This work is a product of the staff of the World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this document do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The colors, boundaries, denominations, and other information shown on any map in this report do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

PurposeThe process of public sector reform in the United Kingdom continues to provoke debate. Even among advocates of the reform process there is a concern that improvements in public service provision have not been as marked as originally intended, and that the process has produced a variety of unintended consequences. The purpose of this paper is to explore possible explanations for these unintended consequences, and discuss possible practical solutions for policy makers and service commissioners.Design/methodology/approachIn this conceptual paper focus is in particular upon attempting to explain managerial behaviour from insights offered by two well‐established managerial theories – stakeholder theory and resource dependency theory. Insights from these theories are used to explain the possible causes of the unintended consequences of the reform process. The discussion is illustrated and set in context by reference to a continuum of service delivery modes from monopoly provision through to full competition.FindingsTheory suggests that managers inevitably prioritise the interests of what they identify as their key stakeholders, and particularly those providing critical resources. In the case of public services this means that the interests of government, as the commissioner and funder of services, are prioritised rather than the end‐users of services. Examples of how this distorts the objectives of government are highlighted. It is argued that understanding this aspect of managerial decision‐making and stakeholder prioritising opens up the potential to resolve the problem.Originality/valueThis is the first paper to address the question of managerial behaviour from these theoretical perspectives in the area of the public sector reform process.

This work is a product of the staff of the World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this document do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The colors, boundaries, denominations, and other information shown on any map in this report do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

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