Hiving off the non-essential: analysing which public organizations outsource administrative overhead
| DOI | 10.1177/0020852317692137 |
| Author | Bruno De Borger,Jan Boon,Koen Verhoest |
| Date | 01 June 2019 |
| Published date | 01 June 2019 |
| Subject Matter | Articles |
International
Review of
Administrative
Sciences
Article
Hiving off the non-essential:
analysing which public
organizations outsource
administrative overhead
Jan Boon
University of Antwerp, Belgium
Koen Verhoest
University of Antwerp, Belgium
Bruno De Borger
University of Antwerp, Belgium
Abstract
This study contributes to our understanding of the characteristics of public organiza-
tions that are more likely to outsource administrative overhead. Despite the climate of
ongoing crisis that urges public organizations to focus their resources on core tasks,
little is known about the characteristics of organizations that hive off the delivery of
non-essential administrative overhead processes to the private sector. This study runs a
panel data Tobit model to test whether different effect sizes of structural, institutional
and political characteristics are found regarding the probability of outsourcing and the
degree of outsourcing of administrative overhead. We find that organizational size,
formal autonomy, inertia and time matter for understanding the outsourcing of public
organizations.
Points for practitioners
Across the globe, governments have turned to a rationalization of administrative over-
head in response to austerity demands posed by the global financial crisis. The present
study shows that large differences exist between organizations in terms of their pro-
pensity to turn to the private sector – one of the classic recipes for achieving efficiency
gains – for the delivery of administrative overhead, and helps practitioners gain insight
into the determinants of administrative overhead outsourcing.
International Review of
Administrative Sciences
2019, Vol. 85(2) 228–246
!The Author(s) 2017
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/0020852317692137
journals.sagepub.com/home/ras
Corresponding author:
Jan Boon, University of Antwerp, Sint-Jacobstraat 2, 2000 Antwerp (M272), Belgium.
Email: jan.boon@uantwerp.be
Keywords
administrative overhead, outsourcing, public organizations
Introduction
The optimal size of government for the delivery of services has been one of the most
enduring questions in public administration theory and practice. In particular, the
size of expenditures on administrative overhead has been sparking academic inter-
est for decades (Parkinson, 1957), and regained importance in more recent years
(Andrews and Boyne, 2014).
‘Administrative overhead’ refers to the expenditures that organizations invest in
a variety of overhead functions aimed at supporting employees in the primary
process (Huijben et al., 2014). Since the crisis, many governments are acting on
the premise that efficiencies can be achieved in the organization of overhead in
favour of front-line services (OECD, 2015). This study focuses on outsourcing as
an organizational model often associated with such efficiency gains. Advocates of
outsourcing have argued that public production models are inefficient and that
market mechanisms should be introduced to create competition in service provi-
sion, thus stimulating cost reductions (Savas, 1987).
Despite the climate of ongoing crisis, which incentivizes governments to release
resources away from internal administrative operations towards more essential
front-line services (OECD, 2015), little is known about the characteristics of organ-
izations that are more likely to outsource administrative overhead. From a prac-
titioner viewpoint, knowledge about how organizations that differ in a range of
organizational characteristics are dealing (differently) with pressures to reduce
administrative overhead expenditures can offer vital information about how to
manage government-wide overhead reductions. From an academic viewpoint, the
topic bridges two literatures that have both underappreciated the issue of admin-
istrative overhead outsourcing. The literature on administrative overhead largely
focused on the determinants of the size of overhead expenditures in neglect of the
organization of administrative overhead, despite observations that how overhead is
organized can greatly impact the overall size of expenditures allocated to overhead
(Huijben et al., 2014). The generic outsourcing literature largely focused on the
motivations for, and effects of, outsourcing activities in the primary process of
organizations, with a prime focus on service characteristics to explain differences
in outsourcing. The present study addresses the following research question: what
are the characteristics of organizations that are likely to dedicate a greater extent of
their administrative overhead expenditures to outsourcing?
In the following sections, we first present an overview of identified determinants
of outsourcing in the generic outsourcing literature, from which we deduce a frame-
work to apply to the case of administrative overhead. We then present our research
design and discuss the Flemish government context, present our findings, and then
turn to a discussion and conclusion.
Boon et al. 229
To continue reading
Request your trial