Inter and Intra Government Arrangements for Productivity: An Agency Approach

220 Pages·1998·3 MB·English

by  Elke Löffler (auth.)

INTER AND INTRA GOVERNMENT ARRANGEMENTS
FOR PRODUCfIVITY
Inter and Intra
Government Arrangements
for Productivity
An Agency Approach
edited by
ARIE HALACHMI
Institute of Government
and
PETER B. BOORSMA
University of Twente
Springer-Science+Business Media, B.V.
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-1-4419-5015-4 ISBN 978-1-4757-2864-4 (eBook)
DOI 10.1007/978-1-4757-2864-4
Printed on acid-free paper
All Rights Reserved
© 1998 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1998.
Softcover reprint of the hardcover 1st edition 1998
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including pbotocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner
CONTENTS
List of Figures xi
List of Tables xiii
List of Contributors xv
FOREWORD xix
Kas Kastelein
INTRODUCTION: Warp and Weft XXlll
Peter B. Boorsma and Arie Halachmi
Part I PRINCIPAL-AGENT THEORY IN PRACTICE
1. mE "CONTRACT AND AGENCY STATE" AS A MULTIPLE
PRINCIPAL-AGENT PROBLEM
Elke Loffler
1.1 Introduction
1.2 The "Administrative State" versus the "Contract and Agency State"
from a Principal-Agent Perspective 2
1.2.1 Principal-Agent Theory as a Theoretical Framework 2
1.3 Principal-Agent Problems ofInternal Management 6
1.3.1 The Efficiency Quenstion 6
1.3.2 Principal-Agent Problems of Agency Relationship 7
1.4 Principal-Agent Problems of External Management 9
1.4.1 The Utility Question 9
1.4.2 The Contract Situation between Politician and Admini-
strative Manager 10
1.4.3 The Contract Relationship between Customers, Politicians
and Public Service Providers 11
1.5 Conclusions 12
REFERENCES 12
2. DECENTRALIZATION IN AN INTER-GOVERNMENTAL CONTEXT:
mE UK EXPERIENCE OF MANAGING LOCAL SERVICE DELIVERY
Christopher Pollit, Johnston Birchall and Keith Putman 15
2.1 Introduction 15
2.2 Background 16
2.3 The Particulars of Reform 16
2.4 Conceptual Framework 18
2.5 Findings 19
2.5.1 National Health Service Trusts 19
vi
2.5.2 Grant Maintained Schools 21
2.6 The Pattern of Decentralization and Devolution 23
2.7 The Effects of Reform on Productivity and Quality 24
2.8 Implications for Public Accountability 25
2.9 Conclusions 26
REFERENCES 28
3. PARTNERSHIPS AND NETWORKS AS SELF-ORGANIZING SYSTEMS:
AN ANTIDOTE TO PRINCIPAL-AGENT mEORY
Tony Bovaird and Sudi Sharifi 31
3.1 Introduction 31
3.2 The Concept of Self-Organizing Systems 32
3.3 Self-Organizing behavior in Management Contexts 33
3.4 Public Sector Significance of the Dynamics of Self-Organizing
Systems 35
3.5 Intentionality and learning in Self-Organizing Systems -an
Antidote to Principal-agent Theory? 36
3.6 Partnership and Networks as Self-organizing systems 39
3.7 Case Study: Rural Actions for the Environment 40
3.8 Conclusions 43
REFERENCES 43
4. FRANCHISING IN GOVERNMENT: AN IDEA IN SEARCH OF A
mEORY
Arie Halachmi 45
4.1 A Principal-agent Perspective 46
4.2 A Simple Background of Franchise Funds and Contracting-in 48
4.3 Franchising in Government: from a Concept to a Plan of Action 49
4.3.1 Privatization and Contracting out with Private Vendors: A Look
at Some of the Liabilities 51
4.4 Concluding Remarks 55
REFERENCES 56
5. TRANSFER PRICING IN GOVERNMENT ORGANIZATIONS
NicoP. Mol 59
5.1 Introduction 59
5.2 Budgeting Versus Pricing 60
5.3 Modeling the Trade-off 61
5.4 Budgeting and Pricing as Control Types 63
5.5 Application to Defense 65
REFERENCES 68
Part II PUBLIC PRODUCTIVITY
6. PRIVATE AND MUNICIPAL CARE INSTITUTIONS
Maili Mustonen 69
6.1 Introduction 69
6.1.1 Finnish Municipal Administration and Services 69
6.1.2 Properties of Public and Private Production Organizations 70
vii
6.1.3 Quantity of Private Companies in the Social Services and
Health Areas in Finland 71
6.1.4 Municipal Personnel for 1994 71
6.2 Case Objectives 71
6.2.1 Children's Day-care 72
6.2.2 Evaluation of Day-care Functions 72
6.2.3 Results 72
6.2.4 Care Homes for the Elderly 73
6.2.5 Evaluation 75
6.3.6 Conclusion 75
REFERENCES 75
7. RELATIVE EFFICIENCY OF INTERMUNICIPAL PROVISION
Peter B. Boorsma and Piet de Vries 77
7.1 Introduction 77
7.2 Alternative Service Delivery Modes 78
7.3 The Rationale of the Intermunicipal Arrangement 80
7.4 Some Factors Influencing Relative Inefficiency of an Inter
communal 81
7.5 Summary and some conclusions 84
REFERENCES 84
8. EFFICIENCY AND EFFECTIVENESS OF PARTNERSHIPS IN
SOUTHERN EUROPEAN METROPOLITAN ADMINISTRATION
Javier Font 87
8.1 Introduction 87
8.2 Recent Evolution of Southern European Metropolitan Admi-
nistration: Obstacles to Efficiency and Performance Improvement 88
8.3 Metropolitan Partnerships in Southern Europe 91
8.4 Service Delivery Oriented Partnerships 93
8.5 Strategic and Assessing Partnerships 96
8.6 Recommendations 98
REFERENCES 98
9. INTER AND INTRA GOVERNMENTAL ARRANGEMENTS
FOR PRODUCTIVITY· THE DELIVERY OF JUSTICE SERVICES:
A VIEW FROM PRACTICE
David Grant 101
9.1 Background 10 1
9.1.1 Our Reform Agenda 102
9.1.2 Analyzing our Business and Activating Key Reform Enablers 102
9.1.3 Putting Management Processes and Systems in Place 104
9.1.4 Reshaping the Culture of the Organization Towards a Justice Model
Driven by Citizenship, Embracing the Common Ideals of Customer
Focus, Cost Effectiveness and Continuous Improvement 105
9.2 Examples ofInter Agency Arrangements 108
9.2.1 PSMO 108
9.2.2 BMA 108
9.2.3 Health Services 109
viii
9.2.4 Communications 110
9.2.5 Crown Solicitor 110
9.2.6 Corporate Support to Other Agencies 110
9.3 Re-engineering and Review 111
9.4 The Future 114
9.5 Conclusion 115
10. AN AGENT'S PERSPECTIVE ON EAST-WEST
ADMINISTRATIVE COOPERATION IN THE FIELD OF TRAINING
Nicolas Dubois 117
10.1 Introduction 117
10.2 The Context of East-West Ddministrative Cooperation 118
10.2.1 When IS Meets LM... 120
10.3 Objectives and Constraints of East-West Administrative Cooperation 123
10.3.1 Objectives and Constraints of the Principal 124
10.3.2 Objectives of the Agent 124
10.3.3 Constraints on the Agent Procedures for International and
Bilateral Programs 126
10.3.4 Constraints on the Client 128
10.4 Evaluation of Training Programs 129
10.4.1 Evaluation as an Element of Training Management 129
10.4.2 The Administrative Evaluation of Programs 131
10.5 Conclusions 133
REFERENCES 135
Part ill PUBLIC SECTOR CONSULTANCY
11. PUBLIC SECTOR PERFORMANCE MEASUREMENT IN A
PRINCIPAL AGENT CONTEXT
Geert Bouckaert 137
11.1 Empirical Shifts in Public Sector Financial Management 137
11.2 Neo-Institutionalism as a Theoretical Context for Shifting Realities 139
11.3 Some Reflections and Implications 141
11.4 Conclusions 144
REFERENCES 145
12. DESIGNING AUDIT AND PERFORMANCE SYSTEMS IN A
MULTI-AGENCY ENVIRONMENT: THE CASE OF THE EURO
PEANUNION
Roger Levy 147
12.1 Introduction 147
12.2 Modelling Audit and Performance Systems with Principal-agent Theory 148
12.3 Characteristic Strengths and Weakness of the Existing Systems 152
12.4 A New Architecture for EU Audit and Evaluation? 158
12.5 Concluding Remarks 161
REFERENCES 161
ix
13. CONSULTANCY IN GOVERNMENT: CONDITIONS FOR SUCCESS
OF A 'CHANGE AGENT'
Sirpa Kekkonen and Hilkka Summa 163
13.1 Consultancy in the Context of Public Management Reforms 164
13.2 Internal or External Consultancy? 166
13.3 Conditions for Success 168
13.4 What are Interal Consultancy Units Good For? 169
13.5 Potential Problems in the Consultancy Approach 171
13.6 The Finnish Experience 172
13.7 Concluding Remarks 175
REFERENCES 176
14. ENHANCING THE CAPABILITY OF THE 0 & M TO CARRY OUT
MORE EFFECTIVE STUDIES
AharonKfir 179
14.1 Introduction 179
14.2 The Israeli 0 & M Unit 180
14.3 The Outputs of the 0 & M Unit 181
14.4 Changes in Tendencies and Activities 182
14.5 Methods Used by the 0 & M Unit 183
14.6 The Quality of 0 & M Officers 185
14.7 Suggested Improvements 188
14.7.1 Recommendations 188
14.7.2 Principal-agent Theory and 0 & M 189
REFERENCES 190
NAME INDEX 193
SUBJECT INDEX 197
xi
LIST OF FIGURES
Figure 1-1 The double principal-agent problem in the "administration state" ..................... 4
Figure 1-2 The "contract and agency state" as a multiple principal-agent model ................ 5
Figure 1-3 The agency relationship in the "administrative state" ........................................ 8
Figure 1-4 The agency relationship in the "contract and agency state" ............................... 8
Figure 5-1 Budgeting of service centers ............................................................................ 60
Figure 5-2 Pricing of service centers ................................................................................. 60
Figure 5-3 Managers' analytical plane (Eccles) ................................................................. 62
Figure 5-4 Transfer pricing for unit sales ........................................................................... 64
Figure 5-5 Transfer pricing for package deals ................................................................... 64
Figure 5-6 Comparison on unit sales/package deals outcomes .......................................... 65
Figure 11-1 Rule compliance audit vs performance audit... ............................................... 144
xiii
LIST OF TABLES
Table 1-1 Basic transactional patterns of contract and agency relationships -----------------3
Table 5-1 Antecedent conditions for control (Ouchi)-------------------------------------------62
Table 5-2 Control types related to production in mission centers ----------------------------63
Table 6-1 Care day expenses cost breakdown (FIM) -------------------------------------------74
Table 11-1 General features of performance governance-------------------------------------- 138
Table 11-2a Results of principal/agent information (dis-)equilibrium ------------------------ 140
Table 11-2b Differentiation in agent behavior due to an information (dis-)equilibrium
between principles and agents ------------------------------------------------------- 140
Table 11-3 Budget and policy cycle in a performance management context--------------- 142
Table 12-1 Matrix of audit and performance models------------------------------------------- 149
Table 12-2 Matrix for VFM Relationship in the management of the structural funds ---- 153
Table 14-1 Educational background of 0 & M officers in government--------------------- 187
Table 14-2 Undergraduate majors of 0 & M officers------------------------------------------ 187