From enthusiasm to disenchantment: an analysis of the termination of Portuguese municipal enterprises

ABSTRACT

This paper explores the determinants of continuity and change of municipal organizations designed for service delivery. Focusing on the political and financial costs of termination, it addresses the question of what is behind a local government’s decision to terminate a municipal enterprise. The results suggest that the survivability of this type of organization depends on financial and economic aspects, rather than the political make up of the local government involved. The paper contributes to the academic literature on the choice of institutional mechanisms for service delivery, particularly on ‘reverse contracting’ which occurs when contracted services are taken back from former providers as a result of contracting challenges.

IMPACT

By examining the political and financial costs of terminating municipal enterprises, this paper suggests that the survivability of this type of organization depends on financial and economic aspects, rather than the political composition of a local government. In addition to political considerations, practitioners must consider the aspects of economic and financial viability and incorporate them into their assessments.

KEYWORDS:

• Municipal enterprises
• municipal organizations
• Portugal
• service delivery
• survival analysis
• termination

Acknowledgements

This study was conducted at the Research Center in Political Science (UID/CPO/0758/2019), University of Minho, and was supported by the Portuguese Foundation for Science and Technology and the Portuguese Ministry of Education and Science through national funds.

Disclosure statement

No potential conflict of interest was reported by the author(s).