One of the most striking features of recent welfare state reform is privatization and the creation of welfare markets. Public provision is on the decline, while the number of entrepreneurial providers delivering public goods for a profit has increased tremendously. In Germany, this trend has become most obvious in the health care sector: the share of for-profit-hospitals has risen sharply within the past years. Strictly speaking, no other comparable country has privatized as many public hospitals as Germany. The comparative welfare state research literature is predominantly interested in the causes of privati-zation and its consequences in terms of access to and quality of services. Questions of democracy, accountability, and legitimacy, however, are mostly neglected. In public management research, in turn, there is a rich literature on accountability. Yet, scholarly attention is most often directed to public organizations, inquiring amongst others the impact of the shift from political to managerial account-ability. The proposed paper draws upon this discussion and wants to broaden it by addressing the question for what and to whom managers of private for-profit organizations delivering public goods are held ac-countable. Privatization affects existing accountably regimes quite considerably. Traditional account-ability mechanisms such as hierarchical control are in welfare markets with autonomous private pro-viders no longer applicable. The corporate actors, however, cannot abstain from their relationship to both the government and the society. Institutional theories of organizations argue that for-profit or-ganizations must be deemed legitimate in order to ‘survive’. Their legitimization hinges on adequately managing the relationship between the organization and its social and political stakeholders. This insight is especially true for corporate organizations delivering public goods as they are dependent on public resources. Further problems arise as the privatization of welfare services is often accompanied by massive public protest challenging not only the legitimacy of elected politicians but also those of the corporate providers. The paper investigates the accountability regimes of corporate providers with regard to both the rela-tionship between business and government and the relationship between business and society. What activities and strategies are applied to manage the interface between the organization and their politi-cal and social stakeholders? And are corporate providers subject to the same requirements concerning transparency and information duties as public organizations? The questions are discussed through the lens of an institutional organizational approach and on the empirical basis of hospital privatization in Germany.
