The Role of Stakeholders in Municipal Contracting Out

Abstract

The environment for contracting out local government public services can be intractable. It is in these environments that engaging external stakeholders can provide pivotal resources. To date, stakeholder literature has suggested that strategically engaging stakeholders can provide information to reduce risk and mobilize support that makes difficult to adopt policy initiatives such as contracting out public services possible. However, few have empirically explored the strategic use of stakeholders as well as their impact on contracting out. Using a large data set of municipal governments compiled from the International City/County Management Association (ICMA) Alternative Delivery Survey (ASD) in 2007 and Census Bureau local government finance data, we demonstrate that engaging external stakeholders is positively related to municipalities with a larger percentage of public services outsourced. We demonstrate that the professional and strategic practice of engaging stakeholders helps to make difficult choices such as contracting out more plausible options in municipal government.