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Journal of Public Administration Research and Theory Advance Access originally published online on July 19, 2006
Journal of Public Administration Research and Theory 2007 17(2):189-211; doi:10.1093/jopart/mul002
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© The Author 2006. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org.

For-Profit Welfare: Contracts, Conflicts, and the Performance Paradox

Janice Johnson Dias

University of Michigan

Steven Maynard-Moody

University of Kansas

Address correspondence to the author at janjohns{at}umich.edu.

This article examines how financial inducements in performance contracts shape the inner workings of a for-profit welfare-to-work training program serving long-term recipients. Our work pays particular attention to how contract requirements shape relationships between manager and line staff and their treatment of clients. We argue that contract design, coupled with bottom-level management efforts to meet contractual obligations, leads to a performance paradox—the same actions taken to achieve contractual results ironically produce negative program practice and poor client outcomes. Thus, rigidly constructed legal agreements between the government and private service providers can distort incentive structures, causing programmatic conflicts between management and staff, and do little to reduce long-term welfare use and diminish recipients' poverty.

This research is supported in part by a grant to the first author from the Ford Foundation to the Research and Training Program on Poverty and Public Policy at the University of Michigan. For their helpful feedback, we thank Sandra K. Danziger, Christopher Jencks, Kevin Delaney, Yeheskel Hasenfeld, David Elesh, Alford Young, Evelyn Brodkin, Mary Corcoran, Pamela Smock, Mayer Zald, Vicki Lens, Anthony Mallon, Kristin Seedfeldt, Thomas Brock, Vincent Louis, Mary Stricker, Robert Reilly, Shreya Janssens, and Sheldon Danziger, participants at the New Directions for Research in Social Policy and Organizational Practices conference and the annual meeting of the Midwest Political Science Association.


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