Competition and Local Government's Choice Between Informal and Formal Collaborative Mechanisms: Measuring Dyadic Intercity Competition Through the Lens of Business Trade-Offs

Abstract

Informal and formal collaborative mechanisms are distinctive self-governing strategies that local governments use to mitigate intergovernmental collaboration risks. Studies on local governance have long argued that both mechanisms tend to co-occur and appear mutually complementary. However, extant research drawing on the transaction cost perspective provides a more nuanced and different explanation that as intergovernmental competition increases, local governments lean toward the choice of a formal mechanism over an informal mechanism to effectively address higher collaboration risks. Through a network lens, this study empirically tests the latter view. Using the Orlando metropolitan area as a testbed, Multiple Regression Quadratic Assignment Procedure tests reveal that the use of both collaborative mechanisms is positively associated with the level of intergovernmental competition. However, different from the initial expectation, local governments are more likely to engage in the informal mechanism rather than the formal mechanism as the competition level increases. In doing so, this study developed a new measurement strategy for intergovernmental competition to test the dyadic network-related research hypotheses. The measurement strategy and the research findings should inform future research on intergovernmental relations and local government network management.