Strategic Capacity Building

I’ve been occupied over the past few weeks with finishing a textbook, The Political Economy of Public Sector Governance, for Cambridge University Press.  I’ve been told it will be in print next summer.  The book seeks to bring core ideas from the theoretical literature of — for want of a better term — the political economy of bureaucracy literature into MPA and MPP classrooms, and also to introduce them to applied public management researchers from a variety of backgrounds who would like to learn more.  In this sense, it is a hybrid book and wound up being one of my most difficult projects. The experience led me to think very carefully about my own teaching style and to add nuance to the many reasons why I respect authors of good textbooks.  Because it also forced me to make hard choices about which studies to discuss in a limited space, it was a very helpful reflection on a body of theory that I have thought about as an applied researcher for many years.

My primary focus in such reflection was about how this literature might be useful to applied scholars and practitioners of public management.  For instance, chapter 5 concerns government contracting with the private and nonprofit sectors.  An interesting extension of the insights of two recent delegation papers regards the acquisition of expertise by contractors. The essential idea is that an administrative agency or contractor makes choices about acquiring expertise that can have incentivize a particular shape for the policy agenda.  A recent paper by Michael Ting relies on the difference between specialist agencies, who can target their capacity-building investments to a particular task, and generalist agencies that cannot. The essential insight is that specialist agencies can create incentives for the government to undertake some tasks rather than others because they have developed the capacity to provide good outcomes precisely by doing things they prefer to do. In the book, I call this process strategic capacity building. Government may consequently take on things that it might not have but for the capacity choices of contractors.   Strategic capacity building also implies that the advocacy mission of non-profit organizations and the contracting environment work together to great effect, which is something that practitioners and scholars know well.  Paul Light, for instance, has argued that organizations that engage in capacity building can enhance organizational effectiveness, which in turn inspires donors and funders to provide additional support.

A very clever and insightful paper by Steven Callander unmasks another aspect for strategic capacity building. When tasks are complex, knowledge about how to do them is difficult for others to sequester.  His argument implies that we should expect capacity acquired by contractors over time to be in regard to complex, non-invertible tasks. Such capacity cannot be easily appropriated, particularly by political principals in furtherance of their policy agendas.  Strategic capacity building can, thus, produce two interesting outcomes. First, the government does not face a true market for services when making contracting decisions. This is because the services offered by potential contractors are defined, at least in part, by their strategic capacity building choices. Second, non-invertible capacity for complex tasks permits contractors to shape policies as they desire unless those outcomes are very far from those envisioned by government, or in other words, because there is substantial policy conflict between the government and contractor.

When non-profits and private firms become involved in the contracting state, they travel (with apologies to George Krause) a two-way street of policymaking with administrative agencies and politicians.