Municipalities’ Choices of Service Delivery Modes: More Cooperation and Municipal-Owned Firms and their Explanation for the Netherlands

A large and growing body of research examines municipalities’ choices of service delivery modes; i.e. what institutional forms municipalities use to produce and deliver their services. Overall, most of this research focuses on services, such as garbage collection, for which data are widely publicly available. Also, most of this research is cross-sectional in nature (i.e., studying how the choices of service delivery modes are related to service and/or municipal characteristics at some point in time), although there are also studies that focus on panel data changes (shifts) in these choices over time. The purpose of this paper is threefold. First, based on Dutch survey data from two years (i.e., 2010 and 2018), we analyze municipalities’ choices of services delivery modes on twelve municipal services (ranging from ‘garbage collection’ to ‘parking management’) in 2010 and in 2018, in order to identify trends in choices of institutional forms. We have complete data for 83 and 108 municipalities in 2010 and 2018, respectively, which in each year are shown to be representative for all Dutch municipalities. Overall, in-house production decreased from 61.8% in 2010 to 45.0% in 2018, whereas the use of private firms decreased from 23.3% to 19.5%. To the contrary, inter-municipal cooperation and the use of municipality-owned firms increased from respectively 8.9% and 6.1% in 2010 to 23.4% and 12.1% in 2018. So, we find that, overall, the use of inter-municipal cooperation (and to a lesser extent, of municipality-owned firms) increased significantly, whereas especially in-house production declined. Second, we also analyze municipalities’ choices of service delivery modes in 2010 and 2018 for the services from the physical and the operational domain separately. Interestingly, for the operational domain, with services such as ICT, asset valuation and catering, we find a similar pattern as for all twelve services combined, with increased use of inter-municipal cooperation and municipality-owned firms and decreased use of in-house production and private firms. For the physical domain, however, with services such as maintenance of roads and green and garbage collection, we find slightly different pattern, with increased use of inter-municipal cooperation and municipality-owned firms and decreased use of in-house production, but also increased (as opposed to decreased) use of private firms. When we look at the individual services, it turns out this pattern for the physical domain is mainly caused by the increased use of private firms for two of these services, namely maintenance of roads and sports facilities. Also, for four services (parking management, social security department, catering and cafeteria), we find that the differences between municipalities’ choices of service delivery modes in 2010 and 2018 are not significant. Third, we analyze the influence of service, political and financial characteristics on municipalities’ choices of service delivery modes in 2010 and 2018. We find that the influence of several of these characteristics on the likelihood that municipalities choose a certain institutional form for a service is significantly more positive or negative in 2018 compared to 2010, and provide some explanations for these findings.