Managerial Adaptation through the Market in the Public Sector: Theoretical Framework and Four Models

During the last two decades, governments made significant efforts to simultaneously reduce the size and increase the efficiency of government. This study examines multifaceted nature of government’s managerial adaptation through the market, which has been one of the key elements of New Public Management. The study posits a theoretical framework of governance and explores some key concepts including government capacities, mechanisms, and governance functions. Based on the framework, the authors identify four models of governance: the traditional bureaucratic model (governance by the bureaucratic mechanism without the market mechanism), the contracting-out model (governance by the joint bureaucratic and market mechanisms), the contracting-in model (governance by the bureaucratic mechanism through the market mechanism), and the public-private direct competition model (governance by the market mechanism). This study also discusses the effects of adopting the contracting-out, contracting-in, and public-private direct competition models on public accountability.