Providing Welfare or Directing Policy? For-Profit Actors Enter the Welfare State

Firms and industries that provide social services become increasingly powerful in welfare state politics. This is the hypothesis of the present paper which studies the political consequences of the marketization of social policy provision. It sheds light on new actors in the welfare state by analysing for-profit providers of pensions and hospitals in Germany and the UK. What resources can these providers rely on when trying to get what they want in the political arena? Can they exert power? If so, how does power differ across countries and policy sectors? The paper makes three main contributions. Theoretically, it newly interprets power resource theory and goes beyond the employer-centred focus by applying it to the privatization of social services. Methodologically, the paper introduces a measure of power resources of welfare providers. Empirically, a fuzzy-set qualitative comparative analysis (fsQCA) indicates that business-friendly social policy reforms are closely related to powerful providers.