Peas in a Pod: Are Efficient Municipalities also Financially Sustainable?

Abstract

The proposition that changes in organisational structure can have decisive and predictable effects on organisational performance can be traced back to the pioneering efforts of Bain (1951) in his analysis of industrial production in market economies. These insights led to the emergence of industrial organisation (IO) as a separate field of inquiry with its characteristic structure-conduct-performance (SCP) analytical framework. In essence, the SCP model predicts that the structure of an industry influences its conduct, which in turn affects its performance. Over time, the application of the SCP paradigm has been extended far beyond the realm of private profit-seeking firms in manufacturing and other industries to not-for-profit organisations such as nursing homes (Nyman 1991) and hospitals (Lynk 1995), as well as the public sector, including local government (Brueckner 1982).