Combining Transaction Costs, Experience, and Context: A Configurational Approach to Relationships in Government Contracting

• In Event: Relational Public Procurement

Abstract

The importance of relationships for successful and high performing public procurement (Brunjes 2020, 2022), motivates this study’s research question: what explains the evolution and prevalence of relationships in government contracting? Formal contracting and relational governance in the outsourcing of public services often act as complements rather than supplements (Poppo and Zenger 2002), yet few studies explore what explains the potential evolution of these relationships. In the United States, government contracting is fairly pragmatic and is driven by public decision makers’ exploration rooted in concerns over costs and quality of services (Warner 2023). Using fuzzy set quality comparative analysis (fsQCA), this study calibrates an outcome set ranging from completely formal contractual transaction (fully transactional) to mature partnership (fully relational). Our explanatory sets consist of transaction costs characteristics, seller experience with government contracts, and use of contract design features. This study makes a couple of notable contributions to the government contracting literature. First, we rely on purchaser-seller relationships as our unit of analyses (cases), whereas previous studies have focused on services broadly defined, or individual contracts. In calibrating our sets, we tabulate the total number of agreements between government purchasers and private sellers. As a result, we can observe how over the duration of the relationship, the transactions evolve as represented by the changes in the scope of tasks (exchanges) between the two parties. Secondly, we also explore how the use of contract design features impact purchaser and seller relationships in government contracting. Scholars often explore the “make-or-buy” decision, who to buy from, and how are contractual exchanges managed. Though, studies that explore how agreements are structured and re-structured using contract design features such as modifications are rare. The study’s preliminary analyses indicate that there are two distinct paths leading to relational contracting. The first involves the use of contract design features, or the use of more complete contracts. The second indicates that the use of contract design features and mutual dependence lead to more relational contracting.

Authors

• Tyler A Scott, University of California, Davis
  Presenting Author

• Lachezar G Anguelov, The Evergreen State College
  Non-Presenting Co-Author