Cost Efficiency of Public Procurement at Local Level: Chances for Improvement of Local Self-government and Public Enterprises in Serbia


  • Ondrej Jaško University of Belgrade, Faculty of organizational sciences, Jove Ilića 154, 11000 Beograd
  • Predrag Jovanović Public Procurement Office, Republic of Serbia.
  • Mladen Čudanov University of Belgrade, Faculty of organizational sciences, Jove Ilića 154, 11000 Beograd



public procurement, public sector, transactional costs, network organizations, federalization


This paper analyses cost efficiency of the public procurement process at local level. Data is gathered in the Serbian environment, and our main hypothesis is that efficiency of public procurement can be improved significantly by the practices of organizational design and external benchmarking, measured by transaction costs. In order to prove this hypothesis, we have described case of major inefficiencies during public procurement process, and then analyzed efficiency of public procurement process, measured in hours per public procurement on a basis of 185.305 directly invested hours, during 18 months period in eight public enterprises. We have shown by statistical analysis that very wide, statistically significant (p<0,001) differences exist in efficiency of three best organizations, compared to five less efficient. All organizations perform public procurements under same environmental conditions. Thus, we have proposed organizational solutions in order to suggest means for performance improvement, and analyzed transactional costs theory in order to suggest measurement of the improvement.

Author Biographies

  • Professor
  • Assistant Professor


<p align="justify"><span lang="EN-US" style="font-size: 13px; font-family: Cambria">Coase, R. (1998) The new institutional economics, American Economic Review, 88(2), pp. 72-74.
Čudanov, M., Jaško, O., & Săvoiu, G. (2012) Public and public utility enterprises restructuring: Statistical and quantitative aid for ensuring human resource sustainability, The Amfiteatru Economic Journal, Academy of Economic Studies, 14(32), pp. 307-322.
Dyer, J. H. (1997) Effective Interfirm Collaboration: How Firms Minimize Transaction Costs and Maximize Transaction Value, Strategic Management Journal, 18(7), pp. 535- 556.
Dyer, J. H., & Chu, W. (2003) The role of trustworthiness in reducing transaction costs and improving performance: Empirical evidence from the United States, Japan, and Korea, Organization science, 14(1), pp. 57-68.
Galbraith, J. R. (1971) Matrix organization designs How to combine functional and project forms, Business Horizons, 14(1), pp. 29-40.
Garrone, P., Grilli, L. & Rousseau, X. (2010) Management Discretion and Political Interference in Municipal Enterprises. Evidence from Italian Utilities, Local government studies, 39(4), pp. 514-540.
Hall, D. (1998) Public Enterprise in Europe.United Kingdom (London: University of Greenwich Institute for Public Policy Research (IPPR)).
Handy, C. (1993) Balancing corporate power: A new federalist paper, Harvard Business Review, 70(6), pp. 59-72.
Hill, C. W. (1990) Cooperation, opportunism, and the invisible hand: Implications for transaction cost theory, Academy of Management Review, 15(3), pp. 500-513.
Jaško, O., Čudanov, M., Jevtić, M., & Krivokapić, J. (2013) Projektovanje organizacije (Beograd: Faculty of Organizational Sciences).
Dyer, J. H. (1997) Effective Interfirm Collaboration: How Firm Minimize Transaction Costs and Maximaze Transaction Value, Strategic Management Journal, 18(7), pp. 535-556.
Krishnaswamy, K. N., Sivakumar, A. I., & Mathirajan, M. (2004) Management Research Methodology: Integration of Principles. Methods and Techniques (New Delhi: Dorling Kindersley Ltd.).
Marczyk, G., DeMatteo, D., & Festinger, D. (2005) Essentials of research design and methodology (New Jersey: John Wiley & Sons).
Marinescu, C. (2013) Institutional Quality of the Business Environment: Some European Practices in a Comparative Analysis, The Amfiteatru economic journal, 15(33), pp. 270-287.
Mijatović, I., Čudanov, M. I. & Krivokapić, J. (2014) Development of Co-Operation-Based Company Standards: The Case of Innovative Practice in Public Service Companies, In: Levi Jakšić, M., Barjaktarović Rakočević, S. & Martić, M. (eds) Innovative Management and Firm Performance: An Interdisciplinary Approach (Hampshire, UK: Palgrave MacMillan), pp. 200-213, doi: 10.1057/9781137402226.0018.
Morgan, G. A., Griego, O. V. & Gloeckner, G. (2000) SPSS for Windows - An Introduction to Use and Interpretation in Research (New Jersey: Lawrence Erlbaum Associates).
North, D. C. (1990) Institutions, Instirurional Change and Economic Perormance (Cambridge: Cambridge University Press).
Oplotnik, Z., & Brezovnik, B. (2004) Financing local government in Slovenia, Post-Communist Economies, 16(4), pp. 483-496.
Saunders, M., Lewis, P., & Thornhill, A. (2011) Research methods for business students, 5th edition (Harlow, UK: Pearson Education).
Săvoiu, G., Dinu, V., & Manea, C. (2013) Methodology for Calculating a Complex Index for Assessing the Pressure of Regional Indicators on Public Administration, Transylvanian Review of Administrative Sciences, 9(40), pp. 201-221.
Simon, H. A. (1982) Models of bounded rationality: Empirically grounded economic reason (Cambridge, MA: MIT press).
Snow, C. C. & Miles, R. E. (1992) Causes for failure in network organizations, California management review, 34(1), pp. 53-57.
Todorović, I., Čudanov, M. & Komazec, S. (2014) Improvement of Organizational Knowledge Transfer through Integration of Functional Silos in Smart Network: Case Study of Public Enterprises, In: Ordoñez de Pablos, P., Jovell Turró, L., Tennyson, R. D. & Zhao, J. (eds) Knowledge Management for Competitive Advantage During Economic Crisis (Hershey, PA: Idea Group Publishing), pp. 299-309, doi: 10.4018/978-1-4666-6457-9.
Todorović, I., Komazec, S., & Čudanov, M. (2013). Different successful patterns for implementing holding model in public sector, Business Systems Research, 4(2), pp. 58-67.
Transparentnost Srbija (2015) Izveštaj o sprovođenju Nacionalne strategije za borbu protiv korupcije u Republici Srbiji za period 2013-2018. godina and Akcionog plana za njeno sprovođenje (Beograd: Transparentnost Srbija).
Williamson, O (1975) Markets and Hierarchies: Analysis and Antitrust Implications (New York: free Press).
Hennart, J.-F. ( 1993) Explaining the swollen middle: Why most transactions are a mix of “Market” and “Hierarchy’, Organization Science, 4(4), pp. 529–547.
Williamson, O. E. (1985) The Economic Institutions of Capitalism (New York: Free Press).
Williamson, O. E. (1979) Transaction-cost economics: the governance of contractual relations, Journal of law and economics, 22(2), pp. 233-261.
Williamson, O. E. (1981) The economics of organization: The transaction cost approach, American journal of sociology, 87(3), pp. 548-577.</span></p>





Conference Paper (Annual Conference 2020)