Institutional context and performance-based procurement: Evidence from welfare services in three countries

This study explores why similar performance-based procurement designs produce different outcomes across welfare service settings. Drawing on ten case studies from the United Kingdom, United States, and the Netherlands we develop a three-mechanism framework linking institutional context to procurement outcomes. We propose that outcomes are associated with three interacting factors: institutional distance (the structural gap between what a procurement model requires and what the existing environment provides), institutional logic alignment (the fit between market-based mechanisms and prevailing normative expectations), and organizational learning capacity (the ability of implementing organizations to adapt over time). We apply this framework to two procurement instruments: Most Economically Advantageous Tender (MEAT) and Payment by Results (PbR). Our case analysis suggests that procurement models building on existing institutional infrastructure and aligning with prevailing normative logics tend to produce more stable outcomes, while those requiring departures from established norms are more frequently associated with cream-skimming, market concentration, and implementation drift. While exploratory, these findings suggest that procurement effectiveness may depend less on the choice between MEAT and PbR than on how carefully either instrument is calibrated to its institutional environment.