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Contracting Capacity and Perceived Contracting Performance: Nonlinear Effects and the Role of Time


Kaifeng Yang is an associate professor and director of the master of public administration program in the Askew School of Public Administration and Policy at Florida State University. He is the managing editor of Public Performance and Management Review. His research focuses on citizen participation and public and performance management.

Jun Yi Hsieh is an assistant professor in the Department of Social and Public Affairs, Taipei Municipal University of Education, Republic of China (Taiwan). His research interests include public management, urban and local governance, public human resource management, and policy analysis.

Tzung-Shiun Li is a professor and Department Chair, Department of Administrative Management, National Central Police University, Republic of China (Taiwan). His research interests include crisis management and risk governance, contracting out government services, public-private partnership, network society, and safety governance.


Contracting out has become a popular strategy in public service delivery, but it remains uncertain whether and how government can ensure contracting performance. As a result, a growing literature emphasizes the importance of governments' contracting capacities. Yet very few studies have empirically assessed how contracting capacities relate to contracting performance. This article identifies four types of contracting capacities in terms of agenda setting, contract formulation, contract implementation, and contract evaluation, relating them to three performance dimensions including cost, efficiency, and quality. Drawing from a manager survey from Taiwan, the article shows that the relationships between the capacities and the performance indicators are not always straightforward or linear, and the relationships are complicated by the role of time. The results suggest that contracting capacities have both benefits and costs, and the solutions rooted in the economics theory should not be taken beyond their appropriate boundaries.