Institutional, ideological and political influences on local government contracting: evidence from England

Theories of contracting out offer contrasting perspectives on the noneconomic determinants of local government contracting. Some suggest ideological motives predominate, with contracting decisions reflecting the ideology of ruling parties. Others emphasise political motives, with governments responding to local preferences. In this paper, we draw on ideas about isomorphic pressures within organizational fields to examine whether institutional influences might also affect contracting behaviour. Using a spatial auto-regressive probit model, we evaluate whether mimetic pressures as well as ideological and political motives shape the decision to contract out service provision in English local governments. In addition, we analyse whether those factors also determine whether contracting local governments decide to contract with a commercial firm or a not-for-profit provider. The statistical results suggest that the decision to contract out is spatially dependent, and hence reflective of institutional forces. By contrast, political motives and market size considerations shape with whom local governments contract.