Resource Stability and Federal Agency Performance

• Author: Ahrum Chang
• DOI: 10.1177/02750740211005046
• Published date: 01 July 2021
• Date: 01 July 2021
• Subject Matter: Articles

https://doi.org/10.1177/02750740211005046

American Review of Public Administration

2021, Vol. 51(5) 393 –405

© The Author(s) 2021

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DOI: 10.1177/02750740211005046

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Article

Over the last several decades, enhancing the performance of

government agencies has been one of the public sector’s cen-

tral concerns. Accordingly, much scholarly attention has

been given to the antecedents of organizational performance

such as leadership (Fernandez et al., 2010), public service

motivation (Alonso & Lewis, 2001), and management

(O’Toole & Meier, 2003). Scholars have also specified how

managerial skills—including proactive management

(Goerdel, 2006) or innovative management (Walker et al.,

2010)—contribute to improving organizational performance.

Studies also show that when career managers/executives or

other appointees administer a federal program, its perfor-

mance appears to be higher than the program run by political

appointees from the campaign or party (Gallo & Lewis,

2012; Lewis, 2007). As such, “people” appear to be the most

significant element that determines government effective-

ness (Osborne & Gaebler, 1992; Pfeffer, 1994).

However, relatively little attention has been paid to finan-

cial resources as a major source for explaining organizational

effectiveness. Budgets are one explicitly important compo-

nent that constitutes organizational environment, which

would influence its performance and policy implementation

(Meier & O’Toole, 2009; Wildavsky, 1986). For U.S. federal

agencies, the administration’s annual budget proposal for

each fiscal year emerges as a big concern. It not only signi-

fies the administration’s policy priorities but also affects the

agency’s performance for upcoming fiscal year. If Congress

passes all appropriations bills based on the president’s sug-

gestions and Congressional priorities, some federal agencies

are confronted with their proposed budget cuts, whereas

other agencies get a boost in funding for achieving their

goals. In previous literature, some dissents can be heard on

the effect of financial resources on agency performance in

the United States. It has been argued that an increase of the

absolute budget size for federal programs rather deteriorates

their respective performance (Jung, 2013). However, spend-

ing authority from offsetting collections turns out to be posi-

tively associated with organizational performance in the

federal government (Lee & Whitford, 2013). This scholarly

discrepancy may come from several factors such as the dif-

ferent shares of federal budgets examined in each study or

time frames that authors focused on.

Given this, we use a total amount of budgetary resources

of 52 U.S. federal agencies to understand the effect of finan-

cial resources on organizational performance. In general,

government agencies harness the total budgetary resources,

which consist of unobligated balances from the prior year’s

budget authority, appropriations, and the spending authority

1005046ARPXXX10.1177/02750740211005046The American Review of Public AdministrationChang

research-article2021

1University of Georgia, Athens, USA

Corresponding Author:

Ahrum Chang, Department of Public Administration and Policy, University

of Georgia, 355 South Jackson Street, Athens, GA 30602, USA.

Email: ahrumc@gmail.com

Resource Stability and Federal Agency

Performance

Ahrum Chang1

Abstract

Resources are essential for organizations to cope with challenges and to achieve their desirable outcomes. Although much

scholarly attention has been paid to the type or level of resources allocated or used to enhance organizational effectiveness,

relatively little effort has been made to analyze whether and how resource changes influence organizational performance.

Considering today’s unstable fiscal climate, this study focuses on how government agencies respond to their budget

fluctuations—both gains and cuts—and their distinctive impact on agency performance. Using data from the Performance and

Accountability Reports from FY 2004 through FY 2014, we analyze the effect of budgetary resource changes on organizational

performance in 52 U.S. federal agencies. Findings show that agency effectiveness is significantly influenced by budget changes.

In particular, we find an asymmetric relationship between budgetary resource changes and organizational performance. It

appears that budget cuts are not associated with changes in agency performance, whereas budgetary resource gains are

associated with dampened agency effectiveness. Ultimately, this study provides insights into public organizations’ resilience

and calls for considering change management perspectives when exploring resource–performance linkages.

Keywords

organizational performance, U.S. federal government, resource stability, budgetary resources