Why create government corporations? An examination of the determinants of corporatization in the Canadian public sector
| Published date | 01 June 2022 |
| Author | Luc Bernier,Luc Juillet,Carl Deschamps |
| Date | 01 June 2022 |
| DOI | http://doi.org/10.1111/padm.12791 |
SYMPOSIUM ARTICLE
Why create government corporations? An
examination of the determinants of
corporatization in the Canadian public sector
Luc Bernier | Luc Juillet | Carl Deschamps
GSPIA, University of Ottawa, Ottawa, Ontario, Canada
Correspondence
Luc Bernier, GSPIA, University of Ottawa,
120 University (6021), Ottawa, Ontario K1N
6N5, Canada.
Email: luc.bernier@uottawa.ca
Abstract
Public corporations have grown in popularity over the last
30 years, but the conditions that lead governments to cre-
ate them are still debated. In this study, we draw on an origi-
nal dataset of public organizations at the federal and
provincial levels in Canada to test the prevalence of corpo-
ratization and the conditions associated with the creation of
public corporations. Our results show that corporatization
has been an important phenomenon in Canada over the last
30 years, but that the creation of public corporations is not
associated with pressures on public finances or favored by
right-wing governments. Our main finding is that the crea-
tion of public corporations is mainly associated with admin-
istrative capacity. Our results suggest that corporatization
may be more a pragmatic exercise in state-building than an
ideological or New Public Management (NPM)-driven pro-
ject, but that its cost or complexity may make it more acces-
sible to larger administrations.
Résumé
Le recours aux corporations publiques a gagné en popularité
au cours des trente dernières années, mais les conditions
qui amènent les gouvernements à faire ce choix restent à
préciser. Dans cette étude, nous nous appuyons sur des
données originales aux niveaux provincial et fédéral au
The authors would like to thank the three editors of this special issue, Rhys Andrews, Judith Clifton and Laurence Ferry for their insightful suggestions and
comments on the different versions of this article.
Received: 29 June 2020 Revised: 7 September 2021 Accepted: 16 September 2021
DOI: 10.1111/padm.12791
216 © 2021 John Wiley & Sons Ltd. Public Admin. 2022;100:216–231.wileyonlinelibrary.com/journal/padm
Canada pour tester ce qui explique le choix de la cor-
poratisation. Nos résultats montrent que celle-ci a été un
phénomène important durant cette période. Nous con-
statons toutefois que la création de corporations publiques
n'est pas associée à des raisons de finances publiques ou à
la présence de gouvernements de droite, mais surtout à la
capacité administrative des administrations. Nos résultats
suggèrent que la corporatisation est moins un projet
idéologique qu'un choix pragmatique visant le renforcement
et la construction de l'
Etat, mais que son coût ou sa com-
plexité peuvent rendre cette approche plus accessible aux
plus grandes administrations.
1|INTRODUCTION
Corporatization—the creation of public organizations governed by their own board of directors and operating with
some autonomy from the core public service—is a notable trend of the public sector of the past decades. According
to Andrews et al. (2020), governments across the globe increasingly use state-owned corporations to deliver public
services. However, despite being an important phenomenon, the study of corporatization remains relatively limited,
especially beyond the municipal level, and largely confined to European and developing countries (Andrews
et al., 2020; Clifton & Diaz-Fuentes, 2018; McDonald, 2014; Voorn et al., 2017). Even in countries with long histories
of public corporations, such as Canada, little research has been done on more recent trends in corporatization.
The creation of public corporation has long been seen as a valuable state-building strategy, allowing for the
development of more specialized expertise and organizational capacity in some sectors. However, since the advent
of the New Public Management (NPM), corporatization has found renewed momentum, as it is also seen as a strat-
egy to improve performance through efficiency improvements while ensuring that social objectives continue to be
emphasized through public ownership. Of course, as with other NPM reforms, whether these objectives are achieved
remains debatable in many cases (Voorn et al., 2017), leading to notable reversals (Albalate et al., 2021; Clifton
et al., 2021; Florio, 2014). Still, despite a questionable track record, NPM remains influential, and many governments
are interested in seeking better organizational performance through adopting organizational forms more akin to the
private sector (Pollitt & Bouckaert, 2017).
While the interest in corporatization has been documented in several countries, the conditions that lead to the
creation of public corporations remain under-investigated. Under what circumstances do governments choose to
give a corporate form to new or reformed public organizations instead of creating a traditional department or an
executive agency? This article addresses this question by examining the factors associated with the creation of public
corporations in the Canadian public sector from 1990 to 2019. By looking at the potential influence of fiscal and eco-
nomic pressures, the ideology of parties in power, the administrative capacity of governments and the division of
powers between levels of government under the Canadian constitution, we apply factors identified in studies of
other countries to the Canadian case. We find that, in Canada, the creation of public corporations is mainly positively
correlated with the administrative capacity of governments. Governments with larger administrations tend to create
more public corporations, suggesting that corporatization may be perceived as a more complex performance-
enhancing strategy better suited to jurisdictions that already have the more extensive administrative resources
needed to pursue it. We also find that the creation of public corporations is inversely related to the unemployment
BERNIER ET AL. 217
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