to nonprofit and for-profit organizations with a small number of programs directly provided by government. The mixed market provides an opportunity to test existing theory about organizational form and performance. I use hierarchical linear models (HLM) and qualitative comparative analysis (QCA) to examine how structural variables influence performance. In the HLM analysis, I find some support for my hypotheses about structural predictors of performance. In the QCA analysis, I find that effects of organizational form are conditional upon structural variables. It appears that nonprofit and public programs perform well under a variety of conditions while for-profit programs are more likely to perform acceptably when they are constrained by structural factors like competition. This dissertation makes theoretical, empirical and practical contributions to the field of public management. Following recent, scholarly tradition, I examine the changing role of government and its increasing use of the nonprofit and for-profit organizations to deliver government services. I incorporate structural theory into the contract management literature and demonstrate the structure of contract settings influences performance. I also develop formal measures of competition in contract settings. I also find that HLM and QCA can be complementary analytical tools and provide a richer picture of causal processes when used on the same dataset.