What Motivates Organizational Changes? an Empirical Analysis in the French Water Industry

Abstract: In this paper we are interested in the way the distribution of water is organized in France. Local authorities may decide to organize water public service through direct public management or may delegate the provision of this public service to a private operator through a public-private partnership. Whatever their choice, it is reversible and local authorities might switch from public to private management at any time, or from private to public management at contract renewal times. We investigate the reasons why French public authorities decide or not to switch from one organizational arrangement to another. Using original data describing organizational choices made by about 3 300 French local authorities through time (Panel data over four periods: 1998, 2001, 2004 and 2008) we first assess the relative efficiency of observed organizational choices to assess in a second step, if economic reasons drive observed switches and their consequences on future performances. Our results suggest that local public authorities do not choose randomly how they organize water services, and that organizational changes is driven by past performances. Nevertheless, political consideration also play a crucial role.