How New Public Management and third party governance has created value problems for third sector organisations delivering public services: evidence from England and Wales (2008-23)

• In Event: The managerial way? Nonprofit service provision in a marketized context

Abstract

Academic debates over the past 30 years have tracked the isomorphic influence of New Public Management reforms and the subsequent transition to third party governance on third sector organisations active in various fields of public service provision (Hood, 191; Salamon, 1987; Salamon and Toepler, 2015; Osborne, 2006; Dayson et al, 2020). Despite initially promising a greater opportunity to access public sector funding, for most third sector organisations the reality of these developments has been quite different. The promise of a more collaborative and equitable relationship with the state, in particularl closer involvement in the design and delivery of public services, has not materialised in practice and more often than not these developments have left third sector organisations facing a battle for resources, legitimacy, independence and their own survival (Milbourne and Cushman, 2015; Dayson et al, 2022).

Why is it that a policy environment that initially seemed to offer such fertile ground for the development of third sector organisations has ended up proving anything but? In this paper I will draw on more than 15 years of researching third sector involvement public service delivery in England and Wales to develop a novel explanation based on insights from the economic sociology of markets. Drawing on Granovetter’s (1985) description of markets as being embedded in and constructed from nonmarket social relations, and Beckert’s assertion that markets are shaped by the “institutional structures, social networks and horizons of meaning within which market actors meet” (2009, p.247), I identify three types of ‘value problem’ that continue to hold back third sector involvement in public service delivery. These problems relate to the ontology and epistemology of value and suggest that how third sector organisations conceive of their value, who they believe it ought to be accrued by and for, and how it should be measured, are at odds with the norms and expectations of public sector organisations.

Value problems are a form of inevitable co-ordination problem that impact market actor’s behaviour and it is only when stable reciprocal expectations of market actors from all sides of a transaction are accepted that markets, such as those for public services, can operate effectively (Beckert, 2009). I conclude that neither NPM nor third party governance has provided the stability necessary for effective market relations between the third sector and the state. In fact, I suggest that value problems are the inevitable end point of NPM and related developments, and it is only if and when these value problems can be overcome that the full embedding of third sector organisations in public sector markets may be possible. In response, I propose deliberative approach to building consensus about the ontology and epistemology of value as an important and necessary step in establishing the social order of public service markets.

References

Beckert, J. (2009). The Social Order of Markets Theory and Society 38, 245-269
Dayson, C., Bennett, E., Damm, C., Rees, J., Jacklin Jarvis, C., Patmore, B., Turner, K. (2022). The Distinctiveness of Smaller Voluntary Organisations Providing Welfare Services. Journal of Social Policy, 52 (4), 800-820
Dayson, C., Fraser, A. and Lowe, T. (2020). A comparative analysis of social impact bond and conventional financing approaches to health service commissioning in England: the case of social prescribing’, Journal of Comparative Policy Analysis: Research and Practice, 22 (2), 153-169
Granovetter, M. (1985). Economic Action and Social Structure: The Problem of Embeddedness. The American Journal of Sociology, 91(3), 481–510
Hood, C. (1991). A public management for all seasons?. Public administration, 69(1), 3-19.
Milbourne, L., & Cushman, M. (2015). Complying, Transforming or Resisting in the New Austerity? Realigning Social Welfare and Independent Action among English Voluntary Organisations. Journal of Social Policy, 44(3), 463-485.
Osbourne, S. (2006). The New Public Governance. Public Management Review, 8 (3), 377-387
Salamon, L.M. (1987). Of market failure, voluntary failure, and third-party government: Toward a theory of government-nonprofit relations in the modern welfare state. Journal of voluntary action research, 16(1-2), 29-49.
Salamon, L.M. and Toepler, S. (2015). Government–nonprofit cooperation: Anomaly or necessity? Voluntas: International Journal of Voluntary and Nonprofit Organizations, 26, 2155-2177.

Author

• Christopher Dayson, Sheffield Hallam University