Larger, Not Leaner? Agencification and the Size of the Administrative Overhead in Local Governments

ABSTRACT Governments establish agencies to enhance public service efficiency, aiming to improve government performance. However, agencification makes governments' service delivery more complex by putting service providers at arm's length from governments' control. To retain their capacity to support frontline service delivery, governments may expand their central administrative overhead. Conceptually, overhead constitutes resources available to support primary production processes in the organization, such as managerial coordination and technical support. This study, based on survey and registry data from 296 Norwegian local governments, analyses whether agencification correlates with the size of administrative overhead across political systems. The findings reveal lower central administrative overhead in local governments with higher degrees of agencification, suggesting a challenge in providing central support for an increasingly disaggregated service delivery. Importantly, the study underscores the difficulty governments face in mobilizing adequate resources to achieve their stated goals.