How Do Public Managers Learn from Performance Information? Experimental Evidence on Problem Focus, Innovative Search, and Change

• Published date: 01 September 2022
• Author: Jesper Asring Hansen,Poul Aaes Nielsen
• Date: 01 September 2022
• DOI: http://doi.org/10.1111/puar.13533

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Research Article:

HERBERT SIMON

Symposium

Abstract: Management decisions are considered important for the performance of public organizations, but how does

information about performance influence management decision-making? Developed from Simon’s notion of bounded

rationality, the behavioral model of performance-based lear ning suggests that managers adjust their understanding of

organizational problems, search for information, and consider initiating change when their organization performs

below aspirations. In this paper, we offer experimental evidence of how performance information affects the attitudes

and decision-making of public managers. We leverage two experiments conducted among managers in public

education. Study 1 uses a question-order experiment to prime only treated respondents to consider performance,

whereas study 2 uses treatments with high- and low-performance signals. We find that low performance affects problem

focus but not managers’ intention to conduct innovative search. We also find that low-performance signals increase

preferences for immediate performance-oriented changes but not for other types of changes. We discuss the implications

for management decision-making.

Evidence for Practice

• Performance information holds the potential to generate organizational learning and inform public

managers’ decisions about important problems, priorities, and organizational change.

• Public managers become more focused on direct performance-oriented changes when performance is low,

whereas high performance lets them engage in other types of changes.

• Performance information alone does not ensure that public managers are focused on generating innovative

solutions to performance problems.

Herbert A. Simon’s(1997) Administrative

Behavior placed decision-making at the

center of administrative research. While

the decisions of managers are considered important

for public service performance (e.g., O’Toole and

Meier2011), public administration scholars have

only recently explored, in turn, how information

about performance affects management decision-

making (Nicholson-Crotty, Nicholson-Crotty,

and Fernandez2017). Yet, Simon emphasized

the goal-oriented nature of organizations and the

importance of performance, noting that “a primary

method of review is to ascertain the degree to

which the organizational objective is attained—

its results.”(1997, 315). Simon also noted that

measuring performance served not only to diagnose

the current state of operations but also “…to

influence subsequent decisions. (…). In brief, change

may be brought about in any of the several ways in

which decisions can be influenced”(1997, 316).

In addition, Simon(1997) introduced the notion

of limited rationality in organizations that can

help us understand how organizations make sense

of and respond to performance information.

Because of later developments by Simon and his

colleagues in the study of bounded rationality (e.g.,

Cyert and March1963; March and Simon1958;

Simon1956)—including the notions of aspirations,

satisficing, search, and adaptation—we are now in a

better position to study organizational responses to

performance information systematically.

Inspired by Cyert and March’s A Behavioral Theory

of the Firm(1963), the aspiration-based model of

performance-based learning represents a prominent

attempt of incorporating Simon’s notion of

bounded rationality into the study of organizational

decision-making (Greve2003). Empirical studies,

predominately conducted among private business

firms, have shown how discrepancies between actual

performance and organizational aspirations signal a

need for strategic adjustment related to organizational

problem focus, conducting an innovative search,

and initiating organizational change (Greve2003;

Shinkle2012).

How Do Public Managers Learn from Performance

Information? Experimental Evidence on Problem Focus,

Innovative Search, and Change

Jesper Asring Hansen

Poul Aaes Nielsen

Aarhus University, Denmark

Poul Aaes Nielsen is an associate

professor in the Department of Political

Science at Aarhus University. His research

examines the role of performance

management systems in politics and public

management and focuses on topics such

as performance budgeting, responsibility

attribution, and organizational learning.

Email: poul@ps.au.dk

Jesper Asring Hansen is an assistant

professor in the Department of Political

Science and Trygfonden’s Center for Child

Research, Aarhus University. His research

focuses on organizational accountability,

public service performance, and behavioral

public administration.

Email: jesper@ps.au.dk

Public Administration Review,

Vol. 82, Iss. 5, pp. 946–957. © 2022 The

Authors. Public Administration Review

published by Wiley Periodicals LLC on behalf of

American Society for Public Administration.

DOI: 10.1111/puar.13533.