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

• Date: 01 July 2018
• Published date: 01 July 2018
• DOI: http://doi.org/10.1111/puar.12884

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.

E-mail: rabovsky@indiana.edu

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.

E-mail: aruther@indiana.edu

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.

• 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

principals.

Amanda Rutherford

Thomas Rabovsky

Indiana University Bloomington