Corporate capacity and public service performance

Corporate capacity is arguably a key determinant of the success or failure of public sector organizations. However, while there is growing evidence on the extent of corporate capacity, few researchers have systematically examined whether it is linked to public service performance. Does a larger corporate centre lead to better or worse performance for the organization as a whole? To answer this question we apply seemingly unrelated regression to measures of effectiveness, cost-effectiveness and equity in English local government. We find that the effect of corporate capacity on performance is nonlinear, following an inverted u-shaped pattern, and that its positive effect turns negative around the mean for effectiveness and cost-effectiveness, and above the mean for equity. The study therefore suggests that senior managers face important trade-offs between organizational goals when deciding on the appropriate level of corporate capacity.