New Public Management
New Public Management
New Public Management
provision. What are the basic prescriptions of NPM? Drawing from several accounts, the following
factors were found to be the most common bureaucratic reform adjustments being attributed to NPM:
organization. It also assumes that management is a distinct and separate activity, and one that plays the
crucial integrative role in bringing together plans, people, and technology to achieve desired results
(Pollitt, 1998). According to him, managerialism must be evaluated from three distinct aspects: first as an
ideology, second as rhetoric and third as a set of practices. 22 Uhr (1990 : 22), defined managerialism as
the pursuit of result-oriented systems of government management through streamlined processes of
decision making designed to allow greater autonomy but also greater responsibility for the field or
program manager.
Dixon et al. (1998 :166) argue that managerialism:
places emphasis on policy management and implementation rather than on policy development and
design in public administration;
stresses efficiency, effectiveness, as against process and equity, in the management of public resources
(involving goal setting, performance benchmarking, performance measurement, performance feedback);
advocates the use of private-sector management practices in the public sector;
seeks to diffuse responsibility and to devolve authority, with the establishment of corresponding
management responsibility and public accountability structures;
shifts the public accountability focus from inputs and process to outputs and outcomes; and
prefers to create a competitive public administration.
Managerialism gained its acceptance in the public sector due to the financial crisis faced by a number of
governments that operated in the traditional way. It was assumed that the private sector values and
business practices support governments in the strategies of making them cost-effective. Managerialism
expects public managers to improve efficiency, reduce burdensome costs and enhance organizational
performance in a competitive stake-holding situation (Dixon et al., 1998 : 164). Advocates of
managerialism do believe that there should not be distinction between public and private sector.
b. Public Choice theory
Public choice theory was the earlier theory applied to bureaucratic organizations against debate over
managerialism (Hughes, 2003). Mueller (1989) argued that public choice theory is a sub-branch of
economic thought concerned with the application of microeconomics to political and social areas. 23
Public choice theorist regarded the traditional public service as a rent seeking source for bureaucrats and
politicians (Lane, 2000). Many arguments were made in support of public choice theory. Minimizing the
role of the government, and making it only as a facilitator, enabler, promoter and regulator can yield
better results. If the role of the bureaucratic organizations is minimum, then market mechanisms shall
grow wider. One argument is that, there will be bureaucratic capture if the policy and operational
functions are combined together. Strategic policy making, setting objectives and evaluating the
implementation of those polices must be the politicians concern. (Armstrong,1998; Dunleavy,1997;
Lane,1997; Minogue,1998). Thus many of the arguments supported the public choice theory as a remedy
for large, inefficient and bureaucratic organizations.
c. Agency Theory
Agency theory came from the Chicago school based on the economic theory that advocate separation of
principals from the agents (Trosa,1997). This theory is also known as principal/agent theory. The
accountability concerns were the main focus for the application of principal/ agent theory in public sector
(Hughes, 2003). In the public sector, there is a difficulty to determine who the owners are and what their
goals. Hence principal/agent concept is unlikely to be effective. It is difficult for the agents to find out
what each principal needs or wants. Agents are less likely to perform in a situation like this. Private
sector also faces similar problems but to a lesser degree. One of the initiatives governments had started
based on this theory is creation of agencies to deliver services and give more autonomy to them (OECD,
1995). Another development based on this theory was contractual arrangement.
d. Transaction Cost Theory
The other key economic theory in the managerial changes has been that of transaction costs; this theory is
concerned with the transactional costs in the public organizations. This theory focused on the reduction
of transaction cost 24 by applying contractual systems in the public service provision in contrast to the
traditional hierarchical co-ordination and decision-making process. According to Gruening (2001), NPM
has been inspired by several theoretical perspectives: public-choice theory, management theory, classical
public administration, neoclassical public administration, policy analysis, principal-agent theory,
property-rights theory, the neo-Austrian school, transaction-cost economics, and NPA and its following
approaches.
REINVENTING GOVERNMENT:
THE IMPERATIVES OF INNOVATION AND QUALITY
Innovation and quality are concepts not frequently associated in peoples minds with
government. Too often, government is seen by citizens, the media, and sometimes by public
servants and political leaders themselves, as plodding, inefficient, bureaucratic, change-resistant,
incompetent, unresponsive, or corrupt. Citizens often complain that governments provide
services that are inadequate, inappropriate, inferior, or too costly of their hard-earned tax
payments. Frequently, people see government officials to be acting in their own interests rather
than responding to the needs of citizens. In many countries, the claim that we are from the
Government and are here to help you is met with popular derision.
Over the past two decades, in the wake of pressures of globalization and technological
innovation and more widespread access to telecommunications systems, citizens in many
countries began demanding more of their governments.
Globalization has brought both benefits and challenges to countries around the world.5
Globalization offers new economic opportunities but also imposes new political, social, technological,
and institutional complexities, especially on poorer countries, that governments must address in order to
stimulate more equitable economic and social development.
Because the pressures of globalization and technological progress will continue to create stronger
challenges for governments in the 21st century, this report describes and analyzes the imperatives of
government reinvention through innovation and quality.
INNOVATION AND QUALITY IN GOVERNMENT REINVENTION
Many political leaders and government officials know that doing things the old way no longer
meets the demands of a more complex and interconnected international economy or the needs of a more
globally-linked and politically-aware citizenry. Globalization has brought stronger competition among
businesses and pressures on governments to create economic, political, and social conditions within
which the private sector can compete more effectively and in which people can develop their human
resources to benefit from participation in productive activities. In their book Reinventing Government,
which influenced reform in the United States and other countries during the 1980s and 1990s, David
Osborne and Ted Gaebler offered another view of innovation and quality in government.6 They described
ten characteristics of what effective governments should be:
1. Catalytic -- governments should steer rather than row and see that services are provided
rather than always delivering them directly;
2. Community-empowering in ways that encourage local groups to solve their own problems
rather than dictating bureaucratic solutions;
3. Competitive rather than monopolistic by deregulating and privatizing those activities that could
be carried out by the private sector or non-government organizations more efficiently or effectively than
public agencies;
4. Mission-driven rather than rule-bound, setting goals and allowing employees to find the best
ways of meeting objectives;
5. Results-oriented by funding effective outcomes rather than inputs;
6. Customer-driven in meeting the needs of citizens rather than those of the bureaucracy;
7. Enterprising in earning revenues rather than just spending tax resources;
8. Anticipatory by investing in the prevention of problems rather than spending to solve problems
after they occur;
9. Decentralized -- working through participation and teamwork among government agencies at
different levels and with groups outside of government; and
10. Market-oriented in solving problems through market forces rather than larger government
programs.
These ten characteristics, or ones similar to them, became the principles for government
reinvention for many federal agencies and state and local governments in the United States, and in the
United Kingdom, Canada, Australia, New Zealand, Portugal and other countries during the 1990s. The
Government of Mexico, in pursuing an Agenda for Good Government, focuses on six objectives that
clearly reflect these principles of reinventing government. In Mexico, the government is seeking ways of
doing more with less, of applying new technologies to make government tasks more efficient, and of
combating corruption through education, prevention, and penalties. As a part of its reform agenda,
Mexico is seeking to create a government of quality under internationally accepted regulations;
professionalizing the public service through career development programs and training; and pursuing
deregulation so that government does not hinder its citizens from participating effectively in the world
economy and from expanding their horizons.
If governments must reinvent themselves in order to satisfy citizens demands and meet the
challenges of globalization through innovation and quality, what do these concepts mean and how are
they applied in the public sector? Quality improvements involve delivering better services or extending
their reach and coverage more effectively and efficiently or improving the capacity of government
agencies to deliver more and better services at lower cost. Innovations are fundamental changes in the
course of action of governments or other institutions in society in more than an incremental way.
Innovations introduce new ideas or ways of doing things that strongly depart from convention or that
require new or unfamiliar forms of behavior and interaction. Few innovations in government are pure
invention; they are more often discoveries combining ideas that have been tried elsewhere that are recast
to meet new circumstances. Changes bringing about higher quality services or improvements in
government agency performance are one form of innovation
Reinventing government through innovation and quality improvement is never an easy process.
Experience has shown that government reinvention through innovation and quality improvement face
strong obstacles and opposition from those benefiting from the status quo. 15 Innovations and quality
improvements often fail when there is not strong support for them by political leaders and heads of
government; when those advocating change within government either are not rewarded for their efforts or
are punished or penalized; and when governments withhold sufficient resources to implement the
changes effectively. Innovations or quality improvements often fail because civil service systems are
inflexible in allowing government agencies to hire the types of people who are needed to implement them
or because of strong opposition within government agencies to changing traditional ways of doing things.
The unwillingness of bureaucracies to cooperate with or support each other, and turf battles or intergovernmental conflicts over resource allocations also undermines the success of innovations.
Political and government leaders, or groups within or outside of government, seeking to promote
quality improvements and other innovations in the public sector must plan not only for the
implementation of substantive changes but also for averting the obstacles that can delay, weaken or
subvert them. Reinventing government is often a long, complicated, and contentious process, but one that
will be essential to meet the challenges of a globalizing society.
Globalization A Driving Force of Government Reinvention
Economic globalization has, more than any driving force, been increasing pressures on
government to respond in innovative ways to the needs of their citizens. In a global market individuals,
households, and businesses trade with each other within and across national borders. Although a
globalizing economy is subject to cyclical spurts of growth and periodic downturns, much like the cycles
of domestic economies, the world economy has grown rapidly since the 1960s. Although regional
recessions in Latin America in the early 1980s, in Africa in the 1980s and 1990s, and in Asia in the late
1990s, and worldwide recession in the early 2000s, temporarily dampened the pace of economic
globalization, they did not reverse it.
Reinventing Government: The Essential Dimensions in a Global Society
In an interrelated global society, governments must take on new roles in creating and sustaining
viable economies, reducing poverty, and raising standards of living. Over the past decade, an increasing
body of knowledge has emerged to describe a set of fundamental roles or functions that innovative
governments perform effectively in a globalizing society. These roles and functions can all contribute to
achieving equitable, sustainable, and participative economic and social development that are reflected in
the United Nations Millennium Development Goals and in other international declarations of human
aspirations.
In the 21st century, four important roles for government can contribute to achieving sustainable
economic and social development. The most crucial of these roles is developing institutional capacity
because it creates the context and the foundation for all of the others. Without strong institutions neither
government nor the private sector can stimulate economic growth or social progress. A second important
role is enacting and implementing policies that create an enabling environment for effective participation
in a globalizing economy. The inability of some countries or population groups to benefit from
international economic interaction virtually assures their inability to achieve economic or social progress.
Third in order to achieve socially equitable economic growth, especially in the poorest developing
countries, the government must focus on pro-poor policies that combat poverty and enhance the
capacities of people who are normally by-passed in the distribution of the benefits of economic growth to
participate more effectively in productive activities on which their livelihoods depend. Fourth,
government has a crucial role in strengthening the capacity of public administration to promote socially
equitable economic growth, enable participation in the global economy, and combat poverty.
Several of the functions of effective governments that are depicted in Figure 1 call for
strengthening the public sectors capacity to cooperate or partner with organizations of civil
society and private enterprise. Innovative governments are seeking ways, first, to strengthen the
roles of civil society organizations and the private sector; and, second, to collaborate with them
in providing services more efficiently and effectively.
As the foregoing descriptions clearly illustrate, governments around the world are experimenting
with many innovative approaches to reinvention. The 21st century began a new era of
globalization, not only for economic trade and investment, but for technological, social, and
political interaction as well. Because of the necessity in an era of globalization for all nations to
participate through open markets in international trade and investment, governments can no
longer centrally plan and manage national economies or merely provide traditional public
services. Global competitiveness will require governments in nations at all stages of economic
development to strengthen market-supporting institutions and the capacity of public
administration. Private businesses, private voluntary organizations, and even informal sector
enterprises are providing more of those goods and services for which user charges can be levied
and from which private companies can derive a reasonable profit. Governments roles will
change drastically from controlling, directing, and intervening in the economy to supporting and
facilitating productive economic activities, providing adequate infrastructure and social
overhead capital, creating and maintaining a competitive business climate, assuring fair market
access, protecting the interests of workers and consumers, and providing for the health, safety
and security of its citizens.
Experience suggests, however, that no single approach to government reinvention is suitable for
all countries. Although they are an important form of government reinvention, public-private
partnerships, for example, are not panaceas for all of the ills confronting governments in
providing services and infrastructure. Public-private partnerships that are carefully planned and
implemented can help governments to improve the quality, reduce the price, and extend the
coverage of services and they can accelerate the construction of infrastructure and facilities that
are crucial for economic development and social progress. PPPs and other forms of publicprivate cooperation can be valuable instruments for leveraging the resources of both the public
and the private sectors and of enhancing the capabilities of national and local governments to
achieve their development goals.
Those governments that reinvent their roles and functions through innovation can play a positive
role in helping citizens and enterprises participate more effectively and share in the benefits of
globalization. Governments that continually reinvent themselves through innovation and quality
improvements can strengthen their relationships with their own citizens, the private sector, and
organizations of civil society. National governments are taking a strong role in shaping the rules
of global interaction so that all countries can benefit equitably from the opportunities and
minimize the burdens of globalization. During the 21st century governments must be efficient,
effective, participative, honest, transparent, professional, responsive, and collaborative if they
are to achieve the goals of socially equitable economic growth and sustainable human
development. Both rapid external economic and technological changes and growing internal
demands from citizens for better services will make innovation and quality imperatives of
good government in a globalizing society.
engagement characterized these relationships. These differences in philosophy and approach are
set out in Table 2 (below).
The New Public Service model approaches public management from the vantage point of
democratic theory, premised on the notion of an active and involved citizenship. Citizens look
beyond narrow self-interest to the wider public interest and the role of public officials is to
facilitate opportunities for strengthening citizen engagement in finding solutions to societal
problems. Public managers need to acquire skills that go beyond capacity for controlling or
steering society in pursuit of policy solutions to focus more on brokering, negotiating and
resolving complex problems in partnership with citizens. In seeking to address wider societal
needs and develop solutions that are consistent with the public interest, governments will need to
be open and accessible, accountable and responsive, and operate to serve citizens. Prevailing
forms of accountability need to extend beyond the formal accountability of public servants to
elected officials in the management and delivery of budgets and programmes to accommodate a
wider set of accountability relationships with citizens and communities.
Similarly, Bourgon (2007) uses the concept of democratic citizenship to open up fresh
perspectives, where the role of public administrators is not confined to responding to the
demands of users or carrying out orders. Her proposed approach to new public administration
contains four elements:
- Building collaborative relationships with citizens and groups of citizens;
- Encouraging shared responsibilities;
-Disseminating information to elevate public discourse and to foster a shared understanding of
public issues;
- Seeking opportunities to involve citizens in government activities.
In placing a fresh emphasis on the public interest and citizens as the focus of public
service, the New Public Service model provides a useful corrective to prevailing notions of
control and steering associated with earlier models of public administration and management.
But it is still far from providing an all-encompassing paradigm that offers the comprehensive
solutions which public sector reforms grounded in earlier approaches have failed to deliver
(Denhardt and Denhardt, 2011; Christensen and Laegreid, 2011). With its emphasis on engaging
citizens as the primary focus of public management the NPS framework is highly normative and
value-driven. Other scholars also highlight the importance of integrating inter-organizational
dimensions of the new public service to capture the significance of the pluralization of service
provision (Perry, 2007). Several other strands of the post-New Public Management
perspective therefore merit attention in the pursuit of a more comprehensive approach. These
respectively focus on whole-of-government approaches, digital governance, and motivation to
redress the problems of organizational coherence and responsiveness associated with NPM,
placing the needs and interests of citizens at the centre of public management endeavour and
extolling a public sector ethos.
The whole-of-government approach arose in response to the lack of coherence and the
coordination problems associated with NPM. In particular, the transfer of central government
responsibilities to specialized single-purpose organizations such as regulatory authorities and
service delivery agencies has undermined the coherence of central government authority and
weakened its capacity to respond to crises and complex problems. Strengthened central
oversight and increased horizontal collaboration implied in the wholeof-government approach is
seen as a necessary corrective to the problems of fragmentation generated by NPM, though
efforts to coordinate government policymaking and service delivery across organizational
boundaries are not a new phenomenon. The whole-of-government approach emerged in
countries such as Australia, New Zealand and the UK which had progressed furthest with NPM
reforms and in which problems of coordination were most evident, though whole-of-government
initiatives have tended to complement rather than supplant NPM reforms in their entirety, in
effect rebalancing the pure NPM model (Christensen and Laegreid, 2007a, 2007b). In this
respect, the creation of the UK Prime Ministers Delivery Unit under the Labour government in
2001 sought to drive up delivery standards and results in priority policy areas through greater
co-ordination, clarity on goals, the formulation of delivery plans, and continuous measurement
of performance. The delivery unit approach has since gained traction in various parts of the