Why do Local Governments Externalise Public Service Delivery? An Empirical Analysis of the Drivers of Corporatisation, Public-public Collaboration and PPP in the Flemish Elderly Care Sector

Abstract

Based on a study of 22 Flemish local governments and their respective delivery of elderly care, this article analyses the drivers of three local public service delivery externalisation options: corporatisation, public-public collaboration and public-private partnerships (PPP). The analysis reveals a combination of financial and economic efficiency underlying externalisation. Further, while political ideology appears to impact the choice for PPP, the findings suggest that externalisation is guided by pragmatic rather than political-ideological motivations. Overall, the results show that smaller and more financially strapped local governments are more inclined to choose for public-public collaboration and PPP. Rather than the overall financial situation of local governments being a underlying factor, the (potential) impact of the service-related costs on local finances drive externalisation. We also find that policymakers do not solely motivate their choices based on past and current situations, but also anticipate future challenges.