From marketization to agency reclassification: A qualitative comparative analysis of de‐agencification in China

Abstract A standing contention in the agencification/de‐agencification literature concerns how to explain the adoption or reversal of the agency form for service delivery. What considerations—transaction costs or political and institutional factors—drive the choice of specific reform strategies? Employing a configurational perspective, this article examines this question in the context of China's service organization reform. By tracing the de‐agencification process and strategy shift of 11 service organizations in the environmental management system of Guangzhou, this article shows that transaction‐cost changes are neither sufficient nor necessary to explain strategy shifts or a slowdown of de‐agencification. A combination of political‐institutional factors can offset the influence of transaction‐cost changes. Reform uncertainty, if combined differently with other factors, can result in divergent outcomes. Moreover, political priority, rather than party politics, shapes China's de‐agencification. A shift in reform strategy does not necessarily impede the pace of de‐agencification reform.