Corporatization, Administrative Intensity and the Performance of Public Sector Organizations

Abstract

The process of corporatization in public services has led to the emergence of new, more autonomous organizational forms. However, while these reforms have been centrally about the development of management capabilities in public sector organizations, we know surprisingly little about what this process involves. To address this concern, we draw on the literature on administrative intensity (AI) to frame hypotheses about the likely relationship between corporatization and investments in management and administration, and the consequences of these investments for performance. As an empirical case, we then focus on the effects of Foundation Trust status on AI and efficiency, effectiveness and responsiveness in the acute care hospital sector in the English NHS. Based on a database of nine years (2008/09-2016/17) and dynamic panel data regressions, the results show that corporatization leads to a leaner administration and improved organizational efficiency, effectiveness and responsiveness. In addition, the analysis reveals that lower levels of AI positively mediate the relationship between corporatization and performance, although only in relation to the efficiency dimension. These findings highlight the crucial, but previously misunderstood, importance of lean administration as part of the corporatization reform package, with implications for theory, research and policy.