Contractor as an Isomorphic Force and Implications of Contractor Dependence

EasyChair Preprint 1101

Abstract

Governments may rely on the same contractor to repeatedly provide goods and services. Contractor expertise relative to the public managers, lack of vendor market competition, and advantages embedded in repeated interaction contribute to the contractor dependence. A horizontal model of contractor relations as discussed in the relational contracting literature places knowledgeable contractors as a proactive actor who could shape public management practices. This study examines contractor influence over public management through the isomorphic effect demonstrated by contractor sharing. Using an innovative text analysis approach, we show that financial disclosures of two local governments converge as they contract with the same independent auditor and the convergence increases with contractor dependence as measured by auditor tenure. The study further analyzes implications of contractor dependence on goal tradeoff. While contractor dependence improves timeliness in service provision, it may give rise to vendor opportunism and compromise public accountability.

Keyphrases: Agency Theory, Relational Contracting, contractor dependence, financial management, text analysis

@booklet{EasyChair:1101,
  author    = {Lang Kate Yang},
  title     = {Contractor as an Isomorphic Force and Implications of Contractor Dependence},
  howpublished = {EasyChair Preprint 1101},
  year      = {EasyChair, 2019}}