Local government growth from a tri-sector perspective

ABSTRACT

This study seeks to explain government growth from a tri-sector perspective. Specifically, it examines how the for-profit and nonprofit sectors impact government growth. Market failure theory predicts an inverse relationship between for-profit sector size and government size. Theories of government failure and nonprofit advantage also predict an inverse size relationship between the nonprofit sector and government. Analysis of panel data from Idaho localities, 1996–2014, confirms the inverse relationship between for-profit sector size and government size, and that between nonprofit sector size and government size, as expected by theory. This study contributes to the literature on public administration, governance, and nonprofit and government relations by demonstrating the relevance of the tri-sector perspective on government growth and the active role of nonprofits in relation to government.

KEYWORDS:

• Local government growth
• market failure
• government failure
• for-profit sector
• nonprofit sector

Highlights

• Government growth is a product of interactions among the for-profit, nonprofit, and government sectors.

• Government growth is negatively associated with for-profit or nonprofit sector size.

• Government growth necessitates improvement of public administration.

• Public administration must achieve a good understanding of private sectoral logics.

• The tri-sector approach is useful in research on the nonprofit-government relations.