Teorías del Aprendizaje

Rosenberg Hansen, Mols & Villadsen (2011), in a study of 98 Danish municipalities, considered why these public organisations outsource and whether they are satisfied with the results. The results of their study indicate that decision making and the perceived success of external service delivery versus internal service delivery in municipalities are explained by resource-based, neoclassical economic and institutional models when making sourcing

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choices. They conclude that the study of local governments’ sourcing may benefit from integrating theories focusing on internal expertise and markets and by integrating economic theories, which assume rationality, with institutional theory, emphasising more unreflective and socially determined behaviour (Rosenberg Hansen, Mols & Villadsen 2011).

A basic overview of core theories that may explain the actions and behaviours of parties to the outsourcing relationship in the public waste management environment are synthesised from the literature.

2.9.1 Transaction cost economics and the resource-based view

A number of studies on inter-local cooperation and outsourcing in general rely on TCE (transaction cost economics) to explain organisations’ contracting decisions (Carr & Hawkins 2013; Hefetz, Warner & Vigoda-Gadot 2012).

Bertelli & Smith (2010) remark that TCE is founded on the work of Coase (1937), who concluded that transaction costs drive organisational structures (Bertelli & Smith 2010). TCE developed from the original Coase theorem (Coase 1937) into what is now known as classical TCE (Williamson 1976, 1979, 1981, 1987, 1993, 1999).

Brown, Potoski & Van Slyke (2010) refer to (Coase 1937; Williamson 1981, 1991, 1996) when explaining that markets can fail because of high transaction costs, limited information, uncertainty about the future and the prospect that people or organizations behave opportunistically in their interactions. They explain that in these instances, win-win voluntary exchanges are replaced by lose-lose outcomes (Brown, Potoski & Van Slyke 2006).

Brown, Potoski & Van Slyke (2010) explain that Williamson’s (1999) asset specificity relates to asset-specific investments which are difficult or impossible to redeploy, which results in a hold-up problem for the purchaser, as the seller may engage in opportunistic behaviour to exploit unforseen events and contract ambiguities (Brown, Potoski & Van Slyke 2010). Where local government outsources a highly specified service, such as development or management of a landfill site, it may not be in the seller’s best interest to disclose waste data regarding the inappropriate disposal of what may be considered hazardous waste (Brown & Benn 2009; Ji & Deegan 2011; Lloyd-Smith 2009; Rae & Brown 2009).

RBV (resource-based view) focuses on how an organisation utilises its resources to develop and maintain a competitive advantage (McIvor 2008; Minkoff 2013; Sundell & Lapuente

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2012; Warner & Hefetz 2012). In the context of the public sector, the relevance of RBV can be found in the decision to source expertise externally. Empirical evidence suggests that RBV in some cases offers clearer support for outsourcing decisions than TCE (Ali, Ali Asghar Anvary & Ali 2008; Lacity & Willcocks 2011; Rosenberg Hansen, Mols & Villadsen 2011). In the context of outsourcing waste management services, the technical expertise required to recover resources from waste streams may not be available internally and has to be obtained elsewhere. In what may be considered thin markets, the risk of opportunistic behaviour among service providers increases, with a corresponding lack of willingness to account for critical waste data (Brown, Potoski & Van Slyke 2006; Girth et al. 2012; Godfrey, Scott & Trois 2013; Lamothe, S & Lamothe 2013; Loughlin & Barlaz 2006; Warner 2009).

2.9.2 Theory of incomplete contracts

The parties to a contract cannot fully predict all future possible scenarios and, as such, all contracts will always be underspecified or incomplete (Bertelli & Smith 2010; Brown, Potoski & Van Slyke 2006; Brown, Potoski & Van Slyke 2010; Dekker, Sakaguchi & Kawai 2013).

The theory of incomplete contracts (TIC) provides a useful analytical framework for studying situations in which contracting is a complex operation (Grossman & Hart 1986; Hart & Moore 1999). The theory predicts that privatisation or outsourcing may result in cost decreases but may also lead to deterioration in the quality of the service (Bel & Fageda 2007, 2008) due to opportunistic behaviour by the vendor. In responding to the risk of opportunistic behaviour, contracting governments must necessarily incur transaction costs by writing more detailed contracts and monitoring the behaviour of the vendor (Brown, Potoski & Van Slyke 2006).

More relational contracting over time may reduce the transaction costs associated with reduced bidding, monitoring and legal costs (Brown, Potoski & Van Slyke 2006; Hart & Moore 1999). The aim of contract management should be to motivate the vendor to go beyond what the letter of the contract says towards more consummate behaviour, and in the process creating a win-win situation (Brown, Potoski & Van Slyke 2010; Hart & Moore 2008).

For example, the outsourcing of development, ongoing management and rehabilitation of landfill sites are considered examples of complex contracting. In the absence of clear

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frameworks or governmental directives, TIC may prove useful as a point of departure to explore outsourcing relationships and the accountability implications thereof.

2.9.3 Public choice and social choice theories

Public choice theory considers public service delivery choices and concludes that overproduction and inefficiencies are the result of politicians and bureaucrats monopolising public service delivery (Niskanen 1971, 1972). Building on this theory, privatisation and outsourcing models were developed to remedy the political rents and political power the politicians and bureaucrats extracted from public service delivery (Ostrom 1972; Savas & Schubert 1987). These initiatives developed into what later became known as NPM (new public management) (Osborne & Gaebler 1993) as a counter-movement to politicians and bureaucrats acting in their own rather than the public interest (Simões, Da Cruz & Marques 2012).

Social choice theory developed from the public interests’ desire to express their wishes collectively. Hefetz & Warner (2007) found a marked shift of privatization in US municipalities back to public service delivery. They argue that public managers adopt a pragmatic approach of balancing the benefits of competition as advocated by NPM with market efficiencies contemplated by TCE whilst ensuring the citizens’ voice is heard (Hefetz & Warner 2007; Sager 1999).

The impact of political influence and the ideological predisposition of managers on outsourcing decision making are the focus of much scholarly debate. Some studies suggest that political influence plays a more important role in local government managers’ decision to outsource than personal ideologies (Ball, Broadbent & Moore 2002; Bel & Fageda 2007, 2009, 2010; Bisman 2008; Hefetz, Warner & Vigoda-Gadot 2012; Kloot & Martin 2002, 2007; Kluvers & Tippett 2010; Warner & Hefetz 2012).

2.9.4 Agency theory

Agency relationships between principals and vendors arise from contracts and other forms of social control. These agency arrangements may result in new agency costs and may create conflicts of interest. The principal-agency problem arises in that the seller may display opportunistic behaviour to the detriment of the buyer by sacrificing the goals of the principal

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and not disclosing it to him or her (Bertelli & Smith 2010; Brown, Potoski & Van Slyke 2010; Calabro & Torchia 2011; Jensen & Meckling 1976).

The outsourcing frameworks discussed earlier in this chapter share a common understanding that managerial skill and management support are a prerequisite for managing the agency relationships resulting from outsourcing. Public managers must respond to additional challenges compared with the private sector. These outsourcing challenges arise from the fact that

Public management is supremely taxed by decentralization trends as it must respond to the challenges presented by a contracting state within a democracy. It is public managers who must keep policy making from devolving into a set of contracts with disconnected interests—the slippery slope of the state of agents (Bertelli & Smith 2010, p. 122).

Public managers may also be self-interested agents motivated by a longer-term of office and larger budgets. The citizen is the primary democratic principal in the local government setting, but due to the degree of separation, the risk of opportunistic behaviour by public managers or local government external service providers is very high. Heinrich, Lynn & Milward (2010) express concern that public management capacity is compromised by extensive contracting, and the extensive deferral of responsibilities means it may no longer be able to reclaim full authority as the statutory agent of constitutional authority (Calabro & Torchia 2011; Cruz & Marques 2012; Heinrich, Lynn & Milward 2010; Niskanen 1971).

Principal-agency theory is a useful framework in which to study the structure and management of complex product contracts. When the principal manager manages uncertainty by outsourcing complex products such as resource recovery or landfill development to an expert agent, their goals are unlikely to be perfectly aligned (Brown, Potoski & Van Slyke 2010).

In the event of multiple principles and agents in a complex network of actors such as the SWSA waste management network, conflicts of interest may arise that could potentially result in accountability problems (multiple agency theory). The agency and multiple agency theories offer an understanding as to how such relationships can be best managed to avoid exploitation by either party. Frameworks designed to manage complex public outsourcing

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must give due consideration to governance and accountability measures to adequately respond to potential conflicts of interest (Calabro & Torchia 2011).

2.9.5 Institutional theory

Institutional theory focuses on the normative, regulative and cultural characteristics of the environment (Rosenberg Hansen, Mols & Villadsen 2011; Scott 2010). It examines the processes and mechanisms by which structures, schemas, rules and routines become established as authoritative guidelines for social behaviour (Scott 1987, 2005, 2010).

The regulative environment is clearly completely different in the public sector compared with the private sector, limiting institutions in how freely they can operate (Hukkinen 1995; North 1990). Institutional arguments have been used to explain sourcing decisions in public organisations and local government (Brown, Potoski & Van Slyke 2006), but according to Rosenberg Hansen, Mols & Villadsen (2011), the theory should be more extensively considered in exploring local governments’ satisfaction with sourcing arrangements (Rosenberg Hansen, Mols & Villadsen 2011).

Simoes & Marques (2012), in their extensive literature review on economic considerations regarding waste management, lament that they could not find studies on economic regulation in the waste sector. They suggest that this may be a consequence of the very limited number of regulators dedicated to the waste sector (Simões & Marques 2012).

2.9.6 Institutional collective action

As a framework to study and understand policy and governance, ICA (institutional collective action) focuses explicitly on the externalities of choice in fragmented systems. The ICA framework considers how alternative mechanisms to mitigate these collective action problems evolve, are selected or are imposed (Feiock 2013). The relevance to accountability for outsourcing of waste management services can be found in that these services have different economies of scale and are demanded by citizens at different levels of quantity and quality (Feiock 2013) across inter-local jurisdictions. Where waste services of low quality and quantity are demanded by citizens the resulting waste data are likely to be of a similar low quality.

ICA dilemmas occur when officials responding to policy interventions which require high quality waste data seek to negotiate the maximum net benefit by either cooperating in a

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regional structure or choosing not to cooperate (Dollery, Hallam & Wallis 2008; Dollery, Kortt & Grant 2012; Feiock 2013; Gruber & Bank 2009).

Feiock (2013) suggests that the ICA framework assists in diagnosing three sources of collaboration risk: (i) the specific nature of the underlying ICA dilemma; (ii) the distribution of preferences within and across the jurisdictions or organization affected by the dilemma; and (iii) the higher-level rules, local political institutions and existing ICA mitigation mechanism in place (Feiock 2013).

When outsourcing waste management services in the SWSA jurisdiction, a number of ICA dilemmas arise. Considerations regarding the level of participation in regional waste planning structures, collaborative partnerships to recover resources from waste streams and use of inter-council outsourcing to dispose of waste in landfills in neighbouring jurisdictions result in accountability problems.

Whilst the theories above are by no means the only theories that could potentially explain the behaviour of actors in the SWSA waste management network, they do serve the purpose of highlighting potential accountability problems when implementing outsourcing frameworks.