‘Best of both worlds’? A comparison of third sector providers in health care and welfare-to-work markets in Britain

This article compares the welfare markets in primary health care and ‘welfare‐to‐work’ in the UK since the late 1990s. A longitudinal comparison of two different policy areas enables us to study the context in which marketization and the resulting shift of welfare provision takes place. We outline the general background of the market‐based reforms and highlight in what way policymakers have ascribed third sector organizations (TSOs) a number of positive characteristics, particularly the ability to address concerns about well‐known market failures. While consecutive governments promoted these organizations as welfare providers, case studies of two illustrative provider organizations in each policy area reveal a number of problems regarding their distinctiveness in increasingly competitive welfare markets.

We conclude that the crisp distinction made by policymakers between the third and other sectors as well as the alleged advantages of the former present a rather naïve picture of a complex reality and argue for a more critical view of third sector characteristics and performance. The third sector is not only characterized by a high degree of fuzziness at the boundaries to other sectors, but even within single organizations, which often undergo significant transformations over time. As a result, policy intentions and practical outcomes are contradictory with TSOs losing their alleged distinctiveness as players in increasingly competitive markets. Furthermore, we contend that detailed longitudinal studies of organizations are essential in the advancement of the discussion of the third sector concept as they provide conceptual insights into organizational change and behaviour.