Abstract
ABSTRACTNew Public Management (NPM) encourages private sector participation in the provision and delivery of public services through outsourcing. Bureaucrats and contractors assess the values, processes, and outcomes of contract management differently. This study adopts transaction cost economics (TCE), the resource-based view (RBV), and the principal–agent theory to analyze Hong Kong bureaucrats’ and contractors’ views on contract management. It finds that both groups are critical of the existing contract management system in Hong Kong. The study shows that the government’s neglect of the risks is causing transaction costs because it lacks a proper monitoring mechanism, two-way communication channels, and appropriate training, and because of contract complications and issues of accountability. There is insufficient proof to assert that the government purposefully conceals these risks, but they are not properly addressed.
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