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Journal of Public Administration Research and Theory Advance Access originally published online on September 25, 2006
Journal of Public Administration Research and Theory 2007 17(1):119-147; doi:10.1093/jopart/mul014
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© The Author 2006. Published by Oxford University Press on behalf of the Journal of Public Administration Research and Theory, Inc. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org

"Choice of Organizational Form Makes a Real Difference": The Impact of Corporatization on Government Agencies in Canada

Nancy Bilodeau and Claude Laurin

HEC Montréal

Aidan Vining

Simon Fraser University

Address correspondence to Claude Laurin at claude.laurin{at}hec.ca.

The new public management includes a portfolio of prescriptions that involve reconfiguring the boundaries of government agencies. One form of reconfiguration is corporatization. Corporatization creates separate agencies that have a contractlike relationship with a ministry or oversight agencies. Corporatization usually comprises a portfolio of changes that attempt to make agencies more "businesslike." Although corporatization is now popular with governments around the world, there is little empirical evidence on its performance impact. This article analyzes 11 corporatizations in Canada by the federal and Québec governments. We first present hypotheses based on principal-agent theory concerning the potential impact of corporatization. For each agency, we compare the behavior and performance for 3 years prior to corporatization to the 3 years subsequent to corporatization. The aggregate results suggest that the introduction of corporatization did alter behavior on a number of dimensions. The results show that output and revenues increased, the revenues-to-expenditures coverage gap narrowed, and cost-efficiency and employee productivity improved following corporatization. Most of these changes were statistically significant.


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