From enthusiasm to disenchantment: an analysis of the termination of Portuguese municipal enterprises

This paper explores the determinants of continuity and change of municipal organizations designed for service delivery. Focusing on the political and financial costs of termination, it addresses the question of what is behind a local government’s decision to terminate a municipal enterprise. The results suggest that the survivability of this type of organization depends on financial and economic aspects, rather than the political make up of the local government involved. The paper contributes to the academic literature on the choice of institutional mechanisms for service delivery, particularly on ‘reverse contracting’ which occurs when contracted services are taken back from former providers as a result of contracting challenges.