Contracting out social care services to for-profit and not-for-profit organizations in Italy: Social categorization and governance choices

IMPACT

This article explains the socio-psychological factors that influence public administrators’ governance choices when dealing with not-for-profit (NFP) and for-profit (FP) providers. In particular, it highlights the use of stereotypes in public administrators’ categorization of NFP and FP motives and expected behaviours, and whether they then prioritize the use of trust or control in the governance of the contractual arrangements. The main implication for public sector managers is that the tendency to social categorization and bias can be an issue in creating the proper mechanisms to ensure the delivery of effective services. In contracting out, the use of categorization by public administrators can reduce their propensity to trust those who are perceived as an outgroup, and hence result in them adopting more formal control mechanisms, while for those perceived as an ingroup their inclination to trust will result in the use of less formal control mechanisms.

ABSTRACT

This article introduces socio-psychological factors that influence public administrators’ stereotypes and governance choices when dealing with NFPs and FPs. The context of this research is the contracting of social services in Italy and the data was sourced from multiple case study sites. Results show that, in contracting out, categorization by one of the parties can increase or reduce trust. This early trust/suspicion can have a substantial effect on future relationships. Prejudices become a self-fulfilling prophecy where the initial categorization influences the subsequent interactions. The ex ante tendency to social categorization and bias can be an issue in creating the proper mechanisms to have both parties working optimally when social services are contracted out. As outsourcing relationships are organized through the definition and elaboration of collective self-categories and mental categories that are taken for granted, categorization affects judgments and actions in such a way that the relationship can be ‘frozen’ within stereotypes. Public administrators should be aware of their preconceived attitudes to the provider based on the provider type and ensure that these attitudes do not lead to sub-optimal contracting behaviour.

KEYWORDS:

• Contracting out
• for-profit
• governance
• Italy
• municipalities
• non-profit/not-for-profit
• social categorization