The role of collaboration in contracting out: an analysis of the importance of transactional and relational dimensions

Abstract

What role does collaboration play in the management of public services, which over the years have been regarded as well suited for contracting out? Effective use of contracting out for easily contractible services is in the administrative practice and the academic literature conventionally believed to be related to the satisfaction of transactional requirements, especially specification, competitive pricing, monitoring and presence of credible safeguards, with a minimum use of resources (transaction costs). The article argues that satisfaction of additional relational requirements, such as collaboration, personal relations and trust, must be expected to play important roles as well. In a single-case study of contracting out of landscape maintenance it is shown that transactional and relational dimensions of the contract exist in a dynamic interplay and that their satisfaction is key to contractual performance. It is concluded that it is necessary to include relational dimensions in explanations of how contractual relations work and the performance of contracting out.