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This article develops and tests a set of hypotheses examining how contracting out of public services affects intra-organizational communication in public agencies (i.e., the principal organization). We draw from two competing perspectives: contracting scholarship argues that outsourcing reduces an organization's structural complexity and enhances intra-organizational communication, while organizational communication studies suggest that outsourcing might lead to fragmented communication pathways and a loss of information. In order to reconcile these perspectives, we examine how different characteristics of an organization's contracting network affect both the internal gathering and dissemination of information. Using survey and contractual relationship data from approximately 200 US transit agencies, we find that contracting out a large portion of services improves intra-organizational communication but this positive effect decreases as the number of contractors grows. Long and stable relationships with contractors negatively affect intra-organizational communication, especially when occurring with private—as compared to public—contractors. Our results suggest the need to further investigate intra-organizational communication in contracting networks and better understand how it may affect organizational performance and contract management.
