Skip to main content

Advertisement

SpringerLink
Log in

Bridging the Gap - Contractor and Bureaucrat Conceptions of Contract Management in Outsourcing

  • Published:
Public Organization Review Aims and scope Submit manuscript

Abstract

Perceptions of bureaucrats and contractors and their contractual relationship underpin contracting success. They are important phenomena but have not been fully explored in the current contracting literature, particularly in a highly politicalized context, namely Hong Kong. Using the principal-agent theory and the transaction cost theory as the theoretical framework, this study examines the perceptions of the key stakeholders, conceptualizes five attributes of effective contract management, and offers recommendations on bridging their perceptions for success of contract administration in Hong Kong. The study helps readers comprehend the dynamics of contract management, and its implications of Hong Kong’s politicalized background.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Accenture. (2003, May 15). Vast majority of government executives report outsourcing "Important" or "Critical" activities, accenture report finds. https://newsroom.accenture.com/industries/health-public-service/vast-majority-government-executives-report-outsourcing-important-or-critical-activities-accenture-report-finds.htm.

  • Amagoh, F. (2009). Information asymmetry and the contracting out process. The Public Sector Innovation Journal, 14(2), 3.

    Google Scholar 

  • Asian Development Bank. (2006). Curbing corruption in public procurement in Asia and the Pacific progress and challenges in 25 countries. ADB/OECD Anti-Corruption Initiative for Asia and the Pacific.http://www.oecd.org/site/adboecdanti-corruptioninitiative/37575976.pdf.

  • Audit Commission of Hong Kong. (2014). Hiring of service contractors and professionals. http://www.aud.gov.hk/pdf_e/e63ch08.pdf.

  • Balago, G. S. (2014). A conceptual review of agency models of performance evaluation. International Journal of Finance and Accounting, 3(4), 244–252.

    Google Scholar 

  • Barthelemy, J., & Quelin, B.V. (2001). Contractual agreements and outsourcing: A modified transaction-cost analysis. In International Society for New Institutional Economics (ISNIE), Alemanha, (2000). https://studies2.hec.fr/jahia/webdav/site/hec/shared/sites/quelin/acces_anonyme/outsourcing/ModifiedTCE-Bart.pdf.

  • Behn, R. D., & Kant, P. A. (1999). Strategies for avoiding the pitfalls of performance contracting. Public Productivity and Management Review, 22(4), 470–489.

    Article  Google Scholar 

  • Berman, S. L., Wicks, A. C., Kotha, S., & Jones, T. M. (1999). Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management Journal, 42(5), 488–506.

    Google Scholar 

  • Boston, J. (2011). Basic NPM ideas and their development. In T. Christensen & P. Lægreid (Eds.), The Ashgate research companion to public management. Farnham: Ashgate.

    Google Scholar 

  • Bozeman, B., & Feeney, M. (2014). Rules and red tape: A prism for public administration theory and research. London and New York: Routledge.

    Google Scholar 

  • Bozeman, B., & Kingsley, G. (1998). Risk culture in public and private organizations. Public Administration Review, 58(2), 109–118.

    Article  Google Scholar 

  • Brown, T., & Potoski, M. (2003a). Transaction costs and institutional explanations for government service production decisions. Journal of Public Administration Research and Theory, 13(4), 441–468.

    Article  Google Scholar 

  • Brown, T., & Potoski, M. (2003b). Contract-management capacity in municipal and county governments. Public Administration Review, 63(2), 153–164.

    Article  Google Scholar 

  • Brown, T., Potoski, M., & Van Slyke, D. (2006). Managing public service contracts: Aligning values, institutions, and markets. Public Administration Review, 66(3), 323–331.

    Article  Google Scholar 

  • Burns, J. P., Wei, L., & Peters, B. G. (2013). Changing governance structure and the evolution of public service bargains in Hong Kong. International Review of Administrative Sciences, 79(1), 131–148.

    Article  Google Scholar 

  • Cannon, J. P., Achrol, R. S., & Gundlach, G. T. (2000). Contracts, norms, and plural form governance. Academy of Marketing Science, 28(2), 180–194.

    Article  Google Scholar 

  • Cheung, A. B. L. (2006). Reinventing Hong Kong’s public service: Same NPM reform, different contexts and politics. International Journal of Organizational Theory and Behavior, 9(2), 212–234.

    Article  Google Scholar 

  • Claro, D. P., Hagelaar, G., & Omta, O. (2003). The determinants of relational governance and performance: How to manage business relationships? Industrial Marketing Management, 32(8), 703–716.

    Article  Google Scholar 

  • Coase, R.H. (1937). The Nature of the Firm. Economica N.S., 4: 386–405. Reprinted in Oliver E. Williamson and Sidney Winter (Eds.), (1991), The nature of the firm: Origins, evolution, development. New York: Oxford University Press.

  • Crocker, K., & Masten, S. (1988). Mitigating contractual hazards: Unilateral options and contract length. RAND Journal of Economics, 19(3), 327–343.

    Article  Google Scholar 

  • Crocker, K. J., & Masten, S. E. (1991). Pretia ex machina? Prices and process in long term contracts. Journal of Law and Economics, 34(1), 64–69.

    Article  Google Scholar 

  • Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. RAND Journal of Economics, 24(1), 126–146.

    Article  Google Scholar 

  • Davis, G. B. (1999). The Blackwell encyclopedic dictionary of management information systems. Malden: Wiley.

    Google Scholar 

  • DeHart-Davis, L. (2000). Environment permit application costs: The role of red tape, subcontracting, experience and communications. Georgia Institute of Technology: Unpublished doctoral dissertation. Atlanta.

    Google Scholar 

  • Denis, J. L., Langley, A., & Rouleau, P. (2005). Rethinking leadership in public organizations. In E. Ferlie, L. E. Lynn, & C. Pollitt (Eds.), The Oxford handbook of public management. Oxford: Oxford University Press.

    Google Scholar 

  • Denscombe, M. (1998). The good research guide for small-scale social research projects. Philadelphia: Open University Press.

    Google Scholar 

  • Dilulio, J. (1989). Recovering the public management variable: Lessons from schools, prisons, and armies. Public Administration Review, 49(2), 127–133.

    Article  Google Scholar 

  • Donahue, A. K., Selden, S. C., & Ingraham, P. W. (2000). Measuring government management capacity: A comparative analysis of city human resources management systems. Journal of Public Administration Research and Theory, 10(2), 381–412.

    Article  Google Scholar 

  • Efficiency Unit. (2006). 2006 Survey on Government Outsourcing. http://www.eu.gov.hk/en/our-work/management-consultancy/doc/survey2006.pdf.

  • Efficiency Unit. (2008). A general guide to outsourcing. http://www.eu.gov.hk/en/reference/publications/guide_to_outsourcing_200803.pdf.

  • Efficiency Unit. (2013). 2012 Survey on Government Outsourcing. http://www.eu.gov.hk/en/our-work/management-consultancy/doc/survey2012.pdf.

  • Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74.

    Article  Google Scholar 

  • Farazmand, A. (2002). Globalization, privatization and the future of modern governance: A critical assessment. Public Finance and Management, 2(1), 151–185.

    Google Scholar 

  • Feeney, M. K., & Bozeman, B. (2009). Stakeholder red tape: Comparing perceptions of public managers and their private consultants. Public Administration Review, 69(4), 710–726.

    Article  Google Scholar 

  • Ferlie, E., & McNulty, T. (2004). Process transformation: Limitations to radical organizational change within public service organizations. Organization Studies, 25(8), 1389–1412.

    Article  Google Scholar 

  • Finkle, A. (2005). Relying on information acquired by a principal. International Journal of Industrial Organization, 23(4), 263–278.

    Article  Google Scholar 

  • Gao, H. (2007). The bid challenge procedures under the WTO government procurement agreement: A critical study of the Hong Kong experience. Public Procurement Law Review, 16(4), 211–254.

    Google Scholar 

  • Goldsmith, S., & Eggers, W. D. (2004). Governing by network: The new shape of the public sector. Washington D.C.: Brookings Institution Press.

    Google Scholar 

  • Grover, V., Cheon, M. J. & Teng, J. T. C. (1996). The effect of service quality and partnership on the outsourcing of information system functions. Journal of Management Information Systems, 12(4), 89–116.

    Article  Google Scholar 

  • Halachmi, A. (2000). Franchising in government: Can a principal-agent perspective be the first step toward the development of a theory? In V. R. Johnston (Ed.), Entrepreneurial management and public policy (p. 281). Huntington: Nova Science Publisher, Inc.

    Google Scholar 

  • Hirschheim, R., Heinzl, A., & Dibbern, J. (2007). Information systems outsourcing: Enduring themes, new perspectives and global challenges. New York: Springer Science & Business Media.

    Google Scholar 

  • Hobbs, J. E. (1996). A transaction cost approach to supply chain management. Supply Chain Management: An International Journal, 1(2), 15–27.

    Article  Google Scholar 

  • Huque, A. S. (2005). Contracting out and trust in the public sector: Cases of management from Hong Kong. Public Organization Review, 5(1), 69–84.

    Article  Google Scholar 

  • Hѐritier, A., & Schmidt, S. K. (2000). After liberalization: Public interest services and employment in the utilities. In F. W. Scharpf & V. A. Schmidt (Eds.), Welfare and work in the open economy. Oxford: Oxford University Press.

    Google Scholar 

  • Ingraham, P. W., & Donahue, A. K. (2000). Dissecting the black box revisited: Characterizing government management capacity. In C. J. Heinrich & L. E. Lynn Jr. (Eds.), Government and performance: New perspectives. Washington D.C.: Georgetown University Press.

    Google Scholar 

  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

    Article  Google Scholar 

  • Kelman, S. J. (2002). Contracting. In L. M. Salamon (Ed.), The tools of government: A guide to the new governance. Oxford: Oxford University Press.

    Google Scholar 

  • Kettl, D. (1993). Sharing power: Public governance and private markets. The Brookings Institution: Washington D.C.

    Google Scholar 

  • Lacity, M. C., & Hirschheim, R. (1993). Information systems outsourcing: Myths, metaphors and realities. Chichester: John Wiley and Sons.

    Google Scholar 

  • Lacity, M. C., & Willcocks, L. P. (2001). Global information technology outsourcing: In search of business advantage. New York: Wiley..

    Google Scholar 

  • Larbi, G. (2006). New public management as a template for reforms in low-income countries: Issues and lessons from Ghana. International Journal of Organization Theory and Behavior, 9(3), 378–407.

    Article  Google Scholar 

  • Legislative Council Panel on Public Service. (2011, February 21). Use of Outsourcing in the Delivery of Government Services. http://www.csb.gov.hk/english/info/files/panel_outsourcing_20110215_e.pdf.

  • Lember, V., Kattel, R., & Kalvet, T. (2014). Public procurement for innovation policy: International perspectives. New York, Dordrecht, London: Springer Heidelberg.

    Book  Google Scholar 

  • Madu, C., & Kuei, C. H. (2012). Handbook of sustainability management. Singapore: World Scientific.

    Book  Google Scholar 

  • Marton, F. (1986). Phenomenography - a research approach investigating different understandings of reality. Journal of Thought, 21(2), 28–49.

    Google Scholar 

  • Miller, G. J., & Whitford, A. B. (2006). The principal’s moral hazard: Constraints on the use of incentives in hierarchy. Journal of Public Administration Research and Theory, 17(2), 213–233.

    Article  Google Scholar 

  • Momme, J. (2001). Outsourcing manufacturing to suppliers. PhD dissertation, Department of Production Aalbrog University, Aalborg. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.798&rep=rep1&type=pdf.

  • Mutiangpili, J. (2010). Government sector outsourcing: Transforming public service with outsourced IT services. Tholons. http://www.tholons.com/nl_pdf/Government_Outsourcing.pdf.

  • OECD. (2004). Anti-corruption policies in Asia and the Pacific: Thematic review on provisions and practices to curb corruption in public procurement. Self-assessment report Hong Kong, China. http://www.oecd.org/site/adboecdanti-corruptioninitiative/policyanalysis/35053895.pdf.

  • OECD. (2016). Public Procurement. http://www.oecd.org/gov/ethics/public-procurement.htm.

  • Petticrew, M., & Roberts, H. (2006). Systematic reviews in the social sciences: A practical guide. Oxford: Blackwell Publishing.

    Book  Google Scholar 

  • Quinn, J. B. (2000). Outsourcing innovation: The new engine of growth. MIT Sloan Management Review, 41(4), 13–28.

    Google Scholar 

  • Riccucci, N. M. (2012). Public personnel management: Current concerns, future challenges. San Francisco: Longman.

    Google Scholar 

  • Robertson, C. J., Lamin, A., & Livanis, G. (2010). Stakeholder perceptions of offshoring and outsourcing: The role of embedded issues. Journal of Business Ethics, 95(2), 167–189.

    Article  Google Scholar 

  • Samaratunge, R., Alam, Q., & Teicher, J. (2008). The new public management reforms in Asia: A comparison of south and southeast Asian countries. International Review of Administrative Sciences, 74(1), 25–46.

    Article  Google Scholar 

  • Sclar, E. (2000). You don’t always get what you pay for: The economics of privatization. Ithaca: Cornell University Press.

    Google Scholar 

  • Scott, I. (2010). The public sector in Hong Kong. Hong Kong/London: Hong Kong University Press/Eurospan.

    Book  Google Scholar 

  • Seidl, R. (2007). Business process outsourcing relationships in Swiss banking: An exploratory study. Göttingen: Cuvillier Verlag.

    Google Scholar 

  • The U.S. Merit Systems Protection Board. (2005). Contracting officer representatives: managing the government’s technical experts to achieve positive contract outcomes. http://www.mspb.gov/netsearch/viewdocs.aspx?docnumber=224103&version=224322&application=ACROBAT.

  • Townley, B. (2002). The role of competing rationalities in institutional change. Academy of Management Journal, 45(1), 163–179.

    Google Scholar 

  • Van Slyke, D. M. (2006). The agent or stewards: Using theory to understand the government-nonprofit social service contractual relationship. Journal of Public Administration Research and Theory, 17(2), 157–187.

    Article  Google Scholar 

  • Van Slyke, D. M., & Hammonds, C. A. (2003). The privatization decision: Do public managers make a difference? American Review of Public Administration, 33(2), 146–163.

    Article  Google Scholar 

  • Vibert, C. (2000). Agency Theory for Online Analysts. http://www.tarrani.net/kate/docs/AgencyTheoryOnlineAnalysis.pdf.

  • Wang, C. (2010). Redefining and Regulating Public Contracting in China: Comparative and International Perspectives. Unpublished doctoral dissertation. Vancouver: The University of British Columbia https://open.library.ubc.ca/cIRcle/collections/ubctheses/24/items/1.0071349.

    Google Scholar 

  • Williams, T.P. (2015). Sustainability in government contracts: A measure of performance from the contractor perspective. Mustang Journal of Business and Ethics, 8(Spring, 2015).

  • Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. New York: Free Press.

    Google Scholar 

  • Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. London: Macmillan.

    Google Scholar 

  • Williamson, O. E. (1989). Transaction cost economics. In R. Schnalense & R. D. Willig (Eds.), Handbook of industrial organizations. New York: Elsevier Science.

    Google Scholar 

  • Williamson, O. E. (1991). Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2), 269–296.

    Article  Google Scholar 

  • Wise, C. (1990). Public service configurations and public organizations: Public Organization Design in the Post-Privatization era. Public Administration Review, 50(1), 141–155.

    Article  Google Scholar 

  • Wollmann, H. (2012). Local government reforms in (seven) European countries: Between convergent and divergent, conflicting and complementary developments. Local Government Studies, 38(1), 41–70.

    Article  Google Scholar 

  • World Bank. (2013). Reluctance to release information. In Governance & Public Sector Management. http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/0,,contentMDK:20134075~menuPK:286310~pagePK:148956~piPK:216618~theSitePK:286305,00.html.

  • World Trade Organization. (2010). Summary - Hong Kong, China. In Trade Policy Review. https://www.wto.org/english/tratop_e/tpr_e/s241_sum_e.pdf.

  • World Trade Organization. (2014). Trade Policy Review. https://www.wto.org/english/tratop_e/tpr_e/s306_e.pdf.

  • Yang, K., Hsieh, J. Y., & Li, T. S. (2010). Evaluating contracting-out performance in Taiwan: Comparing perceptions of public managers and private contractors. Public Administration Quarterly, 34(1), 76–108.

    Google Scholar 

  • Yin, R. K. (1994). Case study research: Design and methods (2nd ed.). Newbury Park: Sage Publications.

    Google Scholar 

  • Zaidi, S., Mayhew, S., & Palmer, N. (2011). Bureaucrats as purchasers of health services: Limitations of the public sector for contracting. Public Administration and Development, 31(3), 135–148.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Asian and Policy Studies, Education University of Hong Kong, 10 Lo Ping Road, Tai Po, New Territories, Hong Kong, SAR, China

    Lina Vyas

  2. Department of Public Policy, City University of Hong Kong, Tat Chee Avenue, Kowloon Tong, Hong Kong, SAR, China

    Mark Hayllar

  3. Department of Public Administration, South China Agricultural University, 483 Wushan Road, Tianhe District, Guangzhou, Guangdong, People’s Republic of China

    Yan Wu

Authors
  1. Lina Vyas
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Mark Hayllar
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Yan Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lina Vyas.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Vyas, L., Hayllar, M. & Wu, Y. Bridging the Gap - Contractor and Bureaucrat Conceptions of Contract Management in Outsourcing. Public Organiz Rev 18, 413–439 (2018). https://doi.org/10.1007/s11115-017-0385-3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11115-017-0385-3

Keywords

Search

Navigation