XXII. MEZINÁRODNÍ KOLOKVIUM O REGIONÁLNÍCH
VĚDÁCH. SBORNÍK PŘÍSPĚVKŮ
22nd
INTERNATIONAL COLLOQUIUM ON REGIONAL
SCIENCES.CONFERENCE PROCEEDINGS
Place: Velké Bílovice (Czech Republic)
June 12-16, 2019
Publisher: Masarykova univerzita (Masaryk University Press), Brno
Edited by:
Viktorie KLÍMOVÁ
Vladimír ŽÍTEK
(Masarykova univerzita / Masaryk University, Czech Republic)
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AUTOR, A. Název článku. In Klímová, V., Žítek, V. (eds.) XXII. mezinárodní kolokvium o regionálních
vědách. Sborník příspěvků. Brno: Masarykova univerzita, 2019. s. 1–5. ISBN 978-80-210-9268-6.
DOI.
AUTHOR, A. Title of paper. In Klímová, V., Žítek, V. (eds.) 22nd
International Colloquium on Regional
Sciences. Conference Proceedings. Brno: Masaryk University Press, 2019. pp. 1–5. ISBN 978-80-
210-9268-6. DOI.
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© 2019 Masarykova univerzita
ISBN 978-80-210-9268-6 (online : pdf)
 
 
 
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DOI: 10.5817/CZ.MUNI.P210-9268-2019-45
PRACTICES IN PUBLIC SERVICE PROVISION
STIMULATING INVOLVEMENT OF PUBLIC SECTOR
Praktiky pri poskytovaní verejných služieb stimulujúce zapájanie
verejného sektora
MONIKA BUMBALOVÁ
EVA BALÁŽOVÁ
Katedra verejnej správy
Fakulta európskych štúdií a regionálneho rozvoja
Slovenská poľnohospodárska univerzita v Nitre
Department of Public Administration
Faculty of Eur. Studies and Regional Development
Slovak University of Agriculture in Nitra
 Tr. A. Hlinku 2, 949 76 Nitra, Slovak Republic
E-mail: monika.bumbalova@uniag.sk, eva.balazova@uniag.sk
Annotation
The economic functioning of local self-governments, including provision of public services, has always been in
line with the prevailing public management orientation presented in the particular country. For past few decades,
the developing countries focused on applying elements of new public management and its modifications, which
implied limited involvement of public sector and its agencies in provision of public services. In particular those
were outsourcing and PPP. The consequent critique of NPM together with its limited success in some countries
created a suitable base for a switch in the focus towards approaches supporting the involvement of public sector.
Inter-municipal cooperation, public-public partnership and remunicipalization are among the most apparent ones.
The main objective of the paper is, therefore, to provide a comprehensive analysis of these approaches with the
emphasis on identifying their strengths and weak points. The method of critical analysis together with the method
of synthesis were the main methods used during the paper elaboration. The performed analysis can further serve
as a theoretical background for an empirical research conducted in the field.
Key words
public sector involvement, inter-municipal cooperation, public-public partnership, remunicipalization
Anotácia
Ekonomické fungovanie miestnych samospráv, vrátane poskytovania verejných služieb, bolo vždy odvodené od
smerovania verejného manažmentu v konkrétnej krajine. Posledné desaťročia, najmä v podmienkach rozvinutých
krajín, sa pozornosť sústreďovala na aplikáciu prvkov tzv. Nového verejného manažmentu (New public
management) a jeho modifikácií, ktoré naznačovali odklon od zapájania verejného sektora a jeho agentúr do
poskytovania verejných služieb, napríklad prostredníctvom outsourcingu a PPP. Následná kritika NPM spolu s
jeho obmedzeným úspechom v niektorých krajinách však vytvorili vhodnú základňu pre zmenu tohto zamerania, a
to smerom k prístupom orientovaným na zapájanie verejného sektora. Medziobecná spolupráca, verejno-verejné
partnerstvo a remunicipalizácia patria k najvýraznejším z prístupov. Hlavným cieľom príspevku je preto poskytnúť
súhrnnú analýzu týchto prístupov s dôrazom na identifikáciu ich silných a slabých stránok. Pri práci boli využité
najmä metóda syntézy a kritickej analýzy. Predkladaná analýza môže následne slúžiť ako teoretický základ pre
empirický výskum v danej oblasti.
Kľúčové slová
zapájanie verejného sektora, medziobecná spolupráca, verejno-verejné partnerstvá, remunicipalizácia
JEL classification: H700, L320
1. Introduction
The public sector in the second half of the 20th
century was dominated by the New Public Management (NPM)
doctrine, which replaced the centralized hierarchical organization structures and which is seen almost as opposition
to the traditional public administration (Islam, 2015). The main idea of the NPM, when perceived from the
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perspective of self-governments, was to favour decentralized administration, delegation of discretion, contracting
for goods and services, and the use of the market mechanisms of competition and customer service to improve
performance (Pfiffner, 2004). NPM involves reducing the size of the public sector including reorganizing and
slimming down (Minogue, 2001). Since delivering of public services belongs to the most important roles of
governments at all levels, NPM had inevitably impact also on this aspect. Based on the main idea behind NPM,
involvement of private sector into the service provision was a crucial factor, while outsourcing and public-private
partnership (PPP) are among the concrete forms used at the municipal level (OECD, 2005).
Outsourcing refers to a private sector delivery of goods and services that are paid for by the government (including
local government). It is argued that businesses act more efficiently than governments because of different
incentives and greater flexibility, and so outsourcing will save the public money (Pfiffner, 2004). On the other
hand, there is a group of scholars, who have pointed out that, even if outsourcing produces cost savings, it is
important to identify where these savings have been made. If outsourcing leads to savings due to a deterioration
of working conditions (Quiggin, 2002) and/or a reduction in the quality of the service provided to citizens (Hart et
al., 1997), which may lead in turn to a negative consequence for social welfare, this should be pointed out as such,
and not confused with efficiency improvements. Further, the potential cost savings from outsourcing may diminish
or disappear over time by rising prices of the private sector companies (Alonso, Clifton, Diaz – Fuentes, 2011).
The second mentioned form, namely the PPP, is characterized as a contract between government and a private
company under which a private company finances, builds, and operates some element of a public service; and the
private company gets paid over a number of years, either through charges paid by users, or by payments from the
public authority, or a combination of both (OECD, 2005). The practice with PPP implementation also revealed
some pros and cons. The main advantages lie for example in risk transfer to the private partner, reducing public
money tied up in capital investment, solving the problem of public sector budget restraint, saving time in project
delivery or facilitating creative and innovative approaches (Li et al., 2015). On the other hand, Hall (2015) found
following disadvantages: with PPP the cost of capital is more expensive, the cost of construction together with
transaction costs for tendering and monitoring are higher, the private sector did not prove itself to be more efficient
in operation and there are negative impacts on public services, the environment and workers, from cost-cutting or
from distorted selection of projects to suit the need for profitability in PPPs. Similar conclusions were drawn also
by Minogue (2000), who claimed that market-based mechanism did not bring hard evidence of real efficiency
gains. Further, Artreya, Armstrong (2002) stated that it is virtually impossible to find rigorous evidence or
evaluation of the impact on public services, despite this being a major emphasis of the reform model.
Thus, the contemporary problem is how to organize the public sector so that it can adapt to the changing needs of
society, without losing coherence of strategy or continuity of governance values (OECD, 2005). Some answers to
the mentioned issues could be found in so called post-NPM reforms, which are mainly inter-organizationally
oriented. These reforms seek to improve the horizontal coordination of governmental organizations and also to
enhance coordination between the government and other actors. Post-NPM implies a mixture of in-house,
marketized services and delivery networks, a client-based, holistic management style, boundary spanning skills,
joined-up targets, a procedural focus, impartiality and ethical norms and stronger centralized control (Lodge, Gill,
2011). The inter-organizational practice for example showed that the organizations need to concentrate on a
specialised selection of employees, recruiting qualified and experienced workers who will become a competitive
advantage (Mura et al., 2017). Also Mikušová- Meričková et al. (2017) pointed out that only self-government with
initiative employees will monitor the needs of inhabitants and consequently will implement innovative
mechanisms of public services into the developing strategy.
Post-NPM focuses on strengthening the capacity of the centre, both politically and administratively, but also
structurally reintegrating or controlling more agencies and state-owned enterprises (Christensen, Lægreid, 2007).
Within the philosophy of post-NPM, three important practices can be found in the municipal service delivery.
Their common feature lies in increased involvement of public sector agencies in the provision and delivery of
public services. In particular those are inter-municipal cooperation, public-public partnership and
remunicipalization, which will be elaborated in further details in the next chapters.
2. Material and methods
The presented paper is oriented on providing a comprehensive analysis of approaches in public service provision,
which are aiming at strengthening the involvement of public sector, in particular inter-municipal cooperation,
public-public partnership and remunicipalization. The stress is put on identification the main strengths and weak
points of the approaches. The paper has a nature of scientific review; therefore, the main methods used were critical
analysis of available scientific literature and, consequently, the method of synthesis of gained knowledge.
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Regarding the material, secondary data sources have been used and processed using the methodological filter. The
secondary data have been collected from scientific monographs, journal papers, reports and publications of
international organizations.
3. Inter-municipal cooperation
When providing public services, especially small municipalities have to cope with the demands and norms pushing
the size of production and also with increasing calls for quality. Beside that, the municipalities are confronted with
raising complexity of social processes and finally, European integration together with market pressure bring
opportunities but also threats for local self-governments (Hughes, 2003). Countries started to be more aware of
the decisive role that good municipal organization plays for efficiency and the national wealth (Hertzog, 2015).
Inter-municipal cooperation represents a way how municipalities can face the situation described above, since
common provision of public services brings economies of scale and helps to reflect on raising consumers‘
expectation (Lethbridge, 2016). According to Hertzog (2015) inter-municipal cooperation (IMC) is a part of local
self-government system and it has no direct relation with the political regime of a country. IMC is characterized
as a situation when two or more municipalities agree to work together on any of the tasks assigned to them in order
to gain mutual benefits. Therefore, it is a relationship between two or several local authorities (i.e. entities in the
first level of territorial administration) having a status of legal persons and enjoying political, legal and financial
autonomy (Hulst, Van Montfort, 2011). In general, this type of cooperation excludes the involvement of private
agents from the public service provision. Other typical features of IMC are as follows (UNDP, 2010):
 the cooperation can concern one or more areas of municipal competencies,
 included municipalities contribute with their capacities,
 the cooperation is a result of free, voluntary decision,
 the cooperation is not accidental and time-framed,
 the cooperation does not represent a permanent transfer of competencies.
In practice, there are several forms of IMC, which are defined based on 3 dimensions. The first dimension is
derived from the type of competencies, while the differentiation is into the competencies linked with the provision
of public services (e.g. water distribution or school transport) and competencies linked to local policies
coordination and planning (e.g. planning of business parks or health care facilities) (Hulst, Van Montfort, 2011).
The second dimension reflects on the rate of integration of the involved subjects. This can vary from the loosely
coupled networks based on mutual consultations to the highly formalized cooperation with common decisionmaking
bodies (Airaksinen, Haveri, 2003). The last dimension is linked to the administrative institutional context
applied in the particular country, which is characterized by the formal structure of the state, the division of
competencies, the administrative culture composed of sets of values, norms, informal rules and traditions and by
institutional context of the public administration (valid legislation and policy) (Osterrieder et al., 2006).
Application of IMC is associated with several advantages but also with potential obstacles. The advantages
include, beside the above-mentioned economies of scale and pressure on service quality, also the following:
 coverage of bigger areas, since the municipalities often secure the services also for other municipalities (e.g.
bus service) and coping with externalities produced by surrounding municipalities (Bel, Warner, 2014),
 decreasing of costs by common management of the public infrastructure and by performing public functions,
e.g. in job creation or investment planning (Hefetz, Warner, Vigoda- Gadot, 2014),
 better promotion and marketing by sharing the costs but also by common usage of regional symbols and
amenities (UNDP, 2010),
 addressing the challenges with sub-optimal municipality size in availability of external financial resources
(Hefetz, Warner, Vigoda- Gadot, 2012).
The application of IMC also proved that the municipalities participating in IMC enjoyed benefits in terms of costs
reduction and better public services, whereas greater institutional legitimacy was detected in about half of the cases
(Giacomini, Sancino, Simonetto, 2018).
On the other hand, there are also some shortcomings of the IMC identified. Hertzog (2015) grouped them into
three major groups: insufficient competences, insufficient finances and insufficient human resources. Some more
details were brought by UNDP (2010), which described them as follows:
 decision-making is more time demanding as it includes more stakeholders,
 the involved municipalities often suffer from bureaucratic inertia when municipal leadership may not be ready
to give up control what leads to duplicities and inefficiency,
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 public control limitation, since some control mechanisms are well-known in case of decision-making at the
municipal level but not in case of IMC,
 there must exist a political will not just to cooperate but also to share competences, costs, success and prestige.
The inter-municipal cooperation can be seen in the reality of local self-governments, nevertheless, in many
countries, including Slovakia, the municipalities still hesitate to enter such relationship (KVPC, 2014). Due to
sustainability reasons, however, the municipalities will be forced to re-evaluate they attitude since IMC will
probably be a natural outcome of the current situation.
4. Public- public partnership
Implementation of public-private partnerships often did not reach the desired outcomes since their primary
orientation was on increasing the value for money and not on increasing the wellbeing of society (Morley, 2016).
This is a reason why there was a massive wave of criticism towards PPP. Creation of public-public partnerships
(PUP) can be seen as one of the reactions on the situation with PPP. PUPs are partnerships between two or more
public or nongovernmental agencies (domestically or internationally) that pool resources and/or expertise in
achieving a common goal (Voshel, 2016). They are based on solidarity to improve the capacity and effectiveness
of one partner in providing public services and to secure multiplication effect (Hall et al., 2009). Further, the
common ground is formed by common values, interests and objectives and not on profit making.
The absence of commercial interests, therefore, enables public partners to re-invest into local capacities and to
build mutual trust what will be reflected in low transaction cost (Lethbridge, 2016). Comparing to PPP, PUP has
also advantage in better control of the public body over objectives and methods and also higher rate of transparency
and accountability (Hall et al., 2009). These partnerships are often formed because partners have practical
experience with one another’s challenges. International partnership represents the most common PUP form. Within
such partnership, the developed countries help to the less developed ones and provide them with knowledge,
logistic assistance and finances (Voshel, 2016). On the other hand, intra-state PUPs are typically established
because of geographic proximity, ease of communication (including a common language), and the sharing of
similar socio-cultural contexts (Boag, McDonald, 2010).
In practice, there are several objectives reached using PUP. It is possible to sort them into 5 general categories
(Hall et al., 2009):
 expertise and development of human resources, which are crucial in increasing quality and efficiency of
service provision, e.g. through cooperation with universities,
 technical support and assistance,
 increasing of efficiency and building of institutional capacities,
 financing of public services,
 improving of civil participation (democratization) through involvement of different actors and wide public
(Voshel, 2016).
Same as all other methods, PUP cannot be used generally under all conditions. When choosing appropriate method,
the potential barriers in implementation should be kept in mind. In case of PUP, they can be summarized as a lack
of willingness and ability to enter into joint working within the public sector, specifically they are (Morley, 2016):
 perceived challenges to organizational status/sovereignty,
 concerns about managerial control,
 political acceptability,
 organizational cultural differences,
 inadequately developed organizational capabilities,
 the need to develop different organizational competencies,
 lack of organizational capacity.
Additionally to that, language barriers, uneven technological skills, dissimilar contexts, disparate labourmanagement
relations, different interpretations of equity, and a host of other large and small discrepancies can
lead to competing – even contradictory – objectives and tensions in partnership frameworks (Boag, McDonald,
2010).
Different forms of associations and merging of public subjects can be seen as a positive expression of public sector
flexibility (Hall et al., 2009). Development of such partnerships seems to be simpler and cheaper in comparison
with difficult processes of searching and negotiating with private partner. Additionally, PUPs involve entities from
the same sector, following same interests and objectives.
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5. Remunicipalization
Privatization is a practice lying at the very centre of the NPM. Even the public services performed by municipalities
were the subjects of privatization. That is why municipalities became important actors in the public debate about
the advantages and disadvantages of involvement of private sector in the public competences. Some municipalities
appreciated the private interventions, however, other municipalities remained frustrated due to unfulfilled promises
of private agents, shutdown of services for the poorest inhabitants, lack of integrated planning and also due to the
pressure from international financial institutions insisting on enclosing a contract with a private partner (Pigeon et
al., 2012). A wave of criticism and disapproval was raised among the municipalities, which were calling for change
in a form of remunicipalization.
The concept of remunicipalisation is broadly used to cover changes from private to wholly public ownership of
assets or companies; changes from outsourcing (or contracting-out) of services to direct provision by a public
authority; and the replacement of concessions or lease contracts by direct provision by a public authority (Hall,
Lobina, Terhorst, 2013). The process of remunicipalization is not always (or only) on a municipal scale. Regional
and national authorities have considerable influence over services funding and policy, and in some cases act
directly as providers of public services, so the process unfolds within this broader context (Lobina, Kishimoto,
Petitjean, 2014).
Hall (2012) summarized the reasons for remunicipalization into the following points:
 expiry of contract with private partner what can serve as an evidence that private contracts proved so
unsustainable that local governments opted to remunicipalize even though they knew that they may have to
pay compensation (Lobina, Kishimoto, Petitjean, 2014),
 private sector failure,
 increased efficiency and lower costs of in-house provision of public services,
 achievement of public service objectives,
 absence of transaction costs connected with searching for private partner and its control,
 access to “cheaper” capital – public authorities can borrow money at lower interest rate than private partner,
 revenue from profit (but it is risky to assume that profits can be relied upon as a substitute for taxation),
 better conditions for employees.
Additional benefit of remunicipalization is the ecological aspect. Kishimoto, Petitjean (2017) claimed that it is a
vital element of a serious transition towards a low-carbon economy. Many municipal companies, often in
collaboration with citizen cooperatives, are focusing on local production and distribution of renewable energy.
Contrary, the private companies have no incentive to behave ecologically because it actually means less profit
(e.g. less waste means less profit)
Despite the mentioned stimuli, the transition back to the public ownership is not an easy process. It can cause
difficulties even when there is a political will and financial and technical capacities. The difficulties include
institutional memory lost, degraded assets, „poison pills“ left by the private company, communication and
accounting systems that do not mesh with public sector systems, changes in organizational culture and so on
(Pigeon et al., 2012).
Yet, the process of remunicipalization has been successfully implemented e.g. in France, Hungary, Germany, UK
or Finland. It is mostly linked with water, electricity, public transport, waste management, cleaning and housing
(Hall, 2012). Additionally, the cases in high-income countries show a marked acceleration: 81 took place between
2010-2014, while only 41 had occurred between 2005-2009. Thus the pace of remunicipalization has doubled over
the last years (Lobina, Kishimoto, Petitjean, 2014). The research of Kishimoto, Petitjean (2017) showed that there
have been at least 835 examples of (re)municipalization of public services worldwide in recent years, some of
them involving several cities. In total there have been more than 1600 cities in 45 countries involved in
(re)municipalization. And these (re)municipalizations generally succeeded in bringing down costs and tariffs,
improving conditions for workers and boosting service quality, while ensuring greater transparency and
accountability.
The importance and popularity of remunicipalization is stressed also by its inter-sectorial nature and also by fact
that it is not a coordinated institutional initiative, but it rather reflects the current political and economic situation.
The speed of political changes, positively perceived impacts of remunicipalization and efficient adaptability of
public sector indicate that this trend will continue also in the future.
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6. Conclusions
Even though the philosophy of the New public management and its elements gained lot of popularity within the
public administration reality of countries, many critical voices were also heard. The same it was in case of
involvement of public sector in the provision of public services. The leaning towards prioritizing of private sector
in public service provision has been questioned by scholars and practitioners pointing out the differences between
these two sectors, as well as, lacking proof of increased efficiency and other promises claimed by the NPM
doctrine. Such situation created a suitable ground for opposite tendencies – increased involvement of public sector.
In practice it has three main forms: inter-municipal cooperation, public-public partnership and remunicipalization.
Inter-municipal cooperation brings economy of scale, creates pressure on quality and nevertheless represents a
solution for too small municipalities. On the other hand, representatives of municipalities are still not ready to
share their competencies and powers, additionally, there must exist a political will to introduce such concept, what
is rather sensitive topic. The second form, public- public partnership, originated as a reaction on public-private
partnership, which did not fulfilled the expectations. Since there are only public partners involved in PUP, the
profit craving aspect is missing what makes it easier to focus on fulfilment of public interest and other common
public objectives. Additionally, better control and transparency is ensured. The negative sides of PUP include the
need for new division of competencies, addressing the problem of insufficient capacities and ever needed political
will. The last mentioned phenomenon was remunicipalization, which is probably the most sensitive one as it is
often the case when changing of ownership is concerned. The advantages of such approach include access to
cheaper capital, decrease of transaction costs and increased efficiency. This process, however, is also associated
with some shortcomings mainly in form of degraded assets, changes in organizational culture and lacking
compatibility between “then” and “now” systems (e.g. accounting, communication).
Despite the negative aspects associated with all the mentioned approaches, it seems that the current tendency in
the public administration practice calls for bigger involvement of public sector. We believe that this is not just a
respond to the questionable success of NPM but also an expression of belief that public agents can deliver public
services efficiently and at a decent quality level.
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This paper was supported by the project KEGA no. 024SPU-4/2017 “Creation of modern textbooks in Slovak
and English language for new study programs”.