Contracting out social care services to for-profit and not-for-profit organizations in Italy: Social categorization and governance choices

This article explains the socio-psychological factors that influence public administrators’ governance choices when dealing with not-for-profit (NFP) and for-profit (FP) providers. In particular, it highlights the use of stereotypes in public administrators’ categorization of NFP and FP motives and expected behaviours, and whether they then prioritize the use of trust or control in the governance of the contractual arrangements. The main implication for public sector managers is that the tendency to social categorization and bias can be an issue in creating the proper mechanisms to ensure the delivery of effective services. In contracting out, the use of categorization by public administrators can reduce their propensity to trust those who are perceived as an outgroup, and hence result in them adopting more formal control mechanisms, while for those perceived as an ingroup their inclination to trust will result in the use of less formal control mechanisms.