ORIGINAL ARTICLE
Consul oc acy and i s discon en s: A c i ical
ypology and a call o a esea ch agenda
Ma i Ylönen
1
| Hanna Kuusela
2
1
Uni e si y o Helsinki
2
Uni e si y o Tampe e
Funding in o ma ion
Ella ja Geo g Eh n oo hin Sää iö; Koneen Sää iö
In he pas ew decades, many sec o -speci ic case s udies
ha e been conduc ed on he use o consul an s in he public
sec o . Howe e , he o e all pic u e o he quali a i e
changes acili a ed by consul an s emains agmen ed, and
a comp ehensi e amewo k on how “consul oc acy”a ec s
go e nance is lacking. This a icle shows how he inc eased
use o consul an s has impac ed he ope a ional logics o pub-
lic adminis a ion and go e nance a la ge. D awing om a
la ge mul isec o al case s udy om Finland as well as exis ing
s udies, a ou old ypology o how consul oc acy shapes
public adminis a ion is in oduced. We a gue ha inc eased
eliance on consul an s con ibu es o he monopoliza ion and
p i a iza ion o public knowledge and ensuing dependencies,
e osion o aci knowledge, weakening o accoun abili y, and
s eng hening o ins umen al a ionali y. This esea ch
emphasizes he impo ance o unde s anding he links
be ween hese de elopmen s and he need o implemen a
comp ehensi e esea ch agenda on consul oc acy.
1|INTRODUCTION
The g owing use o consul an s in he p i a e and public sec o s has d awn much schola ly in e es in
he pas ew decades. Reliance on consul an s in go e nmen and public sec o ins i u ions has g own
globally o such an ex en ha se e al schola s ha e poin ed o he eme gence o a phenomenon
called consul oc acy. The e m was coined in he ea ly 1990s by Hood and Jackson (1991), and i has
since been de ined as a p ocess “whe eby non-elec ed consul an s a e eplacing poli ical deba e con-
duc ed by publicly accoun able poli icians”(C aig & B ooks, 2006).
Especially since he publica ion o he 1998 a icle, “The New Manage ialism and he Policy
In luence o Consul an s in Go e nmen ,”by Sain -Ma in (1998a, 1998b), se e al s udies ha e
desc ibed how consul an s shape poli ics and public adminis a ion p ac ices. This inc eased schola ly
Recei ed: 23 No embe 2017 Re ised: 21 June 2018 Accep ed: 2 Augus 2018
DOI: 10.1111/go e.12369
This is an open access a icle unde he e ms o he C ea i e Commons A ibu ion-NonComme cial License, which pe mi s use, dis ibu ion
and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed and is no used o comme cial pu poses.
© 2018 The Au ho s. Go e nance Published by Wiley Pe iodicals, Inc.
Go e nance. 2019;32:241–258. wileyonlinelib a y.com/jou nal/go e 241
in e es is ha dly a su p ise, gi en ha in 2005, The Economis es ima ed ha public sec o consul ing
accoun ed o some 30% o he global consul ing ma ke (The Economis , 2005).
The g owing in e es in he use o consul an s in he public sec o has esul ed in many sec o -
speci ic s udies. Howe e , he o e all pic u e o he quali a i e changes b ough o public adminis a-
ion and democ a ic go e nance by inc easing eliance on consul an s emains agmen ed. Ou
a icle add esses his p oblem wi h a c i ical ypology o in es iga ing he discon en s and he
quali a i e impac o consul oc acy on he public sec o and adminis a ion in gene al.
Al hough ce ain challenges and p oblems associa ed wi h he use o consul an s a e widesp ead and
cognizable ac oss di e en ields, a sys ema ic amewo k o analyzing he impac o hese de elopmen s
o public adminis a ion is lacking. Much o he p e ious c i ical deba e on consul an s and he public
sec o has ocused on policy consul ancies ha o e ad ice abou poli ical decisions and policies (Bos on,
1994; Eichbaum & Shaw, 2008; G ee , 1994; Gun e , Hall, & Mills, 2015; Ma in, 1998; Polli , 2001;
Polli & Bouckae , 2011; Raudla, 2013; Sain -Ma in, 1998a, 1998b). Howe e , we a gue ha he
impac o he inc eased use o consul an s is no es ic ed o hei in luence on policies. Ins ead, i has had
a signi ican quali a i e impac on he ways in which public adminis a ion and go e nance a e conduc ed
in a ious ields, such as audi ing, o ganiza ional es uc u ing, human esou ces, and in o ma ion and
communica ions echnology (ICT). To cap u e hese mul iple quali a i e e ec s o consul oc acy, an
expansion o he de ini ion o consul oc acy is needed om he policy-cen e ed iew ad oca ed, o
example, by C aig and B ooks (2006) and Sain -Ma in (1998a, 1998b). The e o e, we de ine consul oc-
acy as a phenomenon in which o en sho - e m, ou sou ced expe knowledge p oduc ion is inc easingly
eplacing he long- e m wo k o ci il se an s and e en poli icians. This esul s in an inc eased powe o
consul an s o e poli ics, public go e nance, and public sec o p ac ices.
I is impo an o dis inguish consul oc acy om o he o ms o public sec o ou sou cing.
Whe eas public sec o ou sou cings ha e a long his o y, he one cha ac e is ic ea u e o consul oc-
acy is i s close ela ionship o he di e en o ms o expe -d i en knowledge p oduc ion ha go
deep in o he hea o how socie ies a e uled and go e ned. In o he wo ds, he consul oc a ic o ms
o knowledge-p oduc ion a e ela ed o ields ha a e essen ial o he p ope unc ioning o he demo-
c a ic o ms o go e nmen p ac ices.
The sp ead o such consul oc acy can be explained by di e en ac o s. Schola s ha e ound a
numbe o di e se and con ex -speci ic a ionales o go e nmen s o pu chase policy ad ice and hi e
ex e nal knowledge p o ide s (see, e.g., Dolowi z & Ma sh, 2000; Gun e e al., 2015, p. 527;
Lapsley & Old ield, 2001; Momani, 2013; Reh uss, 1989; Roodhoo & Van den Abbeele, 2006;
Sa as, 2000; S u dy, 1997). Howe e , as Raudla (2013) has no ed, unde s anding he di e se eali ies
o public sec o consul ing is no enough; a en ion mus be paid o he po en ial ecu ing pi alls in
con ac ing expe knowledge and o analyze whe he hese p oblems ou weigh he po en ial bene i s.
In his a icle, ce ain key a eas whe e such isks and disad an ages may ypically occu a e iden i-
ied. D awing om a la ge g ounded heo y-o ien ed s udy on he use o consul an s by Finnish go -
e nmen agencies as well as om he exis ing body o sec o al s udies, a ypology o he p oblema ic
impac s o consul oc acy is p oposed, wi h he aim o acili a ing esea ch on i s quali a i e e ec s
o public adminis a ions and democ a ic go e nance. In alignmen wi h he adi ion o g ounded
heo y, he ypology has, hus, been gene a ed and induc ed om a mixed-me hods s udy, so ha he
heo y building and he eme ging ypology ha e been g ounded in he case s udy.
Speci ically, his ypology con ibu es o an unde s anding o how he eme gence and g ow h o con-
sul oc acy shape democ a ic sys ems o go e nance and adminis a ion. The main impac s iden i ied a e
he monopoliza ion and p i a iza ion o knowledge, and he ensuing dependencies be ween public con ac-
o s and p i a e se ice p o ide s, he e osion o aci knowledge wi hin go e nmen agencies, he
242 YLÖNEN AND KUUSELA
weakening o accoun abili y, and he s eng hening o ins umen al a ionali y. We a gue ha hese ou
impac s cons i u e he main quali a i ely p oblema ic consequences o consul oc acy.
Consequen ly, he go e nmen , he sys ems o democ a ic go e nance, and he public sec o
(mo e gene ally) a e inc easingly guided by p i a e sec o models and in e es s, a he han he pa lia-
men a y sys em, democ a ic consensus, and bu eauc a ic accoun abili y. Poli ical sys ems, which
ha e in he pas elied on bu eauc a ic o ms o policy wo k as well as nego ia ions be ween di e en
in e es g oups, a e inc easingly being eplaced by a cul u e ha acili a es apid and adical e o ms
based on sho - e m goals, wi h models de i ed om he p i a e sec o and implemen ed by consul-
an s. This new cul u e e odes he ole o adi ional go e nmen unc ions, while also po en ially
se ing he poli ical agendas o some ac o s.
2|OVERVIEW OF THE EXISTING RESEARCH ON PUBLIC SECTOR
CONSULTANTS
The exis ing c i ical esea ch unde s ands consul an s b oadly as con ac -based ac o s who sell expe
knowledge and in luence o ganiza ions ha hi e hem. Fo example, Gun e e al. (2015, p. 519) po -
ayed consul an s as “ex e nal knowledge ac o s who ade knowledge, expe ise and expe ience,
and h ough consul ancy as a ela ional ans e p ocess hey impac on s uc u es, sys ems and o ga-
nisa ional goals.”The global g ow h in he use o such consul an s in he pas decades, alongside he
b oade manage ialis shi , has gene a ed new esea ch on he opic. Social scien is s ha e examined
he g ow h, ole, and con ibu ion o consul an s and consul ancy (see A mb üs e , 2006; Lapsley,
Mille , & Pollock, 2013; Sain -Ma in, 2004; S u dy, Handley, Cla k, & Fincham, 2009), and public
managemen schola s ha e poin ed o he inc easing in ol emen o p i a e consul an s in he public
sec o and i s e o ms (see, e.g., C aig & B ooks, 2006; F yson, 2009; Lapsley & Old ield, 2001;
Polli & Bouckae , 2011).
A mb üs e (2006) has di ided he exis ing esea ch on consul ing in o unc ionalis and c i ical
app oaches. Al hough he ocused on esea ch on consul ancy wo k in gene al, hese ca ego ies p o-
ide a use ul s a ing poin o ca ego izing esea ch on public sec o consul an s. Acco ding o
A mb üs e , unc ionalis ic esea ch “p esen s use ul lis s o ou lines o he economic ole o consul -
ing i ms, bu i lacks an analy ical g ounding”(p. 6), whe eas c i ical s udies ei he ocus “on man-
agemen ashions ha clien s supposedly all o , which ep esen s an o e socialized concep ion o
he consul ing ma ke ... o [po ay] consul an s as oppo unis ic agen s who exploi clien s' lack o
quali y ce ain y”(see also Lapsley e al., 2013). Bo h app oaches ypically d aw on sociological
neoins i u ionalism, based on a “belie in he e iciency o pa icula p ac ices o solu ions, a he han
any p o en e iciency,”in de e mining o in luencing economic ac ion (A mb üs e , 2006, p. 7).
As he aim o his esea ch is o unde s and how consul oc acy shapes democ a ic go e nance, i s
app oach is mo e closely aligned wi h c i ical han unc ionalis ic li e a u e. Howe e , ins ead o
ocusing on he seemingly “oppo unis ic”p ac ices o he me hods o socializa ion in consul ing
ashions (see A mb üs e , 2006; G ano e e , 1985, p. 483), he ocus is on how consul oc acy a ec s
he ways and mechanisms o democ a ic go e nance in con empo a y socie y.
Thus a , mos c i ical s udies on he quali a i e impac o he g owing use o consul an s in he
public sec o ha e ocused ei he on sec o -speci ic cases and pe spec i es, such as he use o consul-
an s in na ion b anding, educa ion, p i a iza ion, public b oadcas ing, delibe a i e democ acy o
delibe a i e echnologies, and he dis ibu ion o managemen ends (A onczyk, 2008; Be e idge,
2012; Gun e e al., 2015; Gun e & Mills, 2017; Hend iks & Ca son, 2008; Kan ola & Seeck, 2011;
Moo , 2008; Schwak, 2016), o on speci ic p oblems connec ed o consul an s, such as ansac ion
YLÖNEN AND KUUSELA 243
cos s o he ques ion o us (e.g., Bos on, 1994; Raudla, 2013). O he schola s ha e discussed demo-
c a ic p oblems associa ed wi h he p oli e a ion o go e nmen consul an s (Hend iks & Ca son,
2008; Sain -Ma in, 1998a, 1998b). Fu he , ecen con ibu ions o he esea ch on public sec o
consul an s ha e included s udying he cul u al assemblages o consul ancies (P ince, 2015), sel -
pe cep ions and idea ional backg ounds o consul an s (Momani, 2013), and analyses o consul an s
as “a new ad ocacy g oup”(Hodge & Bowman, 2006, p. 111). Polli (2007, p. 536) has emphasized
he no maliza ion o apid, adical, and o en incohe en change in public adminis a ion and inc eas-
ing links o a “managemen e o m communi y.”In his p ocess, consul ancy businesses ha e been
iden i ied as playing a la ge ole in d i ing he e o m e o s (Meek, 2011). The key conce n dis-
cussed in hese s udies is whe he consul oc a ic endencies ha e educed he openness, pa icipa ion,
and accoun abili y o go e nance, so ha consul oc acy “pa allel[s] a decline in democ acy o he
ci izen y”(Hodge & Bowman, 2006, p. 110).
Despi e his ou pou ing o sec o -speci ic s udies on consul an s, b oad- anging, syn hesizing ana-
lyses o he impac o consul ing on public adminis a ion and democ a ic go e nance in gene al a e
ha d o ind. This a icle add esses his gap by o e ing a holis ic iew on he p oblema ic impac and
discon en s o consul oc acy in he o m o a ou old ypology. The p e iously published sec o al
s udies, howe e , a e highly use ul o d a ing such a c i ical ypology, and in he ollowing, his
s udy d aws on and u he in oduces ele an li e a u e when discussing he p oposed ypology.
Be o e p oceeding in ha di ec ion, howe e , a c oss-sec o al case s udy on Finland is in oduced.
2.1 |Case Finland
The ypology in oduced in his a icle is g ounded in a case s udy on he use o consul an s in he
Finnish public sec o conduc ed in 2011–2013. The apid g ow h in he use o consul an s makes
Finland a highly in e es ing case s udy o analyzing consul oc acy and i s e ec s. Gi en he pas
s eng h o he co po a is , go e nmen -d i en de elopmen model and ila e al ba gaining in
Finland, he ecen inc ease in consul oc a ic endencies has been pa icula ly p onounced. Finland is
adi ionally unde s ood as a No dic wel a e s a e wi h a s ong public sec o . In line wi h se e al
Eu opean coun ies, Finland, howe e , wen h ough a se ies o majo New Public Managemen
e o ms in he la e 1980s and 1990s, which decen alized, es uc u ed, and comme cialized i s public
sec o (Kananen, 2014, p. 140). Schola s ha e desc ibed his as a shi om a planned economy o a
compe i ion economy, o om a No dic wel a e s a e o a neolibe al compe i ion s a e (Alasuu a i,
2004; Heiskala & Luh akallio, 2006; Kan ola & Kananen, 2013; Moisio & Leppänen, 2007).
The e o ms also included he comme cializa ion o go e nmen se ices; hus, many go e nmen
agencies we e g adually ans o med in o s a e en e p ises and inally p i a ely owned companies
(Julkunen, 2001). This pa ed he way o he iumph o ma ke -o ien ed logic, and inally o he
inc eased use o consul an s in he public sec o .
A e hese e o ms, he ise o public sec o consul an s has been as p onounced in Finland as in
many o he Eu opean coun ies. The use o con ac -based expe se ices g ew ma kedly in Finnish
minis ies be ween 1998 and 2016. The money spen on con ac -based expe se ices inc eased by
mo e han 80% om less han €0.4 billion a yea o mo e han €0.7 billion a yea du ing 1998–2009.
Al hough he g ow h s abilized somewha du ing and a e he ecession ha ollowed he 2007–2009
global inancial c isis, he annual pu chases we e s ill mo e han 50% highe in 2016 han hey we e
in 1998.
These changes a e illus a ed in Figu e 1, which depic s he in la ion-co ec ed g ow h in he use
o p i a e consul an s by Finnish minis ies and he p ime minis e 's o ice. The igu e is no comp e-
hensi e, as he da a is de i ed om a speci ic accoun o ou sou ced expe se ices in he
244 YLÖNEN AND KUUSELA
go e nmen 's accoun ing sys em, and i may be possible ha some p ocu emen con ac s ha e been
booked in o he accoun s o a ious easons. This ca ea no wi hs anding, his is he main accoun
whe e hese kinds o expenses a e booked. In o he wo ds, he sums and he g ow h a e subs an ial,
e en hough hese s a is ics do no include all wo k ha Finnish go e nmen agencies ha e pu chased
om consul an s.
The inc ease in he use o consul an s has aken place simul aneously wi h he dec ease in he
numbe o employees employed by he Finnish go e nmen , e lec ing a gene al “shi om
appoin ed and sala ied, o con ac ed and ‘billable’knowledge ac o s”(Gun e e al., 2015, p. 518).
Be ween 1990 and 2016, he numbe o Finland's go e nmen employees declined om 195,800 o
72,984, emo ing mo e han 120,000 employees om he go e nmen 's pay oll (Kuusela & Ylönen,
2013; S a e T easu y, 2016).
O ganiza ional changes explain pa o he dec ease. Mos no ably, in he ea ly 1990s, municipali-
ies gained a numbe o new esponsibili ies om he go e nmen , which con ibu ed o an inc ease
o 45,000–56,000 employees in he municipal sec o be ween 1990 and 2010 (Kuusela & Ylönen,
2013). Se e al go e nmen ins i u ions we e also ans o med in o publicly owned companies. Mo e-
o e , in 2009, he legal s a us o uni e si ies changed om public o p i a e en i ies, emo ing almos
30,000 employees om he go e nmen 's pay oll (e en i uni e si ies a e s ill almos en i ely unded
by he go e nmen ). Howe e , a New Public Managemen policy p og am s a ed in 2003 also aimed
a educing he numbe o go e nmen employees, o b ing economic e iciency by educing he wo k
pe o med by go e nmen employees. Much o he expe wo k was consequen ly eplaced wi h con-
sul an s (Na ional Audi O ice o Finland, 2010). Be ween 2006 and 2010, he go e nmen 's pay oll
expenses dec eased by €216 million, while he pu chases o ou sou ced se ices inc eased by mo e
han €500 million (Na ional Audi O ice o Finland, 2010).
FIGURE 1 The use o ou sou ced expe se ices by Finnish minis ies and he go e nmen , 1998–2017, €(adjus ed o
in la ion using 2017 eu os)
YLÖNEN AND KUUSELA 245

This apid shi ha has esul ed in inc eased eliance on con ac -based consul an se ices is also
isible in he go e nmen 's use o ICT se ices. While ICT has been unde s ood p ima ily as a echni-
cal ield, i has become an impo an ac o in de e mining he in as uc u e o many c i ical go e -
nance, public adminis a ion, and democ a ic p ocesses. Re lec ing he wide consul oc a ic
endencies, he go e nmen has g adually diminished i s ole in he ICT sec o and inc easingly con-
ac ed se ices a he expense o he go e nmen 's own employees. In 2015, o he go e nmen 's
o e all ICT expenses o €848.3 million, €610.4 consis ed o ou sou ced p ocu emen s (Minis y o
Finance, 2016).
3|RESEARCH SETTING
This esea ch on he use o consul an s in he Finnish public sec o was based on he g ounded heo y
app oach. This means ha he heo e ical obse a ions and he ypology p esen ed in his a icle ha e
been gene a ed and induc ed om he empi ical da a on he Finnish case, by disco e ing eme ging
pa e ns in c ea ing and iden i ying new analy ical ca ego ies (Walsh e al., 2015), such as he ele-
men s o he ypology. The s udy d ew pa icula ly on esea ch ha combines case s udy esea ch
and g ounded heo y, so ha he eme ging heo y building is g ounded in a speci ic case s udy
(Eisenha d , 1989; Fe nandez & Lehmann, 2011; Tabe , 2000). This means ha he analy ic codes
and ca ego ies in his esea ch we e cons uc ed om he da a, no om p econcei ed logically
deduced hypo heses.
Mo e p ecisely, a mixed-me hods app oach was employed ha combined ex ensi e a chi al and
s a is ical ma e ial wi h in e iews. The main da a se s collec ed in 2011–2012 we e: (a) inancial
accoun s on ansac ions be ween go e nmen ins i u ions and consul an s, (b) con ac s and p ocu e-
men documen s be ween public con ac o s and consul an s, and (c) 52 semis uc u ed, in-dep h
in e iews wi h consul an s, ci il se an s, poli icians, and o he ele an pa ies.
We began by eques ing de ailed, ansac ion-le el accoun s om all minis ies on expe se ices
p ocu ed in 1998–2011. These accoun s included all indi idual ansac ions ha he minis ies had
in oiced om he a o emen ioned accoun numbe dedica ed o p ocu ed expe se ices. Typically,
he in o ma ion included he da e, he sum, he name o he se ice p o ide , and a e y sho explan-
a o y ex abou he na u e o he ansac ion.
These accoun s we e hen sc eened o ind ecu en pa e ns and sui able case s udies o u he
analysis. Following he p inciples o g ounded heo y, heo y de elopmen was ad anced du ing each
s ep o da a collec ion and he iden i ica ion o speci ic cases on which o ocus. Thus, he da a
collec ion was also guided by he eme ging analy ical ca ego ies. A e he ini ial sc eening, se e al
ecu en pa e ns we e no iced. Among hese pa e ns we e epea ed ansac ions in ol ing a single
p o ide and he same go e nmen ins i u ion, which we e jus below he public p ocu emen
h eshold o di ec pu chasing wi h a compe i i e ende p ocess ( hese we e ypically sligh ly o e
€29,000, as he main h eshold was €30,000 du ing he yea s co e ed). E o s we e also made o ind
pu chases ha had pa icula policy ele ance, in addi ion o case s udies ha would mi o he
ecu ing and mos ele an ypes o consul an se ices used by he go e nmen . The ele ance was
speci ied in and du ing he cons an p ocess o heo y building.
A e his, he p ocu emen documen s (whe e a ailable) and con ac ag eemen s ela ed o he
selec ed cases we e eques ed. These documen s no only included con ac s o policy b ie ings o
new go e nance ini ia i es, bu also policy e alua ions, which a e impo an because o hei po en ial
ole in shaping u u e policies. Mo eo e , i was acknowledged ha many policy- ela ed op ions a e
oday “locked in”by seemingly echnical decisions ela ed o o ganiza ional and ICT s uc u es. To
246 YLÖNEN AND KUUSELA
unde s and his a ea, consul ing con ac s ela ed o wo kplace coaching and emune a ion sys ems
we e also esea ched. Finally, hese s ands o esea ch we e complemen ed by in e iews wi h a
wide a ie y o ele an ac o s, anging om consul an s o pa liamen a ians, esea che s, and in lu-
en ial cu en and pas ci il se an s. The a chi al da a we e collec ed simul aneously wi h he con-
s uc ion o he eme ging analy ical ca ego ies, and he selec ion o in e iewees was conduc ed in
andem wi h he analy ical wo k and heo y building. In o he wo ds, he in e iewees had knowledge
o he chosen cases o he pa e ns ha we e iden i ied as ecu en .
The in e iewees we e selec ed i e a i ely, and new in e iew eques s we e sen based on wha
he esea che s lea ned while e iewing he ex ual ma e ial and he i s in e iews. The in e iewees
held di e en ins i u ional posi ions. An app oxima e b eakdown o he in e iewees is as ollows:
19 ci il se an s, 14 poli icians o poli ical pa y employees, 13 consul an s, 3 esea che s,
2 employees om public sec o ade unions, and 1 jou nalis . Some in e iewees held se e al ins i u-
ional posi ions; o example, some wo ked as consul an s while holding a posi ion in a ci y council,
which is why he b eakdown is only app oxima e. O all he in e iews, 46 we e ace- o- ace, while 8
we e elephone in e iews. All in e iews we e eco ded and las ed be ween 26 and 111 minu es,
wi h a ypical in e iew las ing abou an hou . In line wi h he g ounded heo y app oach, he
in e iew ques ions d ew on he insigh s bo h om he p eceding in e iews as well as om ou
o he esea ch, wi h he in e iew guide e ol ing o e ime. In mos o he in e iews, we sough
bo h new in o ma ion abou he decisions o hi e consul an s in a ious agencies and he easons
behind hese ou sou cing decisions. Ou in e iews wi h consul an s and he ci il se an s who
con ac ed hem also aimed a gaining an unde s anding o he pe sonal and o ganiza ional mo i-
a ion o hese ac o s wi hin he b oade con ex o consul oc acy. The in e iew guide hus
included ques ions on he opinions he in e iewees had on he use o consul an s, as well as on
he p ac ices hey had encoun e ed while con ac ing o in e ac ing wi h consul an s, o al e na-
i ely, when ac ing as consul an s.
The da a we e analyzed acco ding o he basic p inciples o g ounded heo y so ha he analysis
ocused on eme ging pa e ns in c ea ing and iden i ying analy ical ca ego ies ha in e p e , a he
han simply label, ins ances o consul oc acy o i s quali a i e impac on public adminis a ion
(Che maz, 2005). These analy ical ca ego ies ha eme ged in he analysis o he empi ical da a
we e hen compa ed wi h he exis ing esea ch li e a u e (Glase , 1992, p. 33) o c ea e a mo e com-
p ehensi e ypology o he p oblema ic impac s o consul oc acy and a esea ch agenda. Thus, he
ypology p esen ed in his a icle is buil on he ca ego ies ha eme ged in he analysis and de el-
oped u he wi h he help o he exis ing esea ch. As he a icle ocuses on he pi alls and discon-
en s o consul oc acy, i gi es speci ic weigh o pa e ns ha we e seen as p oblema ic by he
in e iewees o ound oublesome in ou analysis o he documen s. I needs o be emphasized ha
in e iewees (pa icula ly he consul an s ha we e in e iewed) held also posi i e iews on he
g owing use o consul an s, bu hese sel -p oclaimed jus i ica ions o he p ac ice a e no he objec
o his a icle.
Al oge he , his esea ch ma e ial enabled he esea che s o conduc a unique, comp ehensi e
s udy on consul oc acy in Finland, acili a ed by he ela i ely nonhie a chical s uc u e o Finnish
socie y (e.g., i is ela i ely easy o a ange in e iews wi h pa liamen a ians) and he Finnish Ac on
he Openness o Go e nmen Ac i i ies (Minis y o Jus ice, 2015). The esul s highligh ed some o
he issues disco e ed in p e ious s udies, bu also enabled p oposing a mo e ho ough ypology o
consul oc acy han p e ious s udies. Thus, ollowing he adi ions o g ounded heo y, he case s udy
was aimed owa d heo y cons uc ion, a he han ep esen a i eness.
YLÖNEN AND KUUSELA 247
3.1 |The ypology o consul oc acy's p oblema ic impac on public adminis a ion
Al hough a numbe o analyses o he policy consequences o consul oc acy in managemen s udies
and ela ed disciplines exis , he o e all pic u e o he quali a i e impac o consul oc acy on public
adminis a ion has emained agmen ed. To add ess his gap, an o e iew o he key isks o con-
sul oc acy is p o ided. As no ed in he In oduc ion, he key ea u e ha di e en ia es he p oblema ic
impac s o consul oc a ic ou sou cing om o he ou sou cing o se ices is he impo ance o hese
se ices o he p ope unc ioning o democ acy and he go e nmen .
Besides acili a ing u u e esea ch, his o e iew helps o unde s and some o he key di e ences
be ween public and p i a e sec o consul ing. The ypes o e ec s co e ed he e a e monopoliza ion
and p i a iza ion o knowledge and ensuing dependencies, e osion o aci knowledge, weakening o
accoun abili y, and s eng hening o ins umen al a ionali y.
Pe haps sligh ly unexpec ed, he esul s we e simila in consul ancy con ac s and companies
ega dless o he size o ma ke posi ion o he consul ancy i m. This is pa icula ly in e es ing gi en
ha he exis ing schola ship on managemen consul ancies has emphasized he bene i s b ough by
la ge size o ma ke dominance (e.g., Kipping, 1999). While ma ke dominance can ce ainly be a
de ining ac o in some espec s, his case s udy calls o mo e nuanced analyses on his opic.
3.2 |Monopoliza ion and p i a iza ion o knowledge and ensuing dependencies
As p i a e p o ide s o knowledge and expe se ices, consul an s ha e b ough undamen al
changes o he ways in which public adminis a ions handle in o ma ion and knowledge. When con-
ac ing ou expe se ices, publicly owned and a ailable in o ma ion (o in o ma ion ha could, in
p inciple, be publicly owned) is ans o med in o a p i a e commodi y. The e o e, in o ma ion ha is
equen ly used by public adminis a ions (such as compu e p og ams, algo i hms, benchma king
da a, and indica o s) becomes an asse o p i a e consul ing i ms. This owne ship may esul in
in o ma ion ad an ages o consul an s ha may lead o a ious dependencies and en -seeking
beha io by consul an s.
This phenomenon has been discussed mos no ably wi hin he new ins i u ional economics and
managemen li e a u e, bo h o which ha e explo ed he economic p oblems associa ed wi h he
“con ac ualiza ion”o go e nance and policy making, and he p oblems associa ed wi h he use o
compe i i e ende ing o p o iding go e nmen se ices. Speci ically, a ious schola s ha e shown
how di icul i is o de ine he cos , quali y, and quan i y pa ame e s o ou sou ced se ices o
complex p oduc s (Baja i & Tadelis, 2001; Bos on, 1994; B own, Po oski, & Van Slyke, 2006; Dixi ,
1996; Donahue, 2009; Raudla, 2013). I is challenging o speci y p ocu emen c i e ia and es ablish
unambiguous exchange e ms. Consequen ly, as Raudla (2013) has no ed, such incomple e con ac s
and in o ma ion asymme ies may cause a ious p oblems, including isks o oppo unism by sup-
plie s. Simila ly, Bos on (1994, p. 21) emphasized how ad ise s can exploi hei quasi-monopoly
posi ion and in o ma ional ad an ages. This can happen, o example, by ailing o p oduce ad ice o
he desi ed s anda d, by p o iding selec i e o dis o ed in o ma ion, by cha ging excessi e p ices, o
by ad oca ing policies delibe a ely designed o inc ease he demand o he consul an s' se ices.
This esea ch e ealed nume ous ins ances whe e consul an s used and bene i ed om hei in o -
ma ion ad an ages o achie e a quasi-monopoly. One case was ela ed o he Minis y o Finance's
use o a emune a ion consul an in an en i onmen whe e a single company domina es mo e han
hal o he ma ke (Kos iande , 2011). The Minis y o Finance also used his consul ancy when i
a emp ed o s eamline i s emune a ion p ac ices. Du ing he 7 yea s (2004–2010) in es iga ed,
yea ly pu chases om his single company inc eased om €750 o €219,174. Ul ima ely, he minis y
248 YLÖNEN AND KUUSELA
e en ended up ad e ising he company's se ices on i s websi e. One pa icula yea , he minis y
paid he consul an s a o al o €140,000 wi hou issuing a p ocu emen ende . This was possible
because he minis y signed se e al sepa a e con ac s wi h he same company o he same p ojec ,
wi h indi idual paymen s emaining unde he €30,000 h eshold. This kind o “chaining”o con-
ac s was common in he accoun s we s udied. The law p ohibi s his p ac ice, bu i was e iden in
all minis ies whose ansac ion-le el accoun s we e in es iga ed. This highligh ed he abili y o p i-
a e sec o consul an s o es ablish long- e m ela ionships wi h he minis ies, and he ailu e o he
legisla ion go e ning public p ocu emen o p e en hese dependencies.
Al hough illus a i e, he s eadily g owing dependence be ween he emune a ion consul ancy
and he Minis y o Finance was only one example o he monopoliza ion endencies and dependen-
cies gene a ed by he go e nmen 's inc easing eliance on consul an s. Se e al in e iewees desc ibed
a emp s o a oid issuing ime- and esou ce-consuming p ocu emen ende s and con i med he
allu e o he p ac ice. “E en hough he guidelines p ohibi issuing con ac s o €29,900, i is
ex emely emp ing o eso o he p ac ice in o de o sa e wo mon hs o wo k [ ha he ende
p ocess may ha e equi ed],”s a ed an in e iewee (In e iew, 2012 ). A di ec o a he Minis y o
Finance also con i med his p ac ice in ou in e iew: “I is indeed common o see a p ocu emen
con ac whe e he p ice has been se a €29,900”(In e iew, 2012a). The p ac ice was also con i med
by a consul an who explained how some imes chaining smalle con ac s s a s innocuously:
“Qui e o en, consul an s en e an o ganiza ion wi h a modes p ojec p oposal. A e his, he p ocess
con inues wi h a se ies o new con ac s”(In e iew, 2012c).
Ano he in e iewee om academia ecalled how (s)he “issued a call o p oposals o an o gani-
za ional de elopmen p ojec while expec ing ha he p ojec would ake jus a ew days. I ecei ed a
p oposal om a consul an who had come up wi h a mon h-long p ojec ha cos €29,000”
(In e iew, 2012 ). This echoes he pa adox desc ibed by Gun e e al. (2015, p. 529), acco ding o
whom consul an s a e usually hi ed o sol e a speci ic p oblem, “bu capi alism equi es he p oduc-
ion o p oblems he clien did no ealise i had”(see also Béland & Howle , 2016). As exchange
ela ionships and claims be ween se ice p o ide s and con ac o s a e asymme ical and a e no
ixed, go e nmen s can be powe ul and powe less a he same ime in hei p ocu emen wo k
(Gun e e al., 2015, p. 534).
O e ime, he exploi a ion o quasi-monopoly posi ions can e ode he o ganiza ion's abili y o
pe o m he ou sou ced ask in-house. Acco ding o Bos on (1994, p. 8), go e nmen depa men s
and agencies ha con ac ou policy analysis ace he isk o “losing hei specialis , in-house
ad iso y capaci y,” u ning hem in o me e “con ac manage s and p ocesso s o he policy ad ice
supplied by con ac o s.”The e olu ion o he ICT se ice p o ision wi hin he Finnish go e nmen
illus a es his phenomenon, as he diminishing ole o in-house se ices has led o a si ua ion in
which he go e nmen has inc easingly become a con ac manage ha spends he majo i y o i s
ICT budge on ou sou ced se ices. The majo i y o he go e nmen 's ICT wo k is essen ially al eady
in he hands o p i a e se ice p o ide s (Minis y o Finance, 2016).
3.3 |E osion o aci knowledge
The g owing dependency on consul an s can also ha e a long-las ing and p o ound impac on he
s uc u es o knowledge wi hin public sec o o ganiza ions. Many s udies ha e ocused on how
consul oc acy con ibu es o he e osion o aci knowledge, and he deepe he dependencies and
monopoliza ion endencies become, he highe he isks. As one example o hese s udies, Powell
(1990, p. 324) no ed how aci knowledge “exis [s] in he minds o alen ed people whose expe ise
canno be easily pu chased o app op ia ed and who commonly p e e o ply hei ade in a wo k
YLÖNEN AND KUUSELA 249
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