Source: Mary K. Marvel A1 and Howard P. Marvel, Public Performance & Management Review, Issue: Volume 33, Number 2 / December 2009
Local governments that contract out services are faced with a complex problem of developing an appropriate mix of incentives to elicit performance from a diverse set of service providers, including networks of other local governments, mission-driven nonprofit organizations, and profit-maximizing firms. This paper employs agency and stewardship theory to motivate an analysis of rewards and sanctions used in service delivery relationships. Our findings, consistent with principal-agent theory, indicate that a significant proportion of local governments in our sample employ high-powered incentives with for-profit firms.


