The Relationship between Efficiency and Quality of Municipally Owned Corporations: Evidence from Local Public Transport and Waste Management in Poland

Abstract

Sustainable development requires the intervention of public authorities in areas where market mechanisms do not guarantee the proper allocation of goods. Some of these goods include public services such as local collective transport and municipal waste management. In many countries, the process of remunicipalizing these service provisions is underway and, in the modern model used in providing these services, municipally owned corporations (MOCs) play a special role. The specific nature of these companies (i.e., the duality of their objectives and that they are required to run classic economic calculations while they are assessed in terms of the quality of their services) encouraged the authors to formulate the primary goal of the study, which was to assess the link between the financial and operational efficiency of MOCs and the quality of their services. The present study’s authors developed a method for measuring the financial and operational efficiency of MOCs. In addition, a set of standards for assessing the quality of public service provision were defined, and opinion surveys were carried out to evaluate them. Subsequently, multi-criteria rankings of the efficiency and quality of services of the MOCs tested were drawn up using a synthetic variable based on the zero unitarization method (ZUM). A correlation of the analyzed variables was examined (Spearman’s rank correlation coefficient) and simple line regression models were built. Our research showed that analyses of MOCs, when limited to their financial and operational aspects, are incomplete. According to the empirical analysis carried out, the financial and operational efficiency of MOCs does not translate to the quality of their services. Therefore, we believe that, in assessing the activities of MOCs, it is necessary to take into account criteria that measure the quality of meeting the needs of the local community in addition to financial criteria.