Integrating Organizational Economics and Resource Dependence Theory to Explain the Persistence of Quasi Markets

Abstract

Abstract:The past few decades have been characterized by a growing body of profit-seeking public service areas with the understanding that profit-seeking organizations will deliver public services more efficiently than government can. These sectors include, but are not limited to, health care, corrections and education. Governments have created quasi markets to attract private providers of services in these sectors, with varying results. Organizational economics has provided the primary explanation for quasi markets, but questions about the sought-for efficiencies actually realized through these markets persist. We integrate resource dependence theory and organizational economics to provide a more comprehensive explanation of the persistence of quasi markets.

Collaborative Value in Public and Nonprofit Strategic Alliances: Evidence From Transition Coaching

“…Governments that are faced with the decision to privatize services often form strategic alliances with nonprofit firms. Governments trying to either reduce costs or make improvements can sometimes trust nonprofits more than profit-seeking firms and allow them more discretion as the lack of profit motive should reduce opportunism (Coupet & McWilliams, 2017; MacIndoe, 2013; Witesman & Fernandez, 2013). These are top-down relationships in which nonprofits are delegated certain responsibilities and monitored by the government (Brinkerhoff & Brinkerhoff, 2002).…”

“…Nonprofits are often wary of formal alliances with governments or public organizations because of the complications that bureaucracy can cause (Bouek, 2017;Coupet & McWilliams, 2017;Salamon & Toepler, 2015) and are more open to partnering with private agencies that allow greater agency. 1 Nonprofits often contract with corporations that are looking to build and extend corporate social responsibility (CSR) initiatives (J. E. Austin, 2000;Seitanidi & Crane, 2009).…”

Exploring the link between government funding and efficiency in nonprofit colleges

“…According to Pfeffer and Salancik (2003), efficiency frameworks involve causal assumptions without sufficient understanding of social systems. However, power and efficiency can be interrelated, as the input/ output function that resource dependence theory largely writes off can be affected by external actors (Coupet & McWilliams, 2017). The government's use of the power associated with resource dependence suggests a movement from a variable in the organization's scope of external control to control of inputs and outputs.…”