Corporatization, administrative intensity and the performance of public sector organizations

The process of corporatization in public services has led to the emergence
of new, more autonomous organizational forms. However, while these reforms
have been centrally about the development of management capabilities in
public sector organizations, we know surprisingly little about what this
process involves. To address this concern, we draw on the literature on
administrative intensity (AI) to frame hypotheses about the likely
relationship between corporatization and investments in management and
administration, and the consequences of these investments for performance.
As an empirical case, we then focus on the effects of Foundation Trust
status on AI and efficiency, effectiveness and responsiveness in the acute
care hospital sector in the English NHS. Based on a database of nine years
(2008/09–2016/17) and dynamic panel data regressions, the results show
that corporatization leads to a leaner administration and improved
organizational efficiency, effectiveness and responsiveness. In addition,
the analysis reveals that lower levels of AI positively mediate the
relationship between corporatization and performance, although only in
relation to the efficiency dimension. These findings highlight the
crucial, but previously misunderstood, importance of lean administration
as part of the corporatization reform package, with implications for
theory, research and policy.