Performance Management Meets Red Tape: Bounded Rationality, Negativity Bias, and Resource Dependence

• Published date: 01 November 2020
• Author: Sounman Hong
• Date: 01 November 2020
• DOI: http://doi.org/10.1111/puar.13213

932Public Administration Review • No vember | D ecember 2 020

Public Administration Review,

Vol. 80, Iss. 6, pp. 932–945. © 2020 by

The American Society for Public Administration.

DOI: 10.1111/puar.13213.

Abstract: Governments around the world have implemented reforms to reduce red tape, but little evidence exists about

whether they have achieved their goals. Utilizing a quasi-experimental regression discontinuity design, this research

examines the impact of a policy implemented by the Korean central government to reduce local levels of regulatory

red tape. The findings show, first, that the centrally designed reform significantly reduced local levels of red tape, but

the reduction occurred only among low-performing localities. This supports the claim that organizations’ responses

to positive and negative performance information are asymmetric—the negativity bias hypothesis. This finding is

explained by the bounded rationality view of organizational decision-making. Second, the impact was clearest among

localities with high fiscal dependence on the central government. This supports the resource dependence hypothesis,

which postulates that a policy’s impact depends on the power imbalance between localities and the central government.

Evidence for Practice

• This research explores whether governments can reduce the level of red tape by implementing a performance

management system.

• The Korean central government implemented a performance management system evaluate local levels of red

tape.

• The reduction in the level of red tape was observed only among low-performing localities.

• The more fiscally dependent on the central government a locality is, the greater its response to the

performance management system.

Scholars tend to agree that red tape lowers

public service performance (Brewer and Selden

2000; Kaufman 1977; Pandey and Moynihan

2006). Red tape usually includes a high degree of

formalization and constraint (Bozeman and Scott

1996); excessive or meaningless paperwork (Bennett

and Johnson 1979); and rules, procedures, and

regulations that create inefficiency (Bozeman and

Scott 1996). More formally, public administration

scholars often define red tape as “rules, regulations,

and procedures that remain in force and entail

a compliance burden but [do] not advance the

legitimate purposes the rules were intended to serve”

(Bozeman 2000, 12). As can be inferred from this

definition, red tape is widely viewed as something that

must be overcome (Brewer and Walker 2010).

Policy makers around the world also seem to share the

view that red tape is “bad tape.” In practice, policy

makers often treat red tape and regulatory burdens as

equivalent concepts, introducing various regulatory

reform programs to cut red tape. On December 14,

2017, President Donald Trump held a ceremony at

the White House, literally cutting a red tape tied

between two stacks of papers representing government

regulations (Williams 2017). Subsequently, he

announced his ambitious plan to reduce the size,

scope, and cost of government regulations. In July

2018, the U.K. government implemented a new,

simplified public sector contract to cut red tape and

make it easier for small- and medium-sized enterprises

to apply for government procurement (Bicknell

2018). The Australian government also launched an

ambitious deregulation plan in 2013 and published its

“Annual Red Tape Reduction Report” in 2016.

Clearly, governments around the world have put

forward various reform agendas to reduce red

tape. What is less clear is whether these agendas

have achieved their goals. For instance, many

commentators believe that the Trump administration

eliminated far fewer burdensome regulations than

his administration’s rhetoric suggests (Financial

Times 2018); such a lack of consensus stems partly

from the absence of credible data on the size and

costs of red tape. What is even more puzzling,

given the critical importance of regulatory reform

in government agendas, is that scholars have paid

Sounman Hong

Yonsei University

Performance Management Meets Red Tape: Bounded

Rationality, Negativity Bias, and Resource Dependence

Sounman Hong is Underwood

Distinguished Professor at Yonsei University,

South Korea. His research focuses on

bureaucratic control, innovation, and

reform and how to achieve a more efficient,

responsive, and accountable public

administration. He holds master of public

policy and doctoral degrees from Harvard

University and a bachelor’s degree from

Yonsei University.

Email: sounman_hong@yonsei.ac.kr