To Have Versus To Have Not: A Cross-City Configurational Analysis of Social Service Contracting

• Author: Jiahuan Lu,Qiang Dong,Bin Chen
• Published date: 01 May 2022
• Date: 01 May 2022
• DOI: http://doi.org/10.1177/02750740211060037
• Subject Matter: Articles

To Have Versus To Have Not: A Cross-City

Configurational Analysis of Social Service

Contracting

Bin Chen

1

, Jiahuan Lu

2

and Qiang Dong

3

Abstract

This study employs a fuzzy-set qualitative comparative analysis to explore how combinations of demand- and supply-side fac-

tors jointly shape the scale of government-nonprofit contracting in social services across 38 Chinese cities. Our analysis

reveals a huge disparity by identifying two pathways to large-scale government contracting for “to-have”(well-resourced cities

with low service needs but a well-developed nonprofit sector) versus the other two pathways to small-scale government con-

tracting for “to-have-not”(poorly-resourced cities with an underdeveloped nonprofit sector struggling with meeting high

service needs). The study contributes to the literature by highlighting how different demand- and supply-side factors can com-

plement each other to form different combinations in shaping the scale of government contracting with new empirical evi-

dence from an authoritarian context. The rise of government-nonprofit contracting in China is more supply-driven,

reflecting the government’s active role in cultivating the nonprofit sector development. The findings also raise an important

policy issue of accessibility and equity in social service provision.

Keywords

government contracting, government-nonprofit relations, qualitative comparative analysis

Introduction

Governments are increasingly using government-nonprofit

contracting to deliver government funded services. Instead

of directly delivering services to citizens, governments

contract-out to nonprofit organizations as third-party actors

to deliver publicly funded services. According to the

studies on third-party governance (Salamon, 1987), hollow

state (Milward & Provan, 2000), and government-nonprofit

partnership (Brinkerhoff, 2002), government funding of non-

profit activities in service delivery has become a widespread

public management practice. Literature has widely docu-

mented the significant scale of government-nonprofit contract-

ing in various countries (e.g., Dong & Lu, 2021; Heinrich &

Choi, 2007; Peng et al., 2020; Petersen et al., 2015). For

example, in the United States, government agencies award

nearly two hundred thousand contracts and grants to human

service nonprofits valued at more than $100 billion in any

given year (Boris et al., 2010). In European countries like

Austria and Belgium, nearly 50 percent of nonprofits’

revenue originates from public agencies (Neumayr et al.,

2015; Verschuere & De Corte, 2015).

Given the significant use of government-nonprofit con-

tracting in the public service delivery landscape, the underly-

ing factors of government contracting-out decisions attract

substantial scholarly attention (e.g., Bel & Fageda, 2009;

Brudney et al., 2005; Fernandez et al., 2008; Hefetz &

Warner, 2012; Warner et al., 2020). Governments typically

face a choice between in-house production and contracting-

out services for citizens. Many researchers examine this

make-or-buy decision, that is, what leads governments to

contract-out service delivery? Generally, contracting-out

determinants can be analyzed from both demand and

supply sides (Ferris & Graddy, 1986; Kettl, 1993). The

demand-side analysis emphasizes the importance of citizen’s

service demand in shaping government contracting-out deci-

sions and proposes demand-side factors such as citizen per-

ception, population diversity, and service characteristics

(e.g., Bel & Miralles, 2003; Brown & Potoski, 2003;

Garrow, 2014). In contrast, the supply-side analysis

1

Marxe School of Public and International Affairs, Baruch College & The

Graduate Center, The City University of New York, New York, USA

2

School of Public Affairs and Administration, Rutgers University-Newark,

Newark, USA

3

College of Humanities and Development Studies, China Agricultural

University, Beijing, China

Corresponding Author:

Qiang Dong, College of Humanities and Development Studies, China

Agricultural University, No.2 Yuanmingyuan West Road, Haidian District,

Beijing, China.

Email: dongqiang@cau.edu.cn

Article

American Review of Public Administration

2022, Vol. 52(4) 317–332

© The Author(s) 2021

Article reuse guidelines:

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DOI: 10.1177/02750740211060037

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highlights the effects of service supply characteristics on gov-

ernment contracting-out and points to supply-side factors

including a government’sfiscal condition and market compe-

tition (e.g., Hefetz & Warner, 2004; O’Toole & Meier, 2004;

Warner et al., 2020).

Our existing knowledge on contracting-out determinants

is deficient for two reasons. First, methodologically, the

extant studies typically rely on regression analysis to gauge

the marginal effects of single demand- or supply-side factors

on explaining contracting-out, withoutaccounting for the con-

figurations of those factors.

1

Contracting-out is a complex

public management decision simultaneously driven by a mix

of demand- and supply-side factors through different causal

paths. The sole focus on individual effects may fail to

unpack the causal complexity underlying contracting-out

decisions. Second, empirically, the existing knowledge on

contracting-out determinants largely rests on public manage-

ment practices in Western democratic regimes, with very

limited attention paid to non-Western regimes. The applica-

bility of the “Western knowledge”to other institutional con-

texts, especially authoritarian ones where state, market, and

civil society interact differently, requires further exploration.

These two intellectual gaps serve as the motivation for our

study.

In this study, we follow a configurational perspective to

explore a research question: what combinations of demand-

and supply-side factors jointly shape the scale of government-

nonprofit contracting in an authoritarian context?We approach

this question with a fuzzy-set qualitative comparative analysis

(fsQCA) of government-nonprofit social services contracting

in China. Specifically, we explore different configurations of

demand-side factors (the percentage of poverty population

and the percentageof population with access to unemployment

insurance) and supply-side factors (the number of nonprofit

organizations, nonprofit sector employment, and total govern-

ment expenditure) leading to large- and small-scale of

government-nonprofit contracting in social service provision

across 38 Chinese cities.

Our analysis identifies four configurations of demand- and

supply-side factors leading to large- and small-scale of

government-nonprofit contracting, demonstrating a contrast-

ing pattern of “to-have”versus “to-have-not”among these 38

Chinese cities. We used “to-have”to refer to the groups of

well-resourced cities with large-scale contracting whereas

“to-have-not”to the groups of poorly-resourced cities with

small-scale contracting.

2

Specifically, two pathways consis-

tent with large-scale government-nonprofit contracting

cover well-resourced governments with low service needs

but a well-developed nonprofit sector (“to-have”); the other

two pathways consistent with small-scale government-

nonprofit contracting include poorly-resourced governments

with an underdeveloped nonprofit sector struggling with

meeting high service needs (“to-have-not”). Moreover, com-

pared with demand-side factors, supply-side factors seem to

drive government-nonprofit contracting in China in a more

forceful way. To our knowledge, our study represents the

first empirical study on Chinese government contracting-out

determinants. Although the cities under study are not a repre-

sentative sample of Chinese cities and thus the findings might

not be generalizable, this explorative study motivates and

informs a fresh examination of different combinations of

demand- and supply-side factors and contributes new empir-

ical evidence from an authoritarian context.

Literature Review: Existing Theories and

Expectations

Since the 1980s, contracting-out has become a widespread gov-

ernment tool for public service delivery in various countries

around the globe (Pollitt & Bouckaert, 2004). Government con-

tracting refers to “a business arrangement between a govern-

ment agency and a private entity in which the private entity

promises, in exchange for money, to deliver certain products

or services to the government agency or to others on the gov-

ernment’s behalf”(Kelman, 2002, p. 282). Through contrac-

tual relationships, governments rely on third-party actors to

produce and deliver publicly-funded services to citizens.

Given the significant use of government contracting for

service delivery,a lingering line of inquiry in government con-

tracting exploration aims to understand what leads govern-

ments to contract-out service delivery, rather than providing

services directly using public employees (“make-or-buy deci-

sions”). The long volume of literature identifies contracting-

out as driven by a myriad of economic, managerial, political,

ideological, and demographic forces (e.g., Bel & Fageda,

2009; Brudney et al., 2005; Hefetz & Warner, 2012;

Petersen et al., 2015; Schoute et al., 2018). In addition, we

must better understand what drives governments to contract-

out more and less, once they decide to do so. We focus on

one demand-side factor and two supply-side factors in this

study and examine how they jointly influence the scale of

government-nonprofit contracting across jurisdictions.

Demand-Side Factor

Extant studies consider the role of population heterogeneity as

a proxy for demand heterogeneity in shaping government-

nonprofit contracting (e.g., Feiock & Jang, 2009; Garrow,

2014; Lecy & Van Slyke, 2013; Matsunaga et al., 2010).

Government failure theory highlights diverse service demand

in explaining the existence of nonprofit organizations in

market economies (Weisbrod, 1988).

3

According to the

theory, nonprofits are established to fill the service gap left

by government provision, a gap caused by tension between

diverse service needs and a majority voting system. A demo-

graphically diverse population expects the government to be

more responsive to the needs of various groups. However,

the qualityand quantity of government provision is determined

by a majority ofvoters through the political process, inevitably

318 American Review of Public Administration 52(4)