Beyond hollowing out: Public sector managers and the use of external management consultants

Abstract

Expenditure on management consultants in public sector organizations is generally seen as contributing to a “hollowing out” of the state through the substitution of internal management capability. However, there is little systematic evidence for this view which also ignores how public sector managers may, themselves, drive consulting use. Looking at 125 English public hospitals over 6 years, we explore the relationship between the development and composition of management functions and spending on consultants. Our findings show the absence of a substitution effect and, therefore, challenge the “hollowing out” thesis. Instead, they point to a more active, occupationally varied and political use of consultancy. We find that larger management functions overall are associated with greater reliance on consultants—a complementary relationship. However, where a higher proportion of managers are engaged in internal consulting functions, this results in the lower use of external management consultants, with implications for theory, research and policy.