Final academic report: Out of Control or Over Controlled? Incentives, Audits and New Public Management

Carl Dahlström (PI), Monika Bauhr, Rasmus Broms, Victor Lapuente, Marina Nistotskaya and Kohei Suzuki

1.What is the purpose of project and how has it developed during the project period?

The purpose of this project is to study the effects of NPM (New Public Management) reforms on public service delivery, corruption, government effectiveness, and more broadly human well-being. Although NPM is at least 25 years old, we have limited understanding about the effects of NPM. In particular, there has been a lack of quantitative studies with large-number sample sizes. Previous studies tend to focus on studies of failed cases with relatively small sample sizes. To fill this gap, this project aims to study the effects of NPM by conducting quantitative assessment with a large number of samples from different countries. NPM reforms emphasize the importance of ex-post evaluations of the results of bureaucratic performance through management tools such as performance and financial audits and performance indicators. NPM has been said to replace the traditional emphasis on ex-ante controls of bureaucracies – procedural controls, personnel policy, and organizational design –with ex-post controls. However, previous studies suggest that ex-ante controls remain important in the NPM era. Therefore, this project focuses on both ex-ante and ex-post control mechanisms and assesses how they affect the aforementioned outcomes.

Our initial plan focused on personnel policy, bureaucratic structure, and administrative procedures as ex-ante controls, and auditing, accountability, and transparency as ex-post controls. However, as we developed our project, we realized that organizational- and individual-level contingent factors such as gender and career background of civil servants play a larger role. We also noticed that the party-political dynamics and political competition are more important than we thought. Thus, we decided to move some of the sub-projects in this direction (Bauhr, Charron, and Wängnerud 2018; Broms et al. 2018; Lapuente and Suzuki 2018a; 2018b; Nistotskaya and Stensöta 2018; Suzuki and Avellaneda 2018).

We focused on Sweden, Russia, the U.S., Spain, and Japan in our sub-national studies. The last two were added to the list of original target countries. We found that subnational-analysis is more useful because it significantly expands the number of samples and allows researchers to isolate the NPM effects. Our cross-national studies cover various countries within Europe (Bauhr and Charron 2018; Lapuente and Suzuki 2018a; 2018b) and from all over the world (Bauhr and Grimes 2017; Suzuki and Demircioglu 2018).

2. How was the project implemented?

Carl Dahlström (PI), Monika Bauhr, Rasmus Broms, Victor Lapuente, Marina Nistotskaya, and Kohei Suzuki implemented the project. As Bauhr, Dahlström, Lapuente, and Nistotskaya received funds from other research grants or University of Gothenburg, with RJ’s permission, some of this project’s funds were re-allocated. First, two post-doctoral researchers (Broms and Suzuki) were hired in a competitive process. Second, three research assistants (Maria Tyrberg, Anna Khakhunova and Nadezda Nazarbaeva) were hired to collect data on Sweden and Russia and contribute to research papers (Dahlström et al 2016; 2018; Nistotskaya and Khakhunova 2016a; 2018).

The following lists research components and the main coordinators.

• Cross-national study concerning ex-ante controls (Lapuente and Suzuki) and ex-post controls (Bauhr)
• Sub-national study concerning ex-ante and ex-post controls (Russia: Nistotskaya), ex-ante controls (Sweden: Dahlström, Spain: Lapuente, Japan: Suzuki), ex-post controls (Sweden: Broms)

3. What are the project’s three most important results and contributions to the international research front?

This project has led to 12 published papers at peer-reviewed academic journals, 5 book chapters, 3 papers under revise & resubmit, 6 papers under review at peer-reviewed academic journals, 15 working papers, and 15 conference papers. Furthermore, the team’s proposal for a special issue, “The Effects of New Public Management on the Quality of Public Policies,” has been accepted by a high impact factor peer-review journal, Governance.

The research team has also assembled and made publicly available comprehensive datasets on institutions, processes, and practices in public administration. This includes a cross-national data-set for more than 100 countries (Dahlström et al 2015a; 2015b; Dahlström and Suzuki 2018) and 4 subnational data-sets: Sweden (Broms 2017a; 2018; Dahlström and Tyrberg 2016), Russia (Nistotskaya et al 2015; Nistotskaya and Khakhunova 2016b), Spain (Drapalova and Lapuente 2017), France (Bauhr and Charron 2018), and Japan (Suzuki and Avellaneda 2018; Suzuki and Ha 2018; Suzuki and Sakuwa 2016).

Our work is available via open access. First, we have presented almost all of our papers at international conferences. Second, we published most of our papers in open access working paper series, primarily the Quality of Government Institute working paper series. Third, we have purchase open access from the journal once it is published in some cases.

Concerning outreach efforts, Dahlström and Broms, co-organized a workshop, “Corruption Risks in Swedish Municipalities,” with SNS, Centre for Business and Policy Studies. More than one hundred policy practitioners attended the workshop with whom we exchanged opinions. Nistotskaya heads a collaborative project between Malmö University and several Russian universities (Legitimacy, Urban Planning and Sustainability in Russian and Swedish municipalities).

Among our findings, three stand out. First, unlike the original intent, the effect of various NPM is not univocally positive (Broms et al. 2018; Dahlström et al. 2018; Drapalova and Lapuente 2017; Nistotskaya and Khakhunova 2016a; Suzuki and Sakuwa 2016; Suzuki and Ha 2018). Marketization of municipal services in Sweden improves neither service quality nor citizen satisfaction (Broms et al. 2018; Dahlström et al. 2018). Relying on revenue from certain industries also lead to low institutional quality in Sweden (Broms 2018). Negative NPM impacts were also found in Japan (Suzuki and Sakuwa 2016; Suzuki and Ha 2018) and Russia (Nistotskaya and Khakhunova 2016a). However, restructuring public services can stimulate citizen volunteering (Suzuki 2017; 2018). Previous private-sector experience enhances efficiency-oriented attitudes of public managers without harming important values such as impartiality and equity (Lapuente et al. 2018).

Second, ex-ante factors still remain important for bureaucratic performance. Recruitment and promotion systems influence performance and bureaucratic behavior (Dahlström et al. 2016; Lapuente and Suzuki 2018a; 2018b; Nistotskaya 2017; Parrado et al. 2018). Contextual factors such as political competition (Broms et al. 2018) and gender (Bauhr, Charron, and Wängnerud 2018; Suzuki and Avellaneda 2018) also play a role in reducing corruption and government debt. Mismanagement in public procurement processes results in higher corruption risk (Bauhr and Charron 2018).

Third, concerning ex-post control mechanisms, we have made an overview of currently available transparency measures (Bauhr and Grimes 2017), and defined and measured the type of transparency that can effectively monitor public procurement (Bauhr et al. 2018). Electoral fortune of local governing parties is, at least indirectly, damaged by receiving a critical audit, providing evidence that auditing can be an important tool for securing accountability between elections (Broms 2018).

4. What are new research questions generated through the project?

This research project has led to several new questions. The overview of the existing literature on incentives in the public sector (Nistotskaya 2018) and our results show negative or no impact of NPM initiatives on bureaucratic outputs and wider societal outcomes, which bring into question the theoretical foundations of the NPM mantra “Let the managers manage!” While some steps have already been taken (Dahlström et al. 2018), further theorization on how ex-ante controls (i.e., bureaucratic structures, processes and/or norms, and values of both bureaucrats and managers) may moderate the relationship between NPM-informed administrative institutions and outcomes.

Within this line of inquiry a broader set of contextual factors, such as gender and political competition, should also be considered. One of the avenues for future research is to investigate the interaction between ex-ante controls and NPM-institutions under specific contextual factors. How do pre-existing administrative structures and processes affect the performance of the NPM-informed administrative institutions? Do female managers respond to the NPM-informed incentives structures differently than men?

Another question is to what extent cultural factors play a role in the success/failure of NPM, which was originated and mainly developed in Anglo-Saxon countries. Finally, some of our study results do not find positive impacts of NPM tools, but reform results may emerge clearly several years later. Future studies should undertake the abovementioned tasks.

5. What are the project’s international dimensions?

The project emphasized international dimensions. First, all of the members attended international conferences to discuss their ideas and findings. Second, the team hosted a large international conference on public management and institutional quality, in which 39 researchers from Europe, U.S., and Asia-Pacific areas participated. Third, we have published 55 papers (including different versions of the same articles), with a large international exposure. Fourth, most of our work has involved international collaboration. Fifth, some of the outreach projects have a clear international dimension.