Can public‐private innovation partnerships improve public services? Evidence from a synthetic control approach

Abstract

AbstractPublic‐Private Innovation (PPI) Partnerships can generate innovative approaches to improving public services. However, incomplete contract theories point to difficulties in making public‐private collaborations work effectively and efficiently. Drawing on these theories, we analyze the transfer of the management of a children's social services department in a large metropolitan government in England to an “improvement partnership” between the local government and two private firms. Using a synthetic control method approach, we find little evidence of improved health or educational outcomes for looked after children during the years following the creation of the partnership. However, there appears to be an increase in the costs of providing children's social services, which documentary evidence suggests may be attributable to weak contract management capacity, difficulties embedding performance monitoring, and additional expenditures on the partnership's reform programme. Our findings therefore highlight that effective supervision of PPI partnerships is essential for making them a success.