Melbourne Institute of Applied Economic and Social Research - Research Publications

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Public Sector Outsourcing Contracts: The Impact of Uncertainty, Incentives and Transaction Costs on Contractual Relationships

JENSEN, P (VDM Verlag, 2007)
Firm size and the use of intellectual property rights

Jensen, PH ; Webster, E (WILEY, 2006-03)
Incentives and the efficiency of public sector-outsourcing contracts

Jensen, PH ; Stonecash, RE (WILEY, 2005-12)

Abstract. Outsourcing the provision of traditionally publicly provided services has become commonplace in most industrialized nations. Despite its prevalence, there still is no consensus in the academic literature on the magnitude (and determinants) of expected cost savings to the government, nor the sources of those savings. This article considers the arguments for (and against) outsourcing and then examines the empirical evidence pertaining to whether any observed savings occur and whether they persist over time. In addition, we examine the existing evidence for the ‘redistribution hypothesis’ and the ‘quality‐shading hypothesis’, which critics have used to argue that outsourcing lowers government expenditure by lowering wages and conditions and/or lower quality services. Finally, we consider the impact of contract design on outsourcing outcomes. While the power of incentives is a strong theme in economics, recent work has suggested that high‐powered incentives may be suboptimal for many public sector services, because they may crowd out intrinsic motivation, particularly in instances where agents are highly motivated. We discuss the implications of this insight for the efficiency of public sector outsourcing.
Innovation, Technological Conditions and New Firm Survival

Jensen, PH ; Webster, E ; Buddelmeyer, H (WILEY-BLACKWELL, 2008-12)

High neonatal mortality is one of the most salient ‘facts’ about firm performance in the industrial organisation literature. We model firm survival and examine the relative influence of firm, industry and macroeconomic factors on survival for new vis‐à‐vis incumbent firms in Australia. In particular, we focus on how the intensity of innovation in each industry relates to firm survival. Our results imply that while new firms thrive in risky and innovative industries, they are also more susceptible to business cycle effects such as changes in the rate of growth of industry profits and the availability of equity finance.