The implementation of strategic management in local governments. An international Delphi study.

Author:Pina, Vicente
Position::Report
 
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INTRODUCTION

In recent decades, local governments have introduced a wide range of techniques to improve their management. The objectives pursued vary depending on the initiatives, the implementers, the specific contexts and the moment. Nevertheless, they have usually been to reduce costs, to improve performance in terms of quality, efficiency and effectiveness, to improve citizen satisfaction, to become more responsible and accountable and to improve citizen trust in government. In spite of the criticisms about the suitability of some of these techniques or the difficulties that they imply in practice, public sector organizations are "obliged" to introduce new ways of managing their resources as traditional managerial processes seem to have serious shortcomings. Management improvement has become a must as the environment has become more competitive and uncertain (Naschold and Daley, 1999).

This atmosphere of necessary change has encouraged the implementation of performance measurement (Bouckaert, 1993; OECD, 2005; Yang, 2007) and strategic management systems (Vinzant and Vinzant, 1996b; Poister and Streib, 1999, 2005). Public organizations, particularly local governments, have embraced different management initiatives and municipal managers have adopted recognized private sector management tools (Chan, 2004), such as the Balanced Scorecard (BSC), the Triple Bottom Line (TBL) and Global Reporting Initiatives (GRI), in their quest to introduce strategic management. Poister and Streib (1999, 2005) show the growing interest in strategic management in the public sector, despite the difficulties of implementing it in the public arena. According to Chan (2004), in the USA and Canada, most municipal governments have developed measures to assess their key organizational areas such as finances, customer satisfaction, operating efficiency and employee performance.

This paper aims to analyze the different factors involved in the implementation process of strategic management and how they affect the result of the implementation. We study the behavior of local governments when implementing strategic management, taking the BSC (1) as a benchmark, and to what extent that behavior explains the degree of alignment between local governments' publicized objectives and the actual configurations of their strategic management system. The sample is made up of local governments with acknowledged experience in strategic management in Australia, Spain, Sweden and the USA. This study contributes to a better understanding and planning of the implementation of strategic management initiatives in local governments.

The rest of the paper is structured as follows: in Section 2, we introduce strategic management in the context of the public sector; in Section 3, we present the theoretical framework; Section 4 develops the methodology; Section 5 contains the analysis of the results and Section 6 the discussion. Finally, we draw conclusions about the main findings of our study.

STRATEGIC MANAGEMENT FRAMEWORK IN THE PUBLIC SECTOR

In the eighties, New Public Management initiatives drove the public sector in the direction of management. Since then, the focus on securing organizational change as opposed to organizational maintenance has become more important in the public sector (Ferlie, 1992), and public sector reforms have increased awareness of the importance of strategic choices about how to provide public services. The need for strategic management practices in the public sector grew when public organizations moved from relatively stable environments into more rapidly changing and competitive ones that are characterized by resource scarcity (Montanari and Bracker, 1986). Ansoff and Hayes (1976) argued that strategic management was needed in environments where new patterns of power and influence were emerging, where basic norms and values were being challenged and where the legitimacy and social utility of the organizations was being redefined.

Bracker (1980) defined strategic management as the application of the concept of business strategy. For him, strategic management involves the analysis of the internal and external environment of an organization to maximize the use of resources in relation with the organizational objectives. For Ansoff (1972), strategic management is concerned with establishing and maintaining a set of relationships between the organization and the environment which enable it to pursue its objectives, are consistent with the organizational capabilities and fulfill the demands of the environment. Strategic management, in the public sector, encompasses the whole process of developing and managing a strategic agenda (Poister and Streib, 2005).

Ansoff, Declerck and Hayes (1976) argued that strategic management was a response to the shortcomings of strategic planning which produced plans but not actions or visible changes. Comparing strategic planning with "the symptoms of a foreign organ transplant", they claimed that an organization focused exclusively on strategic planning will neglect the potentially more important need to change its internal culture. Strategic management is a behavioral phenomenon that involves the managers, the structure, the process and the total management system of planning implementation and control (Davous and Deas, 1976).

For Vinzant and Vinzant (1996a; 1996b), strategic management in the public sector involves profound changes in organizational cultures and its successful implementation requires time, resources, strong leadership and commitment. But, strategic management is not without controversy as there are authors that doubt its applicability to the public sector environment. In general, the adoption of private sector models has been viewed with much skepticism in the literature on public administration and public management (Parker and Subramanium, 1964; Ranson and Steward, 1994; Boyne, 1996).

THEORETICAL FRAMEWORK

Institutional theory has been extensively used by academics to explain the adoption of managerial accounting innovations and voluntary disclosures (Ribeiro and Scapens, 2006). Institutionalism describes the adoption of reforms through isomorphic processes that explain the homogeneity of organizational structures within organizational fields (DiMaggio and Powell, 1983). Similarly, resource dependence theorists have also stated that organizational fields can influence the actions of an organization, both through networks and dependency relations (Pfeffer and Salancik, 1978).

Both theories view the implementation of strategic management as a response to the pressures from the organizational field. These theories consider organizational fields as contexts imposing requirements and/or constraints on organizations (Scott, 2008). They claim that if organizations operating within a given context want to be successful, they are obliged to conform to the dictates of their institutional environments (see DiMaggio and Powell, 1983; Powell, 1988). As such, performance information systems have been seen as attractive reforms by elected officials who value their symbolic benefits, but who are reluctant to undertake important changes that could dismantle the traditional civil service (Moynihan, 2009). These theories have overestimated of the role of the taken-for-granted rules in an organizational field (Oliver, 1991; Beckert, 1999; Sandfort, 2003; Cooney, 2007).

However, Scott (2008) argues that corrections and refinements to both theories have recognized, in addition to the influence of organizational fields, the possibility of choice and of agency behaviors among actors -both individuals and organizations. Attention turned to analyzing the role of agency in organization-environment relations--some examples are DiMaggio (1988), Oliver (1991), Scott (1995), Kostova et al. (2008). Several authors (among others, Oliver, 1988; Oliver, 1991; Barman, 2002) have characterized organizations as strategic actors responding to changing conditions.

Oliver (1991) established different types of organizational behavior or strategy--acquiescence, the most likely option, compromise, avoidance, defiance and manipulation--from the analysis of five factors: cause, constituents, content, control and context. These strategies are a result of combining institutional and resource dependence theories. Defiance implies rejecting the change and manipulation is the purposeful and opportunistic attempt to influence institutional pressures to change (Nabatchi, 2007). These two strategies would not be expected in the implementation of a voluntary reform. So, in the implementation of strategic management, local government strategies will range between avoidance and acquiescence.

There is a growing body of literature that has developed the theoretical perspectives and methodologies to incorporate a multilevel analysis of the agency behavior of organizations and individuals (Barley and Tolbert, 1997; Sillince, Harindranath, and Harvey, 2001). Cooney (2007) shows that institutionalization is a highly contentious process involving actors who engage, reject and, sometimes, transform the reform. In short, societal actors may have their own strategy. Burns and Scapens (2000) emphasize that, although institutions shape behavior, they are themselves the outcome of the actions of the individual members of the organization. Therefore, management changes must also be understood in terms of the behavior of individuals: their strategic behavior should not be underestimated. Organizations would be more successful if they dealt with their members' strategies by orienting individuals' strategic choices towards acquiescence.

METHODOLOGY

The Delphi method is a systematic approach for gathering experts' opinions. Henessy and Hicks (2003) define the Delphi method as "a multiple interaction survey technique that enables anonymous, systematic refinement of expert opinion, with the aim of arriving at a combined or consensual...

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