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. The aim has been to make public sector bureaucracies more business-like, in the hope that this will enhance performance. However, while previous research largely supports this assumption, we know far less about the impact of corporatization on the administrative intensity (AI) of public sector organizations. We address this gap focusing on the effects of Foundation Trust status on administrative intensity (AI) and performance 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 has two primary consequences: improved overall performance: and lower levels of AI. Further analysis reveals that lower levels of AI, in turn, positively mediate the relationship between corporatization and performance, although only in relation to efficiency outcomes. These findings highlight the crucial, but previously misunderstood, importance of lean administration as part of the corporatization reform package, with implications for research, theory, and policy.