The Relationship Between Public Administration and Third Sector Organizations: Voluntary Failure Theory and Beyond

2.1 The “Social Investment State”: Beyond Neoliberalism?

The last two decades have seen in many developed countries of the West the implementation of “demand support” policies in health and welfare sectors. Not just for reasons of public expenditure containment, these policies aimed broadly to strengthen the purchasing power of citizens with regard to a number of social, health and home care services (Hemerijck 2002). The measures taken fall within the framework of a long process of revision, redefinition, and rearticulation of the role and functions of public institutions regarding the responsibility to ensure a certain level of well-being for the population (Hemerijck 2012).

The long process of building, institutionalizing, and legitimizing different welfare state models in Europe and generally in the developed West (Pierson 2001) followed two phases. The first phase –referred to as the “golden era” or the “glorious thirty”–coincided substantially with the period between the end of World War II and the oil crisis of the early 1970s (1945–1975). The second phase is characterized by the emergence of “neo-liberal” policies of fiscal retrenchment and public budget cuts. It began in the United Kingdom and the United States, before gradually spreading across Europe and then the Global South. During this period (1978–2008), measures and practices inspired by the logic of the market have been gradually introduced within the systems of welfare in order to overcome the limitations, malfunctions and inequalities, which connoted the service delivery model based mainly on public agencies. During the thirty years of neo-liberal domination, several innovations have been adopted:

1. the 1980s saw the spread of “contracting-out” tools in the acquisition of social, health, and education services by the government, mainly to non-profit providers; as well as

2. the adoption of “quasi-markets” models particularly in the context of health care and later on in educational policies as well. In these models, a plurality of providers, public and private for-profit as well as private non-profit, compete in highly regulated markets; and

3. during the 1990s, the logic of private management in public administration, the so-called “new public management,” proliferated, which tended to emulate the managerial top levels of the private sector in government, both in terms of rewards (i.e. of salary increases and career progression), and in terms of responsibilities with respect to the decisions they made.

All these policies, while making substantial changes in the welfare services delivery system in Western democracies, nevertheless firmly maintained the decision-making power in the hands of the public sector (Hemerijck 2012a, 2012b). Alongside the public agencies, a number of private providers selected by the public sector (logic of the “offer support”) gradually appeared through a series of contracting procedures for the acquisition of services (e.g. private treaty, public invitation to purchase, tender to the lowest bidder, or under the “most economically advantageous” offer, etc.)

It was only in the late 1990s and early 2000s that various European countries experimented with measures and practices inspired by the logic of the “support of the demand,” and then scaled up them in a systematic way, some of which had been already adopted, not always with success, in USA during the previous decade. These are policies which, using various operating modes (e.g. vouchers, service-ticket, service-checks, personal budgets, virtual budget, etc.), are aimed at improving the quality of services while enabling cost savings. This is achieved through the increased ability to purchase services by specific categories of “persons in need.” Whatever the concrete form of implementing “demand support” policies (Standing 2004) they share two guiding principles:

1. to empower, improve, enhance, strengthen, and increase the “power” (sovereignty) of the service users over the delivery agencies, not only in terms of purchasing power but also in “personal autonomy”; and

2. competition: to increase service quality and reduce the cost for buyers by introducing mechanisms that induce providers to compete for a greater market share (social regulation).

These recent changes, which followed the multiplication and diversification of public and private actors in the field of welfare, has led some authors, such as Jenson (2014) to point out that, in fact, at least four logics (principles) of resource allocation and delivery of services operate in this area: the logic of the market; the logic of the state; the associative logic; and the logic of the informal sector.

1. the logic of the market is based on the pursuit of profit through competition;

2. the logic of the state is based on the principle of providing citizens with the recognition of “social rights”, and operates through the formal public institutions and bureaucracies;

3. the associative logic is based on ethical and moral codes and operates through a number of nonprofit organizations; and

4. the private informal logic sees the family as a key institution and is based on practices that incorporate personal and moral obligations, emotional relationships, and social relationships.

The ever-changing interplay of these four logical or operating principles engenders specific institutional configurations and models of welfare (i.e. schemes), which are characterized by a peculiar “division of labor” between the different actors involved in the caring sector. During the second half of the 2000s, three main narratives emerged in the public and academic debate, especially at European level:

1. a first narrative developed within the longstanding scientific tradition of welfare state studies: it is the so-called issue of personalization (Needham 2014);

2. a second narrative developed as part of the scientific debate on the social economy and concerns the issue of social entrepreneurship (Defourny, Hulgard, and Pestoff 2014); and

3. finally, the third narrative is completely external to these two traditions. It was born from the emergence of new information and communication technologies, and a search for innovative ways to meet the growing and changing needs of society. This is the concept of social innovation (A.A.V.V. 2006), which represents both a confrontation with, and a bridge between, the two cultural and research traditions that had always proceeded on parallel paths without any exchange among them.

The topic of social innovation, given its positive connotation, played the role of a catalyst. It has been able to foster the encounter of two streams of research that developed separately and grew in parallel for many years: welfare studies and social enterprise studies. It succeeded in gather together several scholars and researchers coming from different scientific disciplines and approaches around some research streams and various research centers both at European and international level. This synthesis prepares the ground for elaboration and the emergence of new theoretical approaches to social policy and welfare systems, as well as to the study of the evolution of modern and postmodern societies.

In order to exit from the worldwide economic-financial crisis (i.e. era of austerity), particularly in the European contest, a new paradigm (social investment framework) emerged in welfare policy, trying to develop a new configuration of welfare systems based on four key terms and conceptual frameworks, redefining the role and functions of these sub-systems of the social structure: market, state, societal community and culture. As far as the market subsystem is concerned, in order to face the challenges of a globalized economy, we observe the adoption of an orientation toward a continuous innovative approach, assuming a “sustainable attitude”; meaning to be responsible for the impacts the business units (corporations) produce on three domains: economic, social and environmental.

In this new framework the Public Sector (see Table 1) should adopt a “social investment policy” orientation, meaning that public policies, especially in the welfare area, should be designed to promote and incentivize the autonomous expression of its citizens (i.e. empowerment) helping them to fully develop their capabilities. This is called the “life cycle approach” and is defined by the idea that public policy should sustain the citizens giving them resources (e.g. economic, cultural, and social capital) in order to be well equipped to face the crucial and critical phases of their life cycle.

In the civil society relational sphere, the new framework requires a different role from the collective actors operating in it. The variety of groups, movements, associations, and organizations that are active in this societal space should adopt a more open attitude toward the new typology of needs arising from the deep structural and demographic changes that occurred in the last two decades in the western world. The adoption of a “social inclusion paradigm” requires moving from a “citizenship-based approach” to a “human rights” approach (Donati 2015), especially taking into account the growing number of migrants.

As it relates to the cultural subsystem of the society, in order to cope with the challenges of a multi-ethnic, multi-religious, multi-cultural society, different institutions, whether in the market or in the state and civil society, should promote a “social cohesion approach.” In doing so, they should try to overcome the ultra-individualistic cultural orientation which is mainstreaming in contemporary (i.e. post-modern) societies (Donati 2015).

In synthesis the concept of “developmental” welfare state (Hemerijck 2007) provides a common language for a political program. It prioritizes high levels of employment for both men and women as a fundamental political objective. By combing elements of flexibility and security it seeks to facilitate the reconciliation of work and family life expectations, especially for women. This concept includes new forms of governance on the basis of clever combinations of public, private and individual resources and actions.

2.2 From New Public Management to New Public Governance

To our knowledge, the first scholar to introduce the idea of paradigms or models of public administration (PA) is Stephen Osborne in a (2006) editorial, which was published in a themed issue of the Journal “Public Management Review”. In that editorial, Osborne argued that the “traditional PA” model lasted from the late nineteenth century through the late 1970s. The second model, the New Public Management (NPM), was mainstream during the 1980s and 1990s and a third one, the New Public Governance (NPG), emerged in the mid-2000s.

Osborne suggests that the first paradigm was characterized by a focus on administering set rules and guidelines and included a central role for bureaucracy in policy making and implementation. The NPM paradigm, on the other hand, was based on the use of markets, competition, and contracts for resource allocation and service delivery within public services. It included an emphasis on controlling inputs and outputs, evaluation, performance management, and audits. Finally, the NPG paradigm “posits both a plural state, where multiple inter-dependent actors contribute to the delivery of public services and a pluralist state, where multiple processes inform the policy making system” (p. 384). According to Osborne, the NPG model is concerned with inter-organizational relationships (i.e. trust, relational capital, and relational contracts) and the governance of processes, focusing on service effectiveness and outcomes (Osborne 2009).

Table 2 shows the main characteristics of the three models of public administration. The key point, as it relates to our reasoning, is the role that the service users (citizens) assume in each model. In the TPA configuration, they have a passive role as recipients of services designed, delivered and evaluated by civil servants. In the NPM setting, they are treated as customers in the market, assumed to driven by rational choices. Finally, in the NPG arrangement, the citizens begin to have an active role in the different stages of services delivery.

Needless to say, the configuration most in line with the Salamon’s “third party government” model is the latter. Mainly because, in order to be effective, it requires the establishment of a collaborative relationship based on user empowerment and interdependence between public, private, and non-profit actors.

2.3 Co-creation/Co-production in Search of a New Paradigm

In the last decade, the concept of co-production and related terms (e.g. co-creation, co-design, co-governance, co-planning) have became a central theme of public policy reform in western societies. Such concepts acted as an innovative way of planning, managing, delivering, and assessing services provided to citizens by the government (Torfing, Sørensen, and Røiseland 2016). This is especially true in the fields of health, education, social services, and housing. This trend is exemplified by the publication of several thematic issues in high ranked international scientific journals.^[2]

The supporters of this approach claim that it has positive effects on the planning and delivery of effective public services. For example, one possible benefit is the responsiveness to the democratic deficit, acting as a path to active citizenship and active communities. Supporters have also claimed it is a means by which to reap additional resources to public services delivery. Unfortunately, very few evidence-based studies have been completed to demonstrate the aforementioned outcomes and impacts.

Adopting a more theoretical sociological approach, we argue that the concept itself is neither a positive or negative one, therefore in order to understand (i.e. measure) the real contribution that co-creation might have on the service delivery to which it is applied, it must be contextualized and specified further. Meaning, it is necessary to clarify who are the actors implied by the “co” and what are the objects of the “production” or “design” or “planning.”

We stress the risk linked to a naïve adoption of a co-design or co-production framework. In particular we highlight the possibility that the focus on the “activation” or “involvement” of the end users (i.e. beneficiaries) of a service at the individual level, could have the effect of “ruling out” the intermediary bodies, which historically have played a crucial mediation role between citizens and the public administration officers and agencies, such as social economy organizations (e.g. associations for parents, the disabled, mentally ill persons, the elderly or other disadvantaged groups), social enterprises, or voluntary organizations.

In the scientific literature it is possible to find many definitions and approaches to co-production or co-creation depending on the different disciplines and schools of thought. The first term, co-production, boasts a long tradition whereas the second one, co-creation, is more recent and less analyzed. For instance, in the public management literature there are two main definitions of “co-production”.

The first one is more specific. Osborne et al. consider co-production “the voluntary or involuntary involvement of public services users in any of the design, management, delivery and/or evaluation of public services” (Osborne, Radnor, and Strokosch 2016: 640).

The second one instead is more inclusive. Howlett et al. prefer the definition coined by John Alford in 1998, that sees “co-production” as the “involvement of citizens, clients, consumers, volunteers and/or community organizations in producing public services in addition to consuming or otherwise benefiting from them (Alford 1998, p. 128)” (Howlett, Kekez, and Poocharoen 2017: 2).

Although co-production emerged and developed as a concept that emphasized citizens’ engagement in policy delivery, however, its meaning has evolved in recent years to include both individuals (i.e. citizens and quasi-professionals) and organizations (citizen groups, associations, non-profit organizations) collaborating with government agencies in the design, management, and delivery of services (Alford 1998; Poocharoen and Ting 2015) (ibidem).

In general terms, the main traditions of research and approaches concerning co-creation or co-production are spread across three different literatures:

1. Management literature (Osborne and Strokosch 2013; Osborne et al. 2016);

2. Civil society, democracy, social movements studies (Pestoff 2014); and

3. Urban renewal, local development, social planning (Brandsen et al. 2018).

A first step in defining an analytical framework is to identify conceptual sub-dimensions of the co-production semantic field, as is done by the typology elaborated by Brandsen and Pestoff (2006). The authors recognize three distinct levels of relationship between citizens and the public sector: co-governance, co-management, and co-production:

1. Co-governance (macro-level) refers to an arrangement in which citizens’ associations participate in the planning and delivery of public services. The focus on co-governance is primarily on policy formulation.

2. Co-management (meso-level) describes a configuration in which citizens’ associations produce services in collaboration with the public sector. Co-management refers primarily to interactions between organizations. Its focus is primarily on policy implementation.

3. Co-production (micro-level) represents a situation where citizens (through associations) produce their own services at least in part. Its focus is primarily on services delivery.

Adopting a micro level of analysis, Bason (2010) analyses several examples and case studies from the private and the public sector. From this study the author identifies four distinct roles for citizens in the co-creation process: explorer, ideator, designer, diffuser.^[3] Others (Voorberg, Bekkers, and Tummers 2015) have described three roles of citizens in the co-creation process: co-implementer, co-designer, co-initiator.^[4] Taking into consideration two dimensions of the service implementation process: (1) who is responsible for the service design and (2) who is responsible for the service delivery, Bovaird (2007) develops a typology of co-production along two axes (see Figure 1).

Figure 1:

User and professional roles in the design and delivery of services (Boyle and Harris 2009, p. 16).

Depending on the extent of professional versus user involvement in planning the service and delivering the service it is possible to identify nine configurations. Moving from the top left cell of the matrix to the bottom right cell we can shift from a “pure public services model” to a “typical voluntary/community sector” model, having the highest form of co-creation and co-design in the middle of the nine cells table.

In synthesis, in our opinion, it is possible to identify the following analytical distinctions of the group of policies that have been defined through the “co-” suffix (Figure 2).

In the first instance, which is at the highest level of the “abstraction ladder,” we have the term co-creation that encompasses all the others. It refers to an arrangement where there is a certain level of collaboration between the “producer” and the “user” of a good or service. In the field of business, the phenomenon has been called “prosumer,” meaning the merging of producer and consumer roles.

Figure 2:

The internal dimensions of the co-creation process.

Inside the co-creation process, we can find several phases or degrees of collaboration moving from a macro to a micro level of analysis, including the meso level.^[5]

2.4 The Down Side of Co-creation

Despite the fact that many of the authors underline the “positive” effects of policies fostering co-creation or co-production practices (e.g. delivering better outcomes, preventing problems, bringing in more human resources; encouraging self-help and behavior change, supporting better use of scarce resources, growing in social networks to support resilience, improving well-being), there are several potentially negative or unexpected effects to be take into consideration. Among these risks or possible backlash, we recognize that the co-creation or co-production process is a highly time consuming one, which presents a difficulty in keeping the participants (i.e. users and professionals) involved for a long period of time. Moreover, given the fact that the users of a service change over time, it is necessary to involve newcomers in order to maintain a sufficient level of participation.

Secondly, the users or clients that participate are often those in better socio-economic conditions (i.e. middle-class), with high levels of education. So, the co-creation or co-production process can exclude, instead of including, users who are considered “hard-to reach.” Thirdly, public administration officials are usually not willing to adopt innovation in their working procedures, and often use strategies to keep “business as usual” practices. They are aware that innovation often creates “winners” and “losers.” This especially true in the co-creation and co-production framework because it requires a deep mind-set change from the professionals. So, often the public administration sector reacts to these policies merely in a “formal” way, adopting the rhetoric of co-production while trying to carry out their activities as usual.

The success or failure of policies fostering co-creation or co-production is very hard to verify and depends on several factors, the most important of which is the purpose of the policy. What is the main aim of the innovation? To increase the responsibility of the users or clients? Or increase their participation? To enhance the efficiency (i.e. cost reduction) of the public administration? Or the effectiveness (i.e. quality) of the service delivering process? A final point on this topic concerns the complexity of the public administration system, with its hierarchical model of decision-making and the separation between political roles and managerial roles.

In order to be sustainable and scalable, a co-creation or co-production innovation must involve the entire public administration body, from the politicians and top managers, down to the so-called on-the-ground professionals. Needless to say, these actors have different aims and incentives, so it is very difficult to find an equilibrium among their often-conflicting interests.

In any co-creation or co-production practice, there are, at least, three conflicting logics acting in the field: (1) Professional and expert logic versus citizens and layperson logic; (2) Service logic versus workers union and corporative logic; (3) Public administration logic versus third sector and civil society logic. The final result (impact) of applying the co-creation approach in service delivering depends on which logic configuration will be dominant.

Table 3 shows, in a concise way, the different roles of citizens, civil society actors, and civil servants for each stage or phase of the co-creation process.