Does the Motivation for Market‐Based Reform Matter? The Case of Responsibility‐Centered Management

Date01 July 2018
Published date01 July 2018
Public Administration Review,
Vol. 78, Iss. 4, pp. 626–639. © 2017 by
The American Society for Public Administration.
DOI: 10.1111/puar.12884.
626 Public Administration Review July | A ugus t 201 8
Research Article Does the Motivation for Market-Based Reform Matter?
The Case of Responsibility-Centered Management
Thomas Rabovsky is assistant
professor in the School of Public and
Environmental Affairs at Indiana University
Bloomington. His research focuses on
accountability performance management,
managerial values, and decision making,
and higher education policy.
Amanda Rutherford is assistant
professor in the School of Public and
Environmental Affairs at Indiana University
Bloomington. Her research focuses on
performance accountability systems,
executive profiles and decision-making
processes, and representative bureaucracy.
Abstract: Organizational theorists have long examined the implications of market-oriented policies for public
agencies. Current research often aims to understand the effects of policies imposed on organizations by external
stakeholder groups, but few studies have attempted to gain a better understanding of what mechanisms cause agencies
to select into these strategies. The purpose of this article is to understand, first, which factors make an organization
more likely to adopt a decentralized, market-based budgeting system—termed “responsibility-centered management
(RCM)—and, second, whether this type of system has implications for organizational performance. Using data on
doctorate-granting public and private nonprofit four-year universities in the United States, the authors find that
mission, resource dependence, and state party control influence the take-up of RCM. In terms of effects, RCM creates
winners for graduation rates (white students) and degree production (science, technology, engineering, and math
departments), which raises questions of equity across groups.
Evidence for Practice
Responsibility-centered management (RCM) has grown in popularity over the last decade and has been
touted as a way to improve the cost efficiency, innovation, and performance of large organizations such as
Universities that are both highly reliant on state financial resources and located in states with a high share of
Republican legislators are more likely to adopt this reform.
RCM increases degree production in STEM fields (science, technology, engineering, and math) but has no
effect on the production of humanities degrees.
While RCM appears to increase graduation rates, the increase is driven by white graduation rates, with little
change in graduation rates for minority students, which may be attributable to the underrepresentation of
these students in STEM fields.
Recent decades have seen a decline in public
trust in government, much of which has been
fueled by the idea that the bureaucracy as a
whole is unwieldy and inefficient. Policy makers have
often subscribed to the notion that market-oriented
reforms and the restructuring of incentives for public
agencies will result in administrative outcomes that
are both higher in quality and more effective in their
use of resources. The assumptions embedded in this
perspective have been examined and contested in
multiple contexts, such that many groups of scholars
have voiced doubts about the appropriateness of reforms
centered on principles related to decentralization and
marketization, perhaps most recently through ideals
espoused by New Public Management and outcomes-
based performance regimes (Bevan and Hood 2006;
Hillman, Tandberg, and Fryar 2015).
While studies on the effectiveness of such policies
have generated valuable research that aides in theory
building for understanding externally imposed
reforms, there are also cases in which organizations
voluntarily opt into changes that extend from
market-based approaches to management. Empirical
research examining questions of decision-making
processes (Nielsen 2014; Rabovsky 2014),
innovation (Damanpour, Walker, and Avellaneda
2009), or organizational turnaround (Boyne
2004) sometimes touches on internally initiated
processes but often does not separate such processes
from cases of externally imposed change.1 Yet
understanding when organizations select into
market-based strategies and the consequences of
such change can increase our understanding of
what mechanisms motivate managers to adopt
these strategies in an era of accountability as well
as whether this type of change is any more or less
promising for organizational performance than
the juggling of incentives designed by political
Amanda Rutherford
Thomas Rabovsky
Indiana University Bloomington

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