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Service-Contracting, Co-Production, and Coalitions in the Delivery of Employment-Related Services

PAQ, Vol. 31 No. 2, (2007)

This paper focuses on one type of inter-organizational response to the problem of high transactions costs that are often associated with the delivery of employment-related and other social services. These transactions costs stem in part from the prevalence of service contracting between public agencies and local organizations and public agencies for the delivery of services where specification of complete contracts is often impossible and monitoring is difficult. These transactions costs also often stem from the need for clients to engage in co-production of those services. The argument developed below is that participation in local coalitions with other service delivery organizations helps participating organizations cope with these transactions costs. One hypothesis is that an organization or agency that delivers employment-related services is more likely to participate in a community coalition (1) when it relies heavily on service contracts and (2) when it requires co-production of services by clients. A second hypothesis is that the choices made by organizations about the coalitions in which they participate, i.e., the diversity of other organizations and agencies represented in coalitions, will be a function of the kinds of services that organizations deliver. Data for this paper are drawn from a survey conducted in 2000 of 802 organizations across the state of Indiana that deliver employment-related services. The statistical analyses reported below provide support for the hypotheses developed here about the role that coalitions play in overcoming problems associated with transactions costs.

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