Unobserved Heterogeneity in Public Procurement Governance and Value for Money

Abstract

The public procurement governance crisis in developing countries is typically triggered by unclear transparency and accountability, inadequate competitiveness procedures and weak legal frameworks. To address these challenges, unlikely other studies, we critically analyzed the effects’ sizes and permutation tests to uncover unobserved heterogeneity. The motives behind this paper are to ascertain the unobserved heterogeneity in public procurement governance and to identify existence classes with homogeneous behavior patterns. REBUS-PLS was used to measure and assess the unobserved heterogeneity. In that premises, the paper critically assessed the measurement and structural models and explicitly analyzed the goodness of fit (GoF) index, group quality index (GQI), effects' sizes and permutation tests. The six tested hypotheses were significant at the global model after accustoms the bootstrap. By contrast, the local models show better performance compared to the global model. The paper contributes by providing original empirical findings to the main streams of the public procurement governance with REBUS-PLS which is not a common approach. The study concludes that significant unobserved heterogeneity existed regarding transparency, accountability, competition, legal frameworks and value for money from a viewpoint of local government in Tanzania.