René Andeßner
Dorothea Greiling · Rick Vogel Editors
Public Sector
Management in
a Globalized World
NPO-Management
Herausgegeben von
D. Witt, München, Deutschland
D. Greiling, Linz, Österreich
Das Management von Non-Profit-Organisationen (NPO), insbesondere des Dritten
Sektors – neben Staat und Privatwirtschaft – wird zunehmend von der betriebs-
wirtschaftlichen Forschung untersucht. In dieser Schriftenreihe werden wichtige
Forschungs- und Diskussionsbeiträge zu diesen gemein- oder bedarfswirtschaft-
lichen Betrieben präsentiert, die von Verbänden, Vereinen, Stiftungen, öffentlichen
Betrieben bis zu Großhaushalten reichen. Die Veröffentlichungen wenden sich
gleichermaßen an Theoretiker und Praktiker.
Herausgegeben von
Professor Dr. Dieter Witt Professor Dr. Dorothea Greiling
Technische Universität München, Johannes Kepler Universität Linz,
Dienstleistungsökonomik Institut für Management Accounting
mit Seminar für Vereins- und
Verbandsforschung (SVV)
René Andeßner · Dorothea Greiling
Rick Vogel
(Eds.)
Public Sector
Management in
a Globalized World
Editors
René Andeßner Rick Vogel
Johannes Kepler Universität Linz Universität Hamburg
Österreich Deutschland
Dorothea Greiling
Johannes Kepler Universität Linz
Österreich
NPO-Management
ISBN 978-3-658-16111-8 ISBN 978-3-658-16112-5 (eBook)
DOI 10.1007/978-3-658-16112-5
Springer Gabler
© Springer Fachmedien Wiesbaden GmbH 2017
This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or
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The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt
from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained
herein or for any errors or omissions that may have been made.
Foreword V
H. Ian Macdonald
1 Introduction
In 1998, Professor Peter Eichhorn and I launched the first of fifteen
symposia which together constitute the story of our particular interna-
tional dialogue. That first event took place in Professor Eichhorn’s then
academic home – Mannheim University – and since that time has visited
York University in Canada (twice), returned once to Mannheim, met in
various ports of call in Germany and Austria, as well as venturing into
Japan and Estonia. The result is not only a significant academic network
that has explored a variety of creative topics, but a collegial community
that has nourished both our personal and professional lives.
Among the novel and even frontier topics that we have tackled under the
broad rubric of The New Public Management (NPM) are Entrepreneur-
ship in the Public Sector: A Contradiction in Terms?, Public Govern-
ance for Public Service, Public Management and Public Marketing: Is
© Springer Fachmedien Wiesbaden GmbH 2017
R. Andeßner et al. (Eds.), Public Sector Management
in a Globalized World, NPO-Management,
DOI 10.1007/978-3-658-16112-5_1
2 H. Ian Macdonald
There a Connection? and others. I know that many of us have been in-
spired to pursue these topics in subsequent research programs and other
international meetings and symposia.
Each year, throughout our journey among those fifteen symposia, I have
tried to provide an overview of the symposium topic to set the stage and
to provide a context for the papers to follow during the two days of for-
mal meetings. At the same time, I have sought to introduce a degree of
academic skepticism about the topic, and today is no exception. The title
– Public Sector Management in a Globalized World – suggests much and
promises more. However, there are two implicit assumptions that must
be challenged at the outset.
First, what exactly is the meaning of a globalized world? Second, in
what manner and to what degree can public management operate within
a globalized world and to what extent can it influence the shape of that
world? The scope for research into this broad topic will depend essential-
ly on the answers to those two questions, and the latitude which the an-
swers provide for exploration of that world.
On the first question (What is the meaning of a globalized world?), it is
surprising what little attention has been paid in the literature and in pub-
lic discussion to a definition of that term. The Concise Oxford Diction-
ary tells us that globalization “pertains to or embraces the whole of a
group of items.” Consequently, the application of the term need not be
universal. It can refer to an extended group of nations or to an agreement
among a particular group of institutions – both public and corporate –
but there is scant guidance beyond that. As a result, the concept has giv-
en rise to a certain mythology and to an overriding assumption that it is a
universal principle that must guide all international relationships and
transactions. In fact, as illustrated by some of the examples which I will
describe today, it is more often than not an empty shell.
On the second question, it is difficult, if not impossible, to design a pub-
lic management framework in support of the globalized objectives. This
has resulted in numerous disappointments and frustration along with:
x self-serving bureaucracies;
x intensification of international hostility;
The Mythology of Public Sector Management 3
x false expectations for the private and corporate world which must
live within the globalized umbrella in terms of public policy;
x costly experiments without compensating results.
In other words, global governance offers an heroic objective which faces
a functional challenge that is virtually impossible to sustain under any
system of public management. Over many years, research into public
management practice and techniques has revealed that they are highly
indigenous. Public management develops and grows from a response to
both local and national values and expectations. Even modern theories
such as the New Public Management must respect those values and ex-
pectations. For example, it is difficult to transfer the form, style and sub-
stance of any Public-Private-Partnership from one jurisdiction to another
without considerable modification and adaptation. To do so may be
courting disaster. I trust that the following five illustrations will provide
ample evidence of this proposition.
2 International Agreements
The modern history of ambitious international agreements is a story of
failed endeavors or results that have fallen far short of hopes and expec-
tations. The League of Nations should have been a model of a successful
international organization, a virtual phoenix risen from the ashes of
World War One.
What happened to the determination that the so-called Great War would
be the war to end all wars? And yet, it was doomed from the outset. The
terms of the peace settlement virtually guaranteed that economic disarray
would follow in its wake. Those responsible for its operation – both po-
litical and bureaucratic – were unable to withstand the new nationalistic
movements not only in Europe but in North America and other parts of
the world. Moreover, it did not succeed because there was not a real will
to succeed. And the public management, closeted in Geneva, was inca-
pable of providing the means to implement even the most modest of the
League’s objectives.
In many respects, the story of the United Nations has been no different.
Guided by the lessons from the failed League of Nations experiment, the
4 H. Ian Macdonald
U.N. was more explicit both in its governance and in the enforcement of
its agreements. However, it was too often frozen by the frosty atmos-
phere of the cold war and then, ironically, so often strangled by a bu-
reaucracy more Machiavellian than responsible. Driven more by theory
than by practical objectives, programs were frequently self-defeating.
Nowhere was that more evident than in the work of allied agencies such
as the IMF and the World Bank. For so many years, the World Bank did
irreparable harm in Africa by insisting on the privatization of state-
owned institutions in order for them to qualify for financial assistance.
Eventually, in 2007, the World Bank admitted that it had been wrong
about that insistence and reversed its direction. The real issue was not
relative public versus private efficiency but corruption, with the result
that corrupt practices were merely transferred from the public to the pri-
vate sector with no real improvement.
It is fair to say that more restrictive regional agreements have fared better
because regional objectives were more clearly defined and attainable.
The most significant examples are the European Economic Community
(EEC) and the North American Free Trade Association (NAFTA). From
the outset, it was clear what obstacles would exist and those obstacles
were faced objectively and with determination. My favorite EEC exam-
ple dates from the negotiating process for the Treaty of Rome in 1959.
From the outset, the original partners realized that the achievement of a
common agricultural policy would pose a fundamental problem. Indeed,
it was the remaining challenge when all other items had been agreed
upon, with a deadline of December 31, 1959, looming. Failure to agree
would doom the whole agreement. The chosen device was simply to
declare the clock to be stopped, frozen at December 31, 1959, until
agreement was reached.
Similarly, the partners in NAFTA recognized from the outset that there
were significant differences in the three parties – Canada, Mexico and
the United States. Although imperfect, allowances were made in the
terms of agreement, the governance protocols, and the operational pro-
cedures to accommodate the obvious differences in size, characteristics
and the significant disparity in productivity among the three partners.
The Mythology of Public Sector Management 5
x China: In the case of China, we are talking about the second largest,
if not the largest, economy in the world after the United States.
Whether China remains in or out, there will be a significant result
globally. If China stays out, we can be sure that it will mount strenu-
ous trade competition for the TPP which could undercut its potential
achievements; if China joins, it could have a dominating influence
on the shape of the TPP and even distort its direction.
4 Climate Change
It would be generally agreed that there is no greater challenge to govern-
ing in a globalized world than the issue of climate change. The climate is
the product of discussions made throughout the world with no overriding
way of coordinating policies to confront such problems or even encour-
aging policy at all. The example of the so-called Kyoto Accord provides
little encouragement for those seeking global solutions.
Moreover, the issue of climate change is, in a sense, a by-product of the
underlying question of economic growth and use of natural resources. It
is over forty years since the publication, in 1972, of The Limits to
Growth with its predictions of the ultimate disappearance of non-
renewable resources. It is also the by-product of the conflict between
environmental degradation and economic growth. Even steady state eco-
nomic production would still not provide for the reduction of pollution
necessary to slow down climate change.
Climate change is the symptom of the environmental problem, but eco-
nomic growth is the underlying source of the problem. The task of deal-
ing with economic growth is compounded by the fact that we are rapidly
approaching a world of eight billion people with huge differential stand-
ards of living throughout that world. How do you tell nations such as
China to accept a future where its citizens will be denied the standards of
living which we, in the West, regard as our entitlement? And who could
make such a declaration and enforce such a policy? The world may still
be globalizing but that fact only magnifies the reality that global govern-
ance will not provide for the solution to the economic-environment di-
lemma. Does that mean there is no hope of progress?
The only hope is for a variety of world leaders to conduct campaigns of
moral suasion. For that reason, the initiatives of Pope Francis this year
will continue to attract widespread interest. As reported in The Guardian
Weekly last February: “This year, the Pope will issue a lengthy message
on the subject to the world’s 1.2 billion Catholics, address the U.N. Gen-
eral Assembly and call a summit of the world’s main religions. The rea-
son for such activity …is the Pope’s wish to directly influence this year’s
current U.N. climate meeting in Paris, when countries will try to con-
clude twenty years of fraught negotiations with a universal commitment
The Mythology of Public Sector Management 9
I predict that we will be hearing more and more about this topic. Unlike
governments, businesses have a freer hand in exploring new global initi-
atives without being under the harsh glare that helps to illuminate public
policy formation.
6.2 FIFA
As soon as I made that declaration in the preparation of this paper, an
example of corporate capitalism that is actually a public sector-private
sector hybrid hit the headlines: that strange creature known as FIFA
which is, perhaps, a global institution without equal and even beyond
comparison. It is really a modern form of old-fashioned mercantilism
only on a global scale. The national football associations are the front
line delivery system of governmental ambitions and mutually self-
serving practices. Indeed, it is “management of a globalized world” on a
formidable scale, featuring high seas pirates in modern dress.
1 Introduction
In the past decades, public universities have experienced substantial
changes in their environments, structures, strategies and processes which
have led to considerable modifications of their role and functions as well
as of the values of higher education (Parker 2011, p. 440). Their culture
has moved towards a market-driven enterprise culture in line with the
new managerialism of the New Public Management (NPM) (Lucas 2006;
Parker 2011). Public universities are continually transforming towards
hybrid organisations, which are competing globally to attract students
and researchers.
As a consequence they place an emphasis on efficiency and effectiveness
in order to deliver value for money. NPM was accompanied by higher
concentration on output and outcome accountability and an increase in
the universities’ autonomy – often coupled with declining public funding
and an increase in student enrolment in many OECD countries (Brügge-
© Springer Fachmedien Wiesbaden GmbH 2017
R. Andeßner et al. (Eds.), Public Sector Management
in a Globalized World, NPO-Management,
DOI 10.1007/978-3-658-16112-5_2
16 René Andeßner, Dorothea Greiling
of legal regulations. In Austria this type was the predominant one for
public universities until the implementation of the University law
(UG) 2002.
global level for students and top researchers. University rankings are
important, and accreditations play an important role, signaling to stu-
dents and resource providers the quality of the products of “research”
and “teaching”. This goes along with a certain degree of standardisation,
intense competition and a certain degree of uniformity as to what type of
research is regarded as marketable or publishable. Universities are com-
plementing their core services with publishing houses, spin-offs, tech-
nology transfer services, market-priced student housing services, etc.
While the NPM-role model is in line with the market logic and a neo-
liberal attitude towards education and research as a commodity, the pub-
lic governance model is rather in line with ideas coming from public
policies. Like NPM, public governance goes along with a new division
of labour between public, non-profit and private actors. While NPM
emphasises on competition, vertical segregation and autonomy, public
governance stresses the virtues of cooperation. Public governance advo-
cates collaborative actions by multiple stakeholders, working smoothly
together in service delivery networks for the greater public benefit
(Schuppert 2011, p. 33). Traditional hierarchical top-down command or
contracting structures are replaced by participatory democratic decision-
making structures involving all crucial stakeholders. This offers the
chance of employing the innovative and creative capabilities of all
stakeholders for the common good. The idea of public governance is
bringing citizen responsibility, democratic participation and political
ideas back to the public discourse.
One key assumption of public governance is that societal problems are
complex and can only be addressed appropriately by joining together
different stakeholder groups. Within public governance the role of the
citizen is a much more active one than in NPM. Public governance
stresses that complex and difficult public tasks call for collaborative
actions by multiple actors (public, non-profit, and commercial) (Greiling
2014). Each actor contributes according to his or her abilities and capa-
bilities.
Looking at the governance structures, principal-agent relationships of
NPM are replaced by polycentric network collaborations. Governance is
always multi-actor governance. This is in line with a multi-stakeholder
20 René Andeßner, Dorothea Greiling
approach which may work if all actors act as stewards for the public
benefit.
With respect to the steering of universities in Central Europe, public
governance is much less prominent than NPM. Elements of public gov-
ernance can be found in stressing the contributions of universities as an
important player in the societal welfare production, the increasing em-
phasis of networking and the rising importance of being well connected
to crucial stakeholders. (Scientific) advisory boards, collaborative net-
works between the (local) industries and alumni networks may serve as
examples for an institutionalised involvement of relevant stakeholder
groups in the university context. Regarding university funding, the idea
of public governance stresses the importance of diversified resourcing.
Each partner in the stakeholder network should contribute according to
his or her (financial) capabilities. The benefits arise from resource-
pooling and a diversified resource basis. While NPM stresses the im-
portance of market-generated income, public governance has a much
broader understanding of resources. However, both models go along
with a shrinking share of state-financing for universities.
The more applied research is, the more it conforms to the specific indi-
vidual interests and the less the free-rider problem occurs. Applied re-
search has many more elements of a private good because those who pay
for it normally want exclusive user rights. Often there is a ban against
the results being published in publicly accessible journals, and the
knowledge created has a lot in common with consulting services. Ap-
plied research can be the starting point for addressing more fundamental
research issues, which has the consequence that positive external effects
might also arise (Brunner 2014, p. 19).
That one has to separate scientific research from applied research by
their very nature is also reflected in the ongoing debate about rigor or
relevance. Applied research is regarded as the type of research which
addresses the current challenges of industries or other societal stakehold-
ers on a much more practical level. Research results which meet the cri-
teria of rigor share much more characteristics of a club or collective good
as they are only of interest to an often small number of members within
the academic community.
Teaching is also more in line with a private good, as it can be exclusive
and is to a large extent marketable. Students gain individual or private
benefits through their studies in the form of individual acquisition of
knowledge and competences. This should lead to improved opportunities
on the labour market and higher earnings (Hölzl 2013, p. 189).
Today, Europe is already facing a shortage of highly skilled labour with
an appropriate university education. A huge gap exists between the Lis-
bon millennium aims for Europe to be the most competitive and dynamic
knowledge-based economy in the world, capable of sustainable econom-
ic growth with more and better jobs and greater social cohesion (see
Lisbon Declaration of the Lisbon European Council of 23 and 24 March
2000) and today’s reality of university graduates. In those cases where
students’ willingness to pay for tertiary education is below the societally
appropriate level, governments intervene with incentives or subsidiaries
for tertiary education. Then tertiary education becomes a merit good. The
decision for providing a merit good is highly political and also influ-
enced by ideological components (Appelt/Reiterer 2004, p. 18).
22 René Andeßner, Dorothea Greiling
These three models are ideal types. They serve as an illustration that
university funding can be positioned in the triangle of self-generated
(market) incomes from sales (e.g. in form of tuition fees or income from
applied research), public subsidiaries and private funds. Many European
universities are state-financed. The average amount of public funding
within the EU is about 72.8% (Estermann/Bennetot Pruvot 2011, p. 27).
The ideal-type models do not provide detailed information about the
allocation of the self-generated funds or in which form the public or pri-
vate funders allocate their grants or subsidies. The practice of fund allo-
cation can change essentially, although the amount of coming from one
income source remains the same. With respect to taxpayers’ money,
there are fundamental changes how the money is allocated to universities
in Austria. Traditionally, Austrian universities got money for personnel,
infrastructure and goods needed. The focus was on input financing.
Nowadays, public money is increasingly allocated on the basis of an
indicator-based lump sum budget (bmwfw 2014, p. 53). Thus, changes in
the allocation mechanism need not necessarily result automatically in a
decrease of the relevance of one particular income source.
Max. 11,377
Fees
common 6,369 10,742 1,906 no fees no fees no fees
First Cycle
Min. 189
Max.
Fees
common 7,105 5,051 1,906 no fees no fees no fees
Second Cycle
Min. 261
Max. 4,281 6,472 5,500 9,413 8,040 8,952
Need-based
common 5,352
Grants
Min. 1,203 120 60
Max. 6,472 9,000 8,952
Merit-based
University Funding in a Globalized World
no no no
Grants
Min. 1,203 1,800 60
Tax-benefits for parents no no yes no yes yes
Family allowances no no yes no yes yes
Tax and contribution ratio
27.5 34.9 38.4 47.6 51.5 39.7 43.8
2014 in % of GDP (1)
Table 1: National Student Fee and Support Systems in European Higher Education.
Main source of the table: European Comimssion 2015
(1) Source: http://wko.at/statistik/eu/europa-abgabenquoten.pdf
(2) Source USA: https://secure-media.collegeboard.org/digitalServices/misc/trends/2014-trends-college-pricing-report-final.pdf
Fees First Cycle USA: $ 7,142 (1 EUR = 1,12 USD), Fees Second Cycle USA: $ 7,968 (1 EUR = 1,12 USD)
25
26 René Andeßner, Dorothea Greiling
5%
1%
4%
lump sum budget
revenues/ reimbursement of
costs (§ 26 und 27 UG)
1%
reimbursement of student
fees
university executive
education fees
73%
Figure 1: Structure of revenues in the performance agreement period 2010 - 2012, shown
as a percentage of total revenues
Source: bmwfw 2014, p. 66.
In our paper we argued that one has to differentiate between the funding
of research and other university services which have more elements of a
private good. If the public or collective good component is dominant, as
in non-applied research, it should be financed by taxpayers' money. To
rely that this part of a university’s portfolio could be financed by cross-
subsidies is highly unlikely or would limit to a great extent the amount of
research which could be carried out.
If one shares the opinion that the private financing of the university sec-
tor should be increased (which not all stakeholders of the discussion do),
a number of challenges, demonstrated by the Austrian case, arise. Espe-
cially in teaching, it will be crucial to fix tuition fees that balance the
goals of strengthening the financial basis of the universities on the one
hand and assuring equal access to higher education on the other. Other-
wise the proposed reforms will not be politically accepted in Austria.
Some reforms will need time and additional investments (for example a
fundraising-infrastructure). They only show positive results after a cer-
tain period. However, remaining inactive would mean accepting a pro-
gressive under-financing of the sector. This is particularly true for a
country with an increasing number of enrolled students in which state
subsidies do not sufficiently reflect this indicator.
Looking at funding systems applied in other countries should be a main
goal for Austria. This is a typical benchmarking approach. "Latecomers"
can definitely learn from the "frontrunners", by analysing which reforms
– inspired by the thought of NPM – were successful and at the same time
being aware of unintended negative consequences. Furthermore, it would
be desirable that the Austrian discussion about educational policy be
more fact-driven and less driven by emotions and competing ideologies.
Finally we can conclude that the case of the Austrian universities seems
to represent an outstanding example for a situation in which specific
processes of globalization in both the public sector and the private act as
drivers of change and force the institutions as well as the state to leave
traditional and familiar procedures and search for new innovative paths
to be fit for the future.
University Funding in a Globalized World 35
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versitärer Lehre: Internationale Beispiele, Erfahrungen und mögliche
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modelle_univers_Lehre_Endbericht.pdf (accessed: 23.06.2015).
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Fragen der Finanzierung öffentlicher Universitäten in Österreich, ed. by
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Christian Funk, Wien, pp. 15-37.
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36 René Andeßner, Dorothea Greiling
1 Introduction
Political theory/philosophy and public-sector management are not syn-
onymous. Political theory is a branch of philosophy. Political theory
addresses fundamental issues of governance and the framework for hu-
man interaction. The extremes of political theory are Marxist collectiv-
ism and Libertarian (Hayek). Collectivism versus libertarianism repre-
sents fundamental differences in the role of individuals and the agglom-
eration of individuals. Social agglomeration is predicated on the benefits
of group interaction. In political theory this is manifested as the role of
the state in implementing collective action. The libertarian point of view
argues that there is danger in the collective and that the state, by its ac-
tions, reduces the freedoms of the individual. These philosophical differ-
ences are reflected in the works of Rawls and Nozick (Nozick 1974;
Rawls 1971).
ates the classic principle – agent problem; that is, to ensure that public
officials operate in the best interest of the principal.
New Public Management (NPM) is a bureaucratic response to the pres-
sures of globalization and enhanced competition. NPM as a tool is predi-
cated on a political philosophy which values private sector activities. The
objective in NPM is to ensure that the state retains ultimate control of
critical service delivery and regulatory functions. The role of the private
sector in a specific activity is, therefore, an empirical construct based
upon a benefit – cost calculation with respect to the efficiency and effec-
tiveness of service delivery and regulatory implementation (Bar-
rows/Wesson 2007).
Network governance is a response to complex issues. There is a funda-
mental distinction between issues and problems. Problems, by definition,
are solvable. War is a problem. Once the decision to engage in hostilities
has been made, the solution to the problem is relatively simple: Win the
war. Issues, on the other hand, are complex and are not amenable to
problem solving. Healthcare is an issue not a problem. If healthcare was
a problem it would have been solved by now. Healthcare is an issue
around the world because there is no unique solution. Healthcare is an
issue which must be managed. The management of healthcare as an issue
is impacted by many variables.
Aristotelian values analysis lies at the nexus between political theory and
public management. Public management is impossible without a political
paradigm. Aristotelian analysis argues that societal values must be well
understood and articulated in order to successfully implement public
management. The famous statement by President Kennedy: ”ask not
what your country can do for you, ask what you can do for your country”
is a succinct expression of societal values and, indeed, was the basis for
the creation of the United States Peace Corp.
2 Globalization
Modern globalization was characterized by the rise of maritime Europe-
an empires in the sixteenth and seventeenth centuries. This period has
been described as the Golden Age of globalization. During the golden
42 Sheila Bergeron-Barrows, David Barrows
x Technical efficiency: doing the most work with the fewest resources;
x Allocative efficiency: allocating resources to the right place, doing
the right job;
x Dynamic efficiency: being able to use new technologies and adopt
new ways of operating.
x Inappropriate cuts that end up costing much more than they save.
Cuts are made even when the negative consequences of the cuts
outweigh the savings; cuts to funding or staff are easily measured,
but the resulting reduction in service quality or accessibility is more
difficult to quantify;
x Inappropriate privatization or outsourcing.
data analytics utilizes the extensive data sets that are available to gov-
ernment, at all levels, to assess patterns of causal relationships. It has
been argued that this approach is the equivalent of “data mining” and is
not theoretically based. On the other hand, governments have access to
databases which available for analysis and which do not suffer from
privacy issues.
For example, the Mayor's Office of Data Analytics (MODA) is New
York City's civic intelligence center. MODA aggregates and analyzes
data from across City agencies, to more effectively address crime, public
safety, and quality of life issues. The office uses analytics tools to priori-
tize risk more strategically, deliver services more efficiently, enforce
laws more effectively and increase transparency (The Mayor’s Office of
Data Analytics 2015). MODA has worked with New York City Fire
Department to update the Risk Based Inspection System. The system is
an algorithm that directs inspections to over 300,000 buildings in the
City. By re-weighting the inspection criteria to identify buildings that
have similar characteristics MODA has created a more accurate risk
map. The result is a reduction in response time to inspect the buildings in
the worst conditions by nearly two-thirds.
NPM implies that there may be best practices which can be benchmarked
internationally. This has led to the creation of numerous benchmarking
initiatives by international agencies such as the OECD. The OECD Pro-
gramme for International Student Assessment (PISA) is a triennial sur-
vey to evaluate education systems worldwide by testing the skills and
knowledge of 15-year-old students (OECD 2015).
Students representing more than 70 countries participated in the most
recent assessment in 2012. A significant finding was that the United
States ranked 35 while Vietnam ranked 17. This appears to be counter-
factual based upon the differential level of economic development be-
tween the United States and Vietnam.
One potential scenario to understand these rankings might be as follows:
“The United States does a superb job in the education of elite and aver-
age students. However, there is an enormous underutilization of human
Globalization and Public Administration 47
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New Public Management, in: Stand und Perspektiven der öffentlichen
Betriebswirtschaftslehre II, ed. by Dietmar Bräunig and Dorothea Greil-
ing, Berlin, pp. 451-458.
Barrows, David and John Smithin (2010), Fundamentals of Econom-
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(2014), Empirical Linkages between Good Government and National
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Rawls, John (1971), A Theory of Justice. Harvard University Press.
50 Sheila Bergeron-Barrows, David Barrows
Peter Eichhorn
Summary: In the 19th and 20th century, national states were a dominant
force, but it seems that a reorganization of the states in the 21st century
is taking place, created by both internal and external reasons. What
could legislation in a new adjusted system look like? The author search-
es for an approach following the hierarchical structure of sovereign
rights.
Keywords: Communities of states, confederations, decision-making au-
thorities, de-nationalization, enforcement legislation, functional states,
sovereignty
1 Introduction
The chosen topic is usually addressed by political scientists and legal
scholars. They focus on legal or factual structures and processes and
examine norms, types and sets of rules of the political-administrative
system and its current developments. Basically, they deal with polity and
politics.
The focus of interest in this article lies more on aspects of policy. The
author considers whether a business management approach can help the
states to “manage” the transition from national states towards a federa-
tion of states.
possibly together with the Kurds residing in the massive border regions
between Iraq, Iran and Syria. On a smaller scale, those movements are
observable globally, for example in Sudan and Ethiopia, in Canada, Chi-
na and India. In Europe the Basques, Catalans and Scots have been try-
ing to become independent, as well. All of them share a common dissat-
isfaction about the (from their perspective) outdated concept of a nation-
al state. The legislation, even if it is federally organized, is said to not
care enough about peculiarities and ideas of ethnic groups. As minori-
ties, they claim independence from the majority with regard to their own
language, cultural life, practice of religion, pre-school and school educa-
tion, legislative self-determination and local autonomy.
On the other hand, many national states face an additional challenge
which, due to external developments, stems from global economization,
logistics as well as information and communication technology. People,
capital, firms, goods, as well as services, energy, (property, usage, pa-
tent, copyright) law and disposal (for instance of radioactive waste) have
long surpassed national borders, and continue to do so. Some local econ-
omies virtually live on in- and out-commuters, imports and exports,
transit and development aid (for instance in Sub-Saharan Africa) while
respective national states degenerate to ‘functional states’. They ‘func-
tion’ or manage their tasks only due to support like international cooper-
ation, international trade agreements, supporting free trade zones and
even common currencies.
As a result, national states seem to break up because of both internal and
external reasons. The traditional scheme of nationally limited collective
or partially state-run elections, parliamentary legislation and executive
governments and administrations is beginning to disintegrate. By means
of de-nationalization, states inevitably lose sovereignty rights, because
on the one hand they give it away “upwards”, i.e. to bigger institutions,
on the other hand “downwards”, i.e. by granting them to minorities. In
democratic countries, more and more voices and publications can be
noticed that question the conventional model of democracy, using the
term ‘post-democracy’. However, it remains unclear what a solution
could look like. Can proven principles of separation of powers, of a con-
stitutional state (legality and legitimacy), of representative democracy
and local self-government be retained in a new system?
Federal States instead of National States 53
tional states for the most part – a tripartite public hierarchy with clear
federal structures and responsibilities of the confederation, the member
states and their federal states should be implemented. This would enable
a political-administrative system aimed at decisions instead of tasks.
Transparency and efficiency would be enabled because the constitution
of the confederation includes a framework of rules. Examples: The legis-
lation of the confederation overrules the legislation of the member states,
and this legislation overrules the legislation of their federal states; the
organs of the confederation are responsible for foreign and defense poli-
cy; the government also decides about the costs and the financing of the
legislation; the taxation system avoids mixed financing; the public budg-
ets must be balanced every year and public wealth has to be maintained;
legal disputes regarding the decision-making authority are ruled by a
constitutional court of the confederation.
The following section describes exemplary decision-making authorities
of the states in regard to the educational system (Ad 1) and the utility
sector (Ad 2).
Ad 1: The confederation as the spearhead defines compulsory education,
structure of schools, general objectives of learning and education, core
subjects, requirements for being a teacher and standards for the school
supervisory board. The member states decide on strategies to realize
these guidelines, especially about the mix of public and private schools,
general and vocational schools, schools for children, juveniles and adults
and the respective admission requirements. A more market-economy or
more planned-economy approach to steering the schools and the school
management would most likely also be a part of the schooling strategy.
The federal sub-states then manage the details of the implementation.
Here, the focus would be on needs, quality criteria for subjects and
teachers, support measurements, incentive structures, social mobility for
and integration of students, examination requirements, study results,
comparison of education approaches, pedagogic reforms etc. On the
local, communal level, decisions about the choice of subjects, location of
schools, buildings, sport facilities, infrastructure, school board and
school administration, costs, financing, performance and competitiveness
are made.
56 Peter Eichhorn
References
Eichhorn, Peter (2016), Mehr Management im öffentlichen Dienst, 2nd
edition, Hamburg.
Zippelius, Reinhold (2010), Allgemeine Staatslehre / Politikwissen-
schaft, 16th edition, München.
Welfare-oriented Social Accounting
1 Introduction
For more than 40 years (Eerma 2014), approaches for identifying the
contributions of single economic units to the success of society have
existed, called social accounting. However, they are only partly oriented
to social success in the sense of looking for situations that signal an in-
crease in the welfare of society. This is due to different schools, tradi-
tions and thoughts of dealing with activities of public economic units,
especially public enterprises. Three main concepts of orientation for
activities of public enterprises compete. The first is based on conven-
tional welfare theory and attempts to answer the question of how public
enterprises should behave in order to contribute to welfare maximisation
(Blankart 1980; Bös 1986; Rees 2006; Brown/Sibely 2008; Institute of
Public Utilities Regulatory Research and Education 2012; Frisch-
mann/Hogendorn 2015). The second school considers public enterprises
as a means for public policy to accomplish specific objectives (Thiemey-
er 1975; 1978; Thiemeyer/Cox 1990). According to Ritschl (1925; 1970)
and Hirsch (1992), the third argumentation refers to a dual economy, in
which the public sector has to safeguard the sustainability of society and
the private sector has to organise production, with rather limited external
effects.
These different schools of thoughts are also reflected in social account-
ing. Extended social accounting with respect to the third approach (the
dual economy approach) is missing. Attempts which stem from Business
Administration and “Betriebswirtschaftslehre” literature are more asso-
ciated with the second approach of expressing social success by means
of specific objective attainments.
Some firms want to express how they influence internal and external
stakeholders by effects not expressed in commercial accountings. This
leads to social audits (Schmitz 1980) mostly in the form of reports and
the listing of advantageous and sometimes disadvantageous effects. To
put the focus on showing that the knowledge and stock of labour is of
special value to a firm or the society, human accounting (Hermansson
1964; Brummet 1969; Flamholtz 1971; Neubauer 1974; Conrads 1976)
was evolved. Corporate social accounting considers the social effects of
public and private firms and takes different forms depending on the way
the social value of effect is measured, e.g. by cost effectiveness and utili-
ty analysis (Linowes 1986; Abt 1972; Monsen 1972; Elliot-Jones 1973;
Eichhorn 1974; Mühlenkamp 2007). Sometimes indicators or functions
of indicators are used to signal social advantages and disadvantages in
social indicator analysis (Dierkes 1974; Mintrop 1976; Fischer-
Winkelmann 1980; von Wysocki 1981; Schmitz 1980; Schauer 2007).
The social indicator analysis also includes citizen values analysis
(Schwalbach/Schwerk 2008; Schwalbach/Schwerk/Smuda 2009), meas-
uring effects on the jurisdiction city and its population by extending
profits and losses by financial effects occurring to the city. Social ac-
Welfare-oriented Social Accounting 61
consumer surplus
+ turnover
+ monetary value of external effects*
- producer surplus (as factor price distortion)
- costs
- monetary value of external effects
If there are no external effects and no factor price distortion one receives
a sum showing the consumer surplus and the usual producer surplus. Its
maximisation leads to marginal cost pricing (Brown/Sibely 2008). How-
ever, in social accounting one is not interested in determining optimal
situations, but in measuring the welfare of mostly sub-optimal situations
(in Figure 2 within the Kaldor-Hicks space). Optimal solutions in the
sense of a welfare function maximum are mostly situated at the north-
eastern margin of the possible welfare situation curve (see Figure 1).
Direct social benefits are measured by consumer surplus and turnover
related to the economic unit operations. Some social benefits are meas-
ured indirectly. Income increases, monetary value of time savings, de-
crease of costs, e.g. of self-instruction, less compensation from insur-
ance companies, reductions in contributions of other institutions, or
higher values of shadow prices, higher values based on hypothetical
demand functions (Flores 2003), increases in property values and higher
leases express a higher ability to pay for external effects of the economic
unit operations because of improved services. Social costs incurred are
determined by costs and factor distortion oriented producer surpluses.
Methods used to identify social benefits serve to measure external social
costs as well.
Second, the group of people, economic units, etc. whose welfare should
be measured should be determined. That is rather complicated as the
nation-wide welfare of Estonians, EU-wide or global welfare or regional
or municipal welfare could be measured. The willingness to pay ap-
66 Diana Eerma, Peter Friedrich
proach uses prices, and some of the services also refer to other states,
which are partly determined on a national or EU-wide basis, and Europe-
an capital markets are becoming more and more integrated. The region
where changes in welfare occur is mainly the one in which the econom-
ic unit is embedded by its performance operations, delivery and pro-
curement activities.
Third, the resulting situation if no activities occur, e.g. the economic
unit under investigation is not active – is important for measuring its
welfare contribution. Assuming such a kind of alternative situation is
critical because in a commercial bookkeeping system the alternative
situation is that of non-existence of the firm mostly with profit of
zero. In the case of a public office, there could be another institution that
takes over the duties. The true welfare contribution would consist of
the difference of net benefit to the next less advantageous organisa-
tional solution. As an approximation, it is assumed that the public
office social net benefit vanishes, if it does not exist.
Fourth, because economic units work together to create social success,
rules to assign social success to economic units must be available.
These deferrals should be made according to the volume of activities the
economic units share in production. Related to this problem is the ques-
tion of which sequence of effects should be taken into account. In order
to reduce information problems, the authors consider the sequences of
transactions and effects that are more directly linked to the economic
unit. This automatically restricts the number of people and the size of
the considered region in the social accounting as well.
Fifth, long-term activities of the economic unit existing more than one
period lead to stocks of social benefits (so-called social assets). The long-
lasting social costs occurring more than one period result in social liabili-
ties (Friedrich 1991; Eerma/Friedrich 2012; Eerma 2014). The current
social effects existing in the year of ex-post analysis are related to flows
called current social benefits or current social costs. Due to data availabil-
ity and the principal organisation of the authors’ welfare-oriented social
accounting, the period of ex-post analysis is chosen as one year.
Welfare-oriented Social Accounting 67
Sixth, there are two organisational ways to define the social accounting
approach based on the willingness to pay approach. One can develop a
totally new social accounting approach. A second way starts from equa-
tion (1). The willingness to pay can be rearranged.
turnover commercial
- costs accounting
consumer surplus
+ value of positive external effects additional
- producer surplus as distortion on factor markets social
- value of negative external effects accounting
Net Benefit
A part of the willingness to pay is already considered in commercial ac-
counting, which allows developing an additional social accounting system
that supplements the existing commercial one. The following connections
exist:
(2) Welfare-oriented social accounting = an additional social account-
ing + commercial bookkeeping
(3) Current social net benefit = additional social success operating
statement + commercial profit and loss account
(4) Total social balance = additive social balance + commercial bal-
ance
The social accounting consists of the commercial accounting and of that
part of social accounting not considered in commercial bookkeeping,
called additional social accounting.
An adaptation of the chart of commercial accounts (revenues and ex-
penses) to identify correctly profit and stocks assets, liabilities, etc. is
needed. For the additional social accounts, a chart has to show the cur-
rent social benefits and current social costs and social benefits as stocks
(social assets) and social costs as stocks (social liabilities). The additional
social accounting also applies double-entry bookkeeping. There is a social
68 Diana Eerma, Peter Friedrich
cash account that assembles the counter bookings. Special deferral ac-
counts are necessary to defer the social benefits and social costs that are
caused by other economic units involved in transactions indicating the
part of willingness to pay which is not due to the economic unit under
investigation. In the chart, social assets, social liabilities, current social
benefits and current social costs appear. There are technical accounts
comprising opening balances, final social balance, final total social bal-
ance, the social success operating statement, and the deferral accounts for
stocks and current social benefits and current social costs. The stock ac-
counts are defined according to types of long-lasting benefits (e.g. social
assets) and social costs. The current social benefits and current social
costs are defined according to the operations of the economic unit.
In both parts – the commercial and the additional social accounting –the
welfare-oriented ex-post analysis starts with an opening balance of the
final stocks of the past period. With respect to the commercial part, the
revenues and expenses are booked in stock and current accounts. The
remainder of the current accounts end up in the profit assessment ac-
count, and the resulting profit is transferred to the final commercial bal-
ance. The remainder of the stock accounts also end up there. In the addi-
tional social part, some commercial stocks not considered in commercial
accounting might be added, e.g. old book stocks of the university library.
Then the transactions with respect to stocks are booked as well and de-
ferrals take place. The booking of the transactions implying current ben-
efits and current accounts follows. Deferrals are made. The remainders
of the current social benefits and current social costs are collected within
the social success operating statement and the current social net benefit
determined. The latter is booked to the final social balance as well as the
remainder of the stock accounts. In a last step, the final social balance
and the commercial balance are aggregated to a total social balance (see
Table 1). The commercial assets and the social assets appear there, as
well as equity capital, the commercial liabilities, the social liabilities, the
net social capital and the current social success, thus showing the contri-
bution of the respective economic unit to the social welfare, e.g. in Esto-
nia.
Welfare-oriented Social Accounting 69
Pareto Bergson
Socialist valuation
u1
Rawls
u2
A Pareto
C
u1
u2
Table 1: Total social balance (commercial and additional social balance), (in m. EEK)
Source: Authors’ compilation.
labs? One also needs distribution keys when joint social benefits or so-
cial costs of services occur. Deferral criteria directed to products be-
come necessary. The developer of the type of product unit oriented so-
cial accounting is challenged by assignment of stocks to products.
economists familiar with the approach. There are small investment costs.
The principle development is already done (Eerma/Friedrich 2012;
Eerma 2014). An economist together with an expert for the respective
faculty might need one month to determine the chart and kinds of book-
ings for a faculty. To develop this for the whole university might be a
project lasting one year for a small team consisting of economists, an
expert of the central university administration and bookkeeping, and of
the medical faculty.
The concept of welfare-oriented social accounting is developed for inter-
nal auditing. Whether it should be used for external auditing (e.g. court
of auditors) has to be decided when all features of the bookkeeping ap-
proach have been designed. An aggregated version of the additional so-
cial success operating statement, the additional social balance and the
total social balance should be published.
public and educational sector of Estonia, which is not available for Esto-
nia.
References
Abt, Clark C. (1972), Social Audits: The State of the Art, Paper pre-
sented at the conference on corporate social accounting, New York.
Adler, Mathew and Eric Posner (2006), New Foundations of Cost-
Benefit Analysis, Cambridge.
Amman, Hans and John Creedy (1996), General Equilibrium and Wel-
fare, Cheltenham.
Anand, Paul (2011), New directions in the economics of welfare: Spe-
cial issue celebrating Nobel Laureate Amartya Sen’s 75th birthday, in:
Journal of Public Economics, vol. 95, no. 3-4, pp. 191-192.
86 Diana Eerma, Peter Friedrich
Savitz, Andrew and Karl Weber (2006), The Triple Bottom Line, San
Francisco.
Schauer, Reinbert (2007), Renaissance der Sozialbilanzen, in: Stand
und Perspektiven der Öffentlichen Betriebswirtschaftslehre II, ed. by
Dietmar Bräuning and Dorothea Greiling, Berlin, pp. 719-728.
Schmalenbach, Eugen (1926), Dynamische Bilanz, Leipzig.
Schmidt, Fritz (1921), Die organische Bilanz im Rahmen der Wirt-
schaft, Leipzig.
Schmitz, Bernd (1980), Gesellschaftsbezogene Rechnungslegung für
Altenpflegeheim, Baden-Baden.
Schwalbach, Joachim and Anja Schwerk (2008), Corporate Govern-
ance und Corporate Citizenship, in: Handbuch Corporate Citizenship, ed.
by Andre Habich, Rene Schmidpeter and Martin Neureiter, Berlin, pp.
71-85.
Schwalbach, Joachim, Anja Schwerk and Dieter Smuda (2009),
Stadtrendite – Der gesellschaftliche Nutzen von Wohnungsunternehmen,
in: Neue Grenzen städtischer Wirtschaftstätigkeit: Ausweitung versus
Abbau?, ed. by Peter Haug and Martin Rosenfeld, Baden-Baden, pp.
137-148.
Sen, Amartya K. (2001), Development as Freedom, Oxford and New
York.
Theil, Henri (1967), Economics and Information Theory, Amsterdam.
Thiemeyer, Theo (1975), Wirtschaftslehre öffentlicher Betriebe, Rein-
bek bei Hamburg.
Thiemeyer, Theo (1978), Apriorische versus empirisch-kasuistische
Preistheorie, in: Kosten und Preise öffentlicher Unternehmen, ed. by
Gesellschaft für öffentliche Wirtschaft und Gemeinwirtschaft, Berlin, pp.
36-57.
Welfare-oriented Social Accounting 93
Daniela Haugeneder
1 Introduction
Information and communication technology (ICT) is an essential tool
which supports us in handling many parts of daily life properly, but still
changes our private and business lives significantly into an Information
Society (Webster 2014). According to Krcmar (2010) “information and
communication technology includes any available resource for saving,
processing and communication of information”. In the last decades, the
rapid development of ICT resulted in providing great amounts of infor-
mation available at any time and place which have to be processed by
ICT. The ICT landscape, consisting of multiple information systems, can
be found in all industrial sectors as well as in public and non-profit enti-
ties like hospitals or universities. In the 1980s, ICT was already seen as a
driver for innovation to be more competitive by changing the established
work process (McFarlan 1984).
Main reasons for implementing ICT are cost reductions in terms of coor-
dination, communication and information processing and enhanced work
efficiency and productivity in all sectors (Behrendt 2009; Haas 2005;
Brynjolfsson/Hitt 2000). Decreasing medical and medication errors is an
additional driver to apply ICT (Carayon et al. 2009; Aarts/Ash/Berg
2007). In particular, the health care sector is facing great challenges due
to increased costs in the last years. Aging of the population and progress
in medical technology applications are regarded as the main reasons
(Riedel/Röhrling 2009). In Austria the health care costs rose from 8.4%
in 1990 to 10.8% of the gross domestic product (GDP) in 2013 (Statistik
Austria 2015). This consequently leads to significant investments into
ICT in the health care sector to improve the efficiency and competitive-
ness (Devaraj/Kohli 2000).
Besides the cost and efficiency improvements achieved through ICT, the
changing organisation in combination with ICT is an essential part which
has yet to be considered. ICT is able to enhance and facilitate business
processes and work tasks which results in changed organisational pro-
cesses (Brynjolfsson/Hitt 2000). The topic of organisational changes
with ICT is discussed intensively in the literature and dates back to the
1960s (Leavitt/Whislers 1958). Different aspects of organisational
change and ICT like innovations and their problems and changing work
practices are mentioned in the literature (Keen 1981; Brynjolfsson/Hitt
2000). Many of these studies are conducted in the private sector. Never-
theless, public entities like hospitals face different challenges in relation
to organisational change and ICT as well. A key for successful ICT im-
plementation is based on well-implemented ICT which improves clinical
performance and produces positive individual and organisational out-
come (Carayon et al. 2009). Medical staff members of hospitals have a
strong and distinct professional identity and are typical knowledge work-
ers (Alvesson 2001). Professionals execute complex tasks based on their
knowledge, controlling their own work which results in standardisation
of skills. This means, that they act quite independently from other col-
leagues but closely to their customers (Mintzberg 1979). Universities,
ICT as a Driver for Organisational Changes 97
2 Theoretical background
Referring to the research topic above, we choose the theory of Profes-
sional Bureaucracy, Institutional Logics and the Contingency theory, in
order to look at the problem from the organisational science perspective.
their work into simply executed steps. Moreover, the technical systems
pull the professionals into a closer working relationship with their col-
leagues and force them to work in multidisciplinary teams (Mintzberg
1979). However, professionals are concerned that applying ICT imper-
sonalises the relationship to their patients. Formerly, the ICT systems
were simple to use but nowadays the high developed systems lead to-
wards a hybrid structure of professionals (Mintzberg 1979).
On the one hand, public enterprises, like for example hospitals, have the
social goal to achieve treatment for all patients in best quality. Physi-
cians feel a strong occupational identity with their job following their
guidelines to help people to get healthy and offering the best treatment
for all. In respect to this, occupational identity is defined by a set of cen-
tral, distinctive, and enduring characteristics that personify the work
(Van Maanen/Barley 1984). On the other hand, they have to reduce the
costs driven by state and market forces. All hybrid organisations have to
find ways to deal with the multiple demands they are exposed to
(Pache/Santos 2012). The pervasiveness of hybrids is explained by the
increasing prevalence of pluralistic institutional environments which
means that there are different institutional logics which are not always
compatible with each other (Greenwood et al. 2011).
Hence, this research paper focuses on two different dominant competing
institutional logics. On the one hand, there is health logic in connection
to the medical staff and health care provision. On the other hand, engi-
neering logics arise due to the innovation of new work processes by ICT.
Both institutional logics have separately well-defined practices to exe-
cute their work tasks. The relationship between these two logics consists
of a lack of shared context and understanding (Bechky 2003). Each
group defined as an occupational community has their own wording
building up syntactic and semantic boundaries (Carlile 2004).
Nevertheless, both groups have the main goal of constituting good health
provision for the people. Medical staff applies their knowledge and expe-
rience to their patients to get them healthy. IT-engineers support the
medical staff by applying innovative ICT. Hence, both occupational
communities and their institutional logics have to transform their under-
standings and practices to collaborate with each other and face the chal-
lenges of new ICT innovations and ICT implementations in the hospital
for better treatment for the patients (Bechky 2003; Reay/Hinnings 2005).
(Weill/Olson 1989). Its position lies in the middle between two extreme
views. On the one hand, there are universal principles of organisation
and management. On the other hand, each organisation is unique and has
to analyse the situation separately (Zeithaml/Varadarajan/Zeithaml 1988,
p. 37). Summarised by Szilagyi and Wallace (1983) the contingency
approach can be described as “…attempts to understand the interrela-
tionships within and among organizational subsystems as well as be-
tween the organizational system as an entity and its environments. It
emphasizes the multivariate nature of organizations and attempts to in-
terpret and understand how they operate under varying conditions …”.
Hence, the contingency approach suggests that a number of variables
influence the organisation and its performance and effectiveness
(Entwistle 2011; Zeithaml/Varadarajan/Zeithaml 1988).
Contingency theory built on instrumental rationality resulting in that the
organisations analyse their technical environment and plan appropriate
strategies in anticipation of profitable benefits (Entwistle 2011). The
variables can be divided into external (competition, environment, eco-
nomic situation, laws and regulations etc.) and internal (strategy, compa-
ny size, products, leadership style, ICT etc.) ones (Vahs 2012; Kie-
ser/Walgenbach 2010; Weill/Olson 1989). The better the variables and
the organisation fit together, the better the performance and effectiveness
of the organisation (Greenwood/Hinings/Ranson 1975; Zeithaml/Vara-
darajan/Zeithaml 1988). Hence, it is important to identify essential con-
tingency variables for determining the most effective internal organisa-
tion design (Zeithaml/Varadarajan/Zeithaml 1988). Contingency theory
often focuses more on outcome and effectiveness of contingency varia-
bles than on changed processes.
Here, the examined contingent variable is ICT. There are several studies
about the impact of ICT in relation to the company’s performance in the
private sector (Umanath 2003; Fry/Slocum 1984; Staehle 1976). Never-
theless, there are no studies about professional organisations examining
the impact of ICT with respect to the performance of hospitals by im-
proving the processes and reducing the costs. The fit between the ICT
applied and the professionals in the hospitals has to be investigated ex-
amining the acceptance of the physicians relating to the applied ICT. The
literature discusses the topic of fit between ICT and organisations inten-
ICT as a Driver for Organisational Changes 103
3 Research design
There are different studies about organisational and institutional changes
in health care organisations losing dominance and legitimacy done by
physicians in the United States. Healthcare organisations are changing
from professional dominance to managed care organisations (Scott et al.
2000). So far, the topic of technical engineers and medical staff, both
professionals, as two different subcultures working together by imple-
menting and applying ICT in hospitals is yet an under-researched topic
in Europe and particularly in Austria. Therefore, in order to get a deeper
insight into this topic, we chose to apply a qualitative research design
(Atteslander 2010).
104 Daniela Haugeneder
References
Abbott, Andrew (1988), The system of professions: An essay on the
division of expert labor, Chicago.
Abernethy, Margaret A. and Johannes U. Stoelwinder (1990), The
relationship between organisation structure and management control in
hospitals: an elaboration and test of Mintzberg's professional bureaucra-
cy model, in: Accounting, Auditing & Accountability Journal, vol. 3, no.
3, pp. 18-33.
ICT as a Driver for Organisational Changes 105
Hiroko Kudo
1 Introduction
The Italian local government system, especially the intermediate prov-
ince and the Prefect, has been developed from its Napoleonic tradition
into a unique direction. This paper analyses the last 25 years of its re-
forms, beginning in the early Nineties, and tries to identify the reform
drivers from two dimensions; Europeanization (Graziano 2013), and
public management and governance rhetoric.
The first series of reforms was implemented in the field of public admin-
istration (Bertonazzi 1998) following international NPM trends and itself
was considered a “miracle”, since Italian public administration had been
considered too old fashioned to be reformed at the beginning of the
© Springer Fachmedien Wiesbaden GmbH 2017
R. Andeßner et al. (Eds.), Public Sector Management
in a Globalized World, NPO-Management,
DOI 10.1007/978-3-658-16112-5_7
112 Hiroko Kudo
tures and therefore have different needs and require different public ser-
vices.
Thus, these theoretical backgrounds show importance of decentralisation
and its organizational settings, in relation to NPM. Furthermore, creation
and reinforcement of intermediate level of local governments and ag-
glomeration process have been promoted in order to improve public ser-
vices, thus following the New Public Governance rhetoric.
The Law N.56 of 7 April 2014 defines the detailed design of the future
of the intermediate level local governments, which would be metropoli-
tan cities and union of municipalities. Provinces would be abolished;
meanwhile small municipalities are encouraged to merge.
It is interesting to note that this institutional reform, which has been re-
peatedly discussed, but has failed many times over many years, is to be
realised, thanks to the pressures from the EU and for financial reasons,
not for the domestic political reasons and managerial requests. As dis-
cussed previously, major reforms in Italy have been indeed strongly in-
fluenced by the European integration process and seem to prove the Eu-
ropeanization; however, while rational perspective could be identified
through political actors, sociological perspective cannot be found in the
recent reform on provinces.
With the delegation of functions to Regions from the State, realised by
the Constitutional Reform, local offices of the States have been rational-
ised and reorganised under the office of Prefects. The futures of these
functions should be discussed during the reform process. This process
confirms the NPM-driven management reform, but has little to do with
Europeanization. Thus the recent reform process regarding intermediate
level of local governments in Italy shows various contradictions: abol-
ishment of provinces can be understood as a fruit of European financial
pressure, thus with Europeanization, it contradicts the decentralisation
policy and shows centralisation tendencies, abandoning thus the public
management rhetoric as well; reform on Prefects shows, on the other
hand, that it is rather independent from European policy, and is in line
with organizational rationalisation of public management.
5 Discussion
Provinces in Italy, as an intermediate local government unit, have
changed their functions and roles during the reforms. They have gained
more coordination functions from municipalities, and especially in met-
ropolitan areas, they were designed to become a new entity called “met-
ropolitan cities” (Vandelli 2014). The reform process was influenced by
the Constitutional Reform in 2001 and especially by the role of Regions.
Until then, the whole reform process can be explained with Europeaniza-
Europeanization or New Public Governance? 125
References
Agranoff, Robert and Michael McGuire (2004), Collaborative Public
Management: New Strategies for Local Governments, Washington.
Arachi, Giampaolo and Alberto Zanardi (1998), Federalismo e pereq-
uazione regionale: lavori in corso, in: La finanza pubblica italiana, Rap-
porto 1998, ed. by Luigi Bernardi, Bologna, pp. 135-158.
126 Hiroko Kudo
Legal References
Legge 8 giugno 1990, n.142, “Ordinamento delle autonomie locali”,
pubblicata nella Gazzetta Ufficiale, n.135 del 12 giugno, Supplemento
Ordinario n.42
Legge 7 agosto 1990, n.241, “Nuove norme in materia di procedimento
amministrativo e di diritto di accesso ai documenti amministrativi”, pub-
blicata nella Gazzetta Ufficiale, n.192 del 18 agosto 1990
Legge 25 marzo 1993, n.81, “Elezione diretta del sindaco, del presidente
della provincia, del consiglio comunale e del consiglio provinciale”,
pubblicata nella Gazzetta Ufficiale, n.72 del 27 marzo 1993
Legge 23 febbraio 1995, n.43, “Nuove norme per la elezione dei consigli
delle regioni a statuto ordinario”, pubblicata nella Gazzetta Ufficiale,
n.46 del 24 febbraio 1995
Legge 15 marzo 1997, n.59, “Delega al governo per il conferimento di
funzioni e compiti alle regioni ed enti locali, per la riforma della pubbli-
ca amministrazione e per la semplificazione amministrativa”, pubblicata
nella Gazzetta Ufficiale, del 17 marzo 1997
Legge 15 maggio 1997, n.127, “Misure urgenti per lo snellimento
dell'attività amministrativa e dei procedimenti di decisione e di control-
lo”, pubblicata nella Gazzetta Ufficiale, n.113 del 17 maggio 1997, Sup-
plemento Ordinario
Legge 16 giugno 1998, n.191, “Modifiche ed integrazioni alle leggi 15
marzo 1997, n.59, e 15 maggio 1997, n.127 nonché in materia di forma-
zione del personale dipendente e di lavoro a distanza nelle pubbliche
amministrazioni disposizioni in materia di edilizia scolastica”, pubblicata
nella Gazzetta Ufficiale, n.142 del 20 giugno 1998
Legge 30 aprile 1999, n.120, “Disposizioni in materia di elezione degli
organi degli enti locali, nonché disposizioni sugli adempimenti in mate-
ria elettorale”, pubblicata nella Gazzetta Ufficiale, n.101 del 3 maggio
1999
Europeanization or New Public Governance? 133
1 Introduction
All along, public administration has been dealing with implicit or explic-
it assumptions about how to contribute best to the bonum commune or
common good (cf. Maier 1986, Waldo 1948/2007). In the late 20th cen-
tury, a new variation of this discourse was initiated and framed as the
public value approach (Moore 1995).
© Springer Fachmedien Wiesbaden GmbH 2017
R. Andeßner et al. (Eds.), Public Sector Management
in a Globalized World, NPO-Management,
DOI 10.1007/978-3-658-16112-5_8
136 Timo Meynhardt et al.
2 Theoretical background
tion and even became part of the BBC’s mission statement (Crabtree
2004). In Germany, public value ideas were also welcomed to reconcile
traditional notions of public administration and management principles
imported from the private sector (Hill 2006; 2007; Meynhardt 2008;
2009a; 2009b; Meynhardt/Metelmann 2009). Hill (2006) argued that
after the lean state and the activating state, the value-creating state is
needed (Hill 2006, p. 82). For Stoker (2006), public value could even
serve as an “emerging paradigm” for networked governance.
Germany’s Federal Labor Agency (FLA), Europe’s biggest bureaucracy,
has used the approach to demonstrate its value to the public, which goes
beyond mere task fulfillment (Meynhardt/Metelmann 2009;
Weise/Deinzer 2013). In Austria, the public broadcaster ORF systemati-
cally evaluates its activities against a public value measure (Unterberger
2013). German Schools Abroad, a highly prestigious school, evaluated
its public value on a global scale (WDA 2014). Another example is the
Public Value Award for public baths in Germany, which was initiated in
2010 to better appreciate and better legitimize public baths (Ochsenbau-
er/Ziemke-Jerrentrup 2013). The Goethe Institute applied this methodol-
ogy to determine its public value creation (Meynhardt/Maier/Schulze
2010).
This wealth of published research and practical applications has made
the field more diverse, and it has been noted that there is uncertainty
about what public value is and what the most important elements of the
public value literature are (Williams/Shearer 2011). We follow the recent
categorization of major theoretical approaches according to Bryson,
Crosby, and Bloomberg (2014; 2015). They distinguish between Mark
Moore on Creating Public Value, Barry Bozeman on Public Values, and
work concerning Psychological Sources of Public Value by Timo Me-
ynhardt (Bryson/Crosby/Bloomberg 2015, pp. 2-11). We will now give
concise overviews of the work by the main protagonists – Moore, Bo-
zeman, and Meynhardt (Bryson/Crosby/Bloomberg 2014; 2015). We
will also describe Meynhardt’s psychological approach in more detail,
since it provides the theoretical basis for the Public Value Scorecard
(PVSC) and the Public Value Atlas (in German: GemeinwohlAtlas) we
will then present.
Public Value Performance 139
between financial and nonfinancial goals and can better identify societal
needs and concerns” (Meynhardt 2015, p. 157).
The Public Value Scorecard has been used in private as well as public
organizations. The German soccer club FC Bayern Munich (Ber-
inger/Bernard 2013; Meynhardt/Strathoff/Beringer/Bernard 2015) as
well as Fresenius Medical Care (Armsen/Moeller/Lampe/Gatti 2013), a
leading provider of dialysis products and services, have identified their
public values by using the Public Value Scorecard. Within the public
sector, the FLA discovered, through the Public Value Scorecard that
public value creation and customer satisfaction are not the same
(Weise/Deinzer 2013). We will now outline how other public managers
could benefit from utilizing this management tool.
3.2 How public sector managers can use the Public Value Score-
card
Public managers can use the Public Value Scorecard in various ways and
in many fields. In the following, we present the five inquiry techniques
on using the Public Value Scorecard, which Meynhardt (2015) presented
in his article Public Value: Turning a Conceptual Framework into a
Scorecard. The Public Value Scorecard can be applied via five different
inquiry techniques: prioritizing, screening, surveying, exploring, or sens-
ing. The data collection methods may vary but the presented five dimen-
sions of the Public Value Scorecard always remain constant. Finally,
each method provides either a public value score or a profile (Meynhardt
2015).
Version 1: Prioritizing
This Public Value Scorecard forces its respondents to rank the five value
dimensions in a specific context concerning opportunities and risks.
Thus, it presents 18 questions that refer to different situations: six ques-
tions deal with a general assessment, six address the short-term perspec-
tive, and six the medium-term and the long-term perspective. Each re-
spondent is asked to rank each of the given value statements according to
their relative importance from 5 (highest importance) to 1 (lowest im-
portance). Together, this version of the Public Value Scorecard is based
146 Timo Meynhardt et al.
Version 3: Surveying
This Public Value Scorecard is adapted for use in large-scale surveys.
Since it is very difficult for public sector managers to force thousands of
respondents to rank public value depending on different statements, the
indicators can be adapted into a question battery with Likert scales from
1 to 6, which we will discuss in some detail in the next section. Such
large-scale surveys enable public sector management to ask different
stakeholder groups to assess their specific public value creation and to
gain comparable data. Descriptive and inference statistics may then be
used to examine new relationships and dependencies of public value
creation, giving public sector managers new insights into their work’s
worth (Meynhardt 2015).
148 Timo Meynhardt et al.
Version 4: Exploring
This Public Value Scorecard represents a hybrid between qualitative and
quantitative approaches. It builds on the value knowledge guide (Me-
ynhardt 2004) and is the most demanding for the respondent. Its applica-
tion is especially interesting and relevant for decoding the frames in
which a public organization’s public value is perceived. In other words,
how and under which circumstances do respondents interpret the behav-
ior of a public organization concerning its public value? Therefore, the
guiding question for public management in this approach is: What makes
our organization valuable to society?
Version 5: Sensing
Taking into account the new possibilities of big data analysis, this Public
Value Scorecard presents an inquiry technique for social media data,
such as provided by Twitter, Facebook, Google+, or blogs (Meynhardt
2015). The developed machine-learning algorithm makes public value-
related content in big data visible for managers. It automatically detects
given statements and interprets to what extent they are attached to the
public value dimensions. Furthermore, it evaluates the statements as
positive, negative, or neutral. The great advantage of such an approach
for public management is its real-time sensing of public value dynamics
(Meynhardt 2015).
4.2 How public sector managers can use the Public Value Atlas
Since the Public Value Atlas uncovers what organizations contribute to
society and what is appreciated most about them, it stimulates reflection
about an organization’s place in society.
The public value concept fosters a broader perspective on performance in
the public sector, a perspective that is more challenging, because it goes
beyond complying with given processes or meeting budget restrictions
(Meynhardt 2009a). In doing so, it explicitly calls for a more active role,
fostering self-initiative and entrepreneurship.
Furthermore, it confronts public sector managers with the question
whether their actions bring value to society, which is far more difficult to
measure than mere financial performance. The latter is one of many as-
pects that inform public sector managers about their value creation.
Thus, it is not sufficient to solely refer to the facts – for instance the in-
vestments made – when analyzing what makes public administrations
valuable for society. The Public Value Atlas provides a measure that
Public Value Performance 151
5 Conclusions
The public value discourse in public administration over the past 20
years indicates a renewed interest in the roles of state institutions in soci-
ety. Public value thinking provides a narrative and potentially a case for
a more active, entrepreneurial role for public managers. It spells out what
management in a public administration would mean, both beyond the
traditional Weberian idea of bureaucracy and a new public management
notion that would call for importing private sector models of efficiency.
Public value brings the question of effectiveness to the forefront: Public
administration exists owing to a legal obligation to serve and enhance the
common good. In this sense, public value reminds us of public admin-
istration’s reason for being.
Such a reminder was warmly welcomed in times when state institutions
were under attack. However, it is not just about the idea of rebalancing
and reorienting public administrations towards a positive force in socie-
ty. The public value discourse calls for an understanding of entrepre-
neurship in the public sector, which is perhaps the biggest challenge
ahead. Bearing in mind the poor performance of the Federal Labor
Agency in Germany’s first Public Value Atlas in 2015 it becomes clear
154 Timo Meynhardt et al.
References
Armsen, Wencke, Stefan Moeller, Rainer Lampe and Emanuele
Gatti (2013), Gesundheitsdienstleistungen in der öffentlichen Wahr-
nehmung. Die Messung des gesellschaftlichen Nutzens privatisierter
Gesundheitsdienstleistungen, in: Organisationsentwicklung - Zeitschrift
für Unternehmensentwicklung und Change Management, vol. 32, no. 4,
pp. 20-26.
Benington, John and Mark H. Moore (2011), Public Value: Theory
and Practice, Basingstoke.
Beringer, Lorenz and Sebastian Bernard (2013), Stern des Südens –
Fußballverein oder weltweites Entertainment? Der Public Value des FC
Bayern München, in: Organisationsentwicklung – Zeitschrift für Unter-
156 Timo Meynhardt et al.
Dorothy Mpabanga
1 Introduction
The 2008 global financial crisis affected private and public sectors in one
way or another. This paper assesses the effects of the financial crisis on
public service provision in the context of a developing country. The
2008 financial global crisis has forced governments in both developed
© Springer Fachmedien Wiesbaden GmbH 2017
R. Andeßner et al. (Eds.), Public Sector Management
in a Globalized World, NPO-Management,
DOI 10.1007/978-3-658-16112-5_9
162 Dorothy Mpabanga
financial crisis which occurred in 1997/98 and asserts that it was caused
by weak internal macro-economic failings such as corruption, weak tra-
ditional banking practices and inadequate financial regulations. In the
case of the UK, the collapse of the banking system was partly due to the
lack of appropriate pro-active regulatory involvement, poor regulatory
oversight and poor supervision in the financial system (Mugarura 2011).
According to Bancel and Mittoo (2011, p. 180) the global financial crisis
was the most severe crisis since the great depression and its impact var-
ied widely across countries as well as across firms within a country. The
two authors further argue that other firms survived the crisis by enhanc-
ing their competitive position while others were hard hit.
As pointed out by Stiglitz (2001) the global financial crisis has affected
the manner in which governments operated and carried out their daily
activities. For example, there have been changes in priorities in public
policy and program development where governments are forced to
choose what development projects to implement and prioritize projects
to set aside due to tight revenue combined with efforts to reduce ex-
penditure. This has led to governments reacting to global pressure to re-
structure their economies, reduce the public size and the public wage bill
(Stiglitz 2001). Furthermore Stiglitz (2001) posits that social effects of
the financial crisis have been immense, including reduction in revenue
for governments, hence reduction in social benefit programs, rejection of
salary increments for public servants to help cope with the increase in
the cost of living, (inflationary salary adjustment), and cuts in training
and development budgets.
The challenges brought by the financial crisis forced governments to
adjust the way they did business in order to continue providing public
services by re-directing and re-evaluating their priorities to remain rele-
vant in serving the public and being responsive to the call to change after
the 2008 financial crisis. Multiple tools and techniques were used to
combat and deal with challenges associated with managing the public
sector and continue to provide services after the financial crisis. Many
governments around the world had to develop, adapt and apply stringent
tools and measures in order to survive after the crisis. As pointed out by
Mugarura (2011, p. 225) globalization has introduced the concept of
global solutions for global problems. International financial institutions
164 Dorothy Mpabanga
including the World Bank/IMF devised some tools and techniques and
advised governments to adopt them in order to resiliently manage their
economies and the public sector during and after the financial crisis.
Globalization has also contributed to the springing up of many ideas and
policy recommendations on how to reform and make the public sector
efficient and effective in serving public interest. Stiglitz (2001) argues
that neo-liberal economic policies of the International Monetary Fund
based on flawed concepts forced governments to downsize and reduce
public spending and were wrong options to help countries cope with
societal problems. Other policy recommendations include the concept of
new public management, which emerged in the 1980s as a blue print to
reform governments (Stiglitz 2001).
Bancel/Mittoo (2011) assert that in the case of France, the effect of the
global financial crisis was not as much as in other countries in Europe,
mainly because France had a strongly regulated financial sector and
banking system. According to Bancel/Mittoo (2011, p. 194) firms in
France were able to survive the crisis because they had high internal
funding, low short term debt and high cash rations. They argue that firms
with high financial flexibility experienced a milder impact from the fi-
nancial crisis because of their financial strength and the low cost of bor-
rowing they experienced during the crisis. In the case of the United
Kingdom, Connolly and Wall (2010) argue that the government used
private public partnerships (PPPs) in order to reduce public sector bor-
rowing and to transfer risk to the private sector. According to the two
authors, the global financial crisis affected the UK’s government invest-
ment through PPPs and infrastructural development through PPPs de-
clined after 2007 as the crisis affected the banking systems which almost
collapsed under factors including liquidity constraints, high cost of bor-
rowing, falling PPP asset value and lack of funding for PPPs (Connol-
ly/Wall 2010, p. 540). In the case of Germany, the government took
drastic measures in 2008 to deal with the financial crisis by passing a law
to stabilize the financial markets and restored confidence in the banking
system and declared the State to guarantee on all savings of German
citizens (Giustiniani/Thornton 2011).
Hughes (2015, p. 174) asserts that Australia was one of the few countries
that were able to escape the global financial crisis due to the govern-
Resilient Public Service Provision after the Global Financial Crisis 165
service values, charters and standards in order to guide the public in ex-
pectations for government services.
from 6.3 per cent in 2007 down to 2.0 per cent in 2008. The worst effect
of the crisis on GDP per capita was in 2009 when it declined to -9.5 im-
mediately after the crisis (Bank of Botswana 2015). The global financial
crisis also affected the country’s inflation as shown in table 4 below,
which increased from 10.7 per cent in 2007 to 16.7 per cent in 2008 and
declined to 2.8 by May 2015 (Bank of Botswana 2015). The last time the
country experienced similarly high annual inflation was in 1986 when it
was 16 per cent (Salkin et al. 1998).
Period 2007 2009 2011 2013 2015
May
GDP at constant market prices 8.3 -7.8 6.2 5.9
GDP excluding mining 14.5 5.0 7.9 5.2
GDP per capita 6.3 -9.5 4.2 3.9
Excluding mining 12.4 3.0 5.9 3.2
Annual Inflation per cent 10.3 5.4 7.1 6.7 2.8
Table 4: GDP growth (constant 2006 prices) and Inflation: 2007-2014
Source: Bank of Botswana 2015, p. 6.
3.4.5 Employment
As shown in table 5 below, the overall formal sector employment in
private, public enterprises and public sectors experienced a steady
growth despite the 2008 financial crisis. The only period total formal
employment declined was in 2010 when it declined from 384 633 to 361
267. A significant increase in employment was in local government,
mainly because of the self-help employment program (Ipelegeng: self-
reliance)which was introduced in 2009 in order to create jobs for the
unskilled and semi-skilled labour force in the country. The self-help
program was designed in order to address high unemployment of un-
skilled labour and to generate income for the unemployed poor in the
society. It is worth noting that the government was advised by the
IMF/World Bank to reduce the size of the public sector, particularly after
the global financial crisis when the country experienced prolonged budg-
et deficits for the first time in its history (Botswana Government 2015).
As shown in the table 5 below there was steady growth in employment in
government as government adopted the policy of freezing the establish-
ment of new positions. However, the rate of unemployment has re-
mained high in the country at 19.8 per cent in 2014 and it is one of the
174 Dorothy Mpabanga
was designed to provide modest income earnings for the unskilled poor
segments of the society. Due to high employment in the country, this
program has attracted poverty-stricken semi-skilled unemployed seg-
ments of the society, who have joined this program because they have no
alternative source of income.
Period 2007 2009 2011 2013
Monthly Wage Earnings
Citizens
Private & Parastatals 2942 3287 4392 4678
Local government 3294 3700 4478 4501
Including Ipelegeng - 1366 1970 1677
Central government 3928 5230 5992 7120
Total Citizens 3275 3939 4911 5442
Including Ipelegeng - 3293 4360 4661
Non-Citizens
Private & Parastatals 8894 9344 12275 13760
Local government 8364 14633 17221 16029
Central government 5479 10806 11758 13226
Total Non-Citizens 8584 9584 12315 13733
All sectors 3417 3990 4746 5009
Table 6: Employee Average Monthly wage earnings by sector & citizenship (Pula):
2007-2014
Source: Bank of Botswana 2014, p. 27.
The following table demonstrates the government budget and the deficits
experienced since the financial crisis and foreign exchange reserves and
other sources of revenue which were used to help the government cope
after the financial crisis.
Period 2007/08 2009/10 2011/12 2013/14
(Pula)
Total Revenue & Grants 28629.6 30023.1 38486.0 48951.3
Total Expenditure 24821.9 39489.2 38667.5 41729.7
Overall Surplus (+)/Deficit(-) 3807.6 -9466.1 -181.4 7221.6
Foreign currency reserves 9790 8558 8100 7600
(USD)
Table 7: Summary of Government budget: 2007-2014
Source: Bank of Botswana 2015; Botswana Government 2015.
176 Dorothy Mpabanga
4 Research methods
The purpose of this paper is to assess the extent to which the government
of Botswana provided public services after the 2008 global financial
crisis. This paper achieves this through a qualitative survey and docu-
mentary data analysis. Primary data was collected by quantitative means
through semi-structured survey questionnaires with open-ended ques-
tions. As shown in table 8 below, public perceptions were sought from
various categories of respondents in order to give their views regarding
public service provision after the 2008 global financial crisis. The survey
results are used to assess public perceptions on the impact of financial
crisis on the provision of social and economic service and respondents’
beliefs on how the government has managed the socio-economic services
after the crisis. In addition, the paper examines the critical success fac-
tors that supported the government’s ability to be resilient in providing
public services under such a turbulent global environment. These ques-
tions were asked using the Likert five point scale of agreeing or disa-
greeing to statements. SPSS software was used to analyze survey data
and frequencies were used to present data. A total of 100 survey ques-
tionnaires were distributed to respondents and there was a very good
response rate as 81 out of the 100 questionnaires administered were re-
turned as shown in the table below. The convenient non-random sam-
pling method was used to administer the survey questionnaire between
June and July 2015 in the capital city of Gaborone. Table 8 shows almost
a balance by gender as 54.5 percent of respondents were male and 45.7
per cent were female. Survey data was also collected by age group, em-
ployment status and educational level in order to obtain diverse views
across different strata of the purposely sampled population.
Resilient Public Service Provision after the Global Financial Crisis 177
5 Findings
The following section presents data and discusses findings to answer the
main research from respondents’ perceptions question regarding the ex-
tent to which the government of Botswana resiliently provided public
services despite the 2008 financial crisis. The data is presented and find-
ings are discussed according to the main research questions.
5.1 Public sector budget and financial management after the 2008
financial crisis
Public sector financial management is normally one of the areas affected
by any financial crisis. The 2008 global financial crisis posed budgetary
constraints, high borrowing costs and reduced revenue for many gov-
ernments including Botswana. As it emerged in the literature reviewed,
multiple suggestions were made to help governments to survive the fi-
nancial crisis including controlling government size and wage bill as
well efficiency in government spending. One of the objectives of this
research was to investigate the efforts made by the Botswana govern-
ment to control government expenditure after the financial crisis, par-
ticularly in the provision of social and economic services and the overall
management of public finances. Respondents were asked to indicate
their views regarding management of the national budget and controlling
public finances after the 2008 global financial crisis.
72.9 per cent disagreed that government was very wasteful with public
money during the crisis.
5.4 Reducing the size of the public service after the financial crisis
As pointed out by Stiglitz (2001) international institutions such as the
World Bank and the IMF were advising governments around the globe to
cut public budgets, reduce government size and freeze employment in
order to reduce the government wage bill. One of the objectives of this
research was to explore the extent to which the government of Botswana
adhered to suggestions to control/curb government expenditure and re-
duce the public wage bill by freezing employment and not adjusting
salaries of public servants.
financial crisis, the majority of respondents agreed (66.7 per cent) with
the government’s decision to freeze the establishment of new positions.
Surprisingly 74.1 per cent disagreed with the government’s decision not
to fill existing vacancies. Documented data indicates that total employ-
ment increased steadily from 301 978 in 2007 to 399 530 in 2013 (Bank
of Botswana 2015). In addition, employment figures in central govern-
ment increased steadily after the financial crisis, from 88 521 in 2007 to
104 541 in 2013 (as demonstrated in table 5). It is worth noting that total
employment increased after the financial crisis as a result of the self-help
employment program which was introduced by the government in 2009
in order to create jobs for semi- to unskilled labour (Botswana Govern-
ment 2015). However, the effects of the financial crisis were felt in local
government, where employment decreased from 94 968 in 2009 to 62
049 in 2010 and increased to 60 623 in 2013 (Bank of Botswana 2015).
Employment in the self-help program was also affected by the financial
crisis as employment under the program decreased from 66 806 in 2009
to 32 957 in 2010, though this figure increased to 60 623 in 2013 when
the economy recovered from the crisis.
cuts, water shortages that last for days and the national airline that is
failing to provide reliable and efficient air travel services. The national
railway service stopped providing passenger rail transportation service a
few years ago despite the government’s continued investment in the
railway public corporation which is not operating efficiently and effec-
tively, particularly in providing passenger rail services (Botswana Gov-
ernment 2005).
The best in service delivery is the Ministry of Labour and Home Affairs
and the worst in service delivery is the Ministry of Health.
Best departments in Service delivery Listed as Best
5.12 Post-NPM and managing the economy after the financial crisis
The post NPM era and the 2008 financial crisis period were assessed in
this research by asking respondents' views regarding issues relating to
the post-NPM era and government’s management of the economy after
the crisis. Respondents were asked the extent they agreed or disagreed
with statements relating to the reforming the public service after the cri-
sis, including retrenchment, engaging citizens on issues of national con-
cern, acting in public interest during a financial crisis and management
of the economy since the 2008 crisis. About of half of those surveyed
felt government should not re-trench employees after the 2008 financial
crisis, as 50.6 per cent of respondents disagreed with this statement.
Most of the respondents agreed that government must engage citizens
more on issues of public concern (88.9 per cent) and that government
must act in public interest during financial crisis (87.7 per cent). In addi-
tion, respondents agreed that government should be more careful when
spending public money (88.9 per cent) and were of the view that gov-
ernment should spend less during financial crisis (77.0 per cent). A high
number of respondents agreed that the government should be more care-
ful with financial management when resources are scarce (90.1 per cent).
Surprisingly, only one third (29.6 per cent) of respondents agreed that
government should increase public servants' salaries in times financial
crisis, while almost half of those surveyed disagreed with this statement
(49.5 per cent). This indicates a concern among the public surveyed that
government should manage national resources in a sustainable manner
during a crisis.
Government: E V W N P T M
Managing 6.2% 33.3% 46.9% 8.6% - 95.1% 4.9%
the economy (77) (4)
Managing 4.9% 22.2% 48.1% 19.8% - 95.1 4.9
the national (77) (4)
budget
Managing 1.2% 18.5% 37.0% 30.9% 7.4% 95.1 4.9
public (77) (4)
spending
Managing 6.2% 25.9% 28.4% 24.7% 9.9% 95.1 4.9
public sector (77) (4)
reforms
Table 11: Perceptions about Management of the Economy after the crisis
Source: Survey data, June-July 2015, by Dorothy Mpabanga, Gaborone, Botswana.
Agenda:
E= Exceptionally well
V= Very well
W= Well
N= Not well
P= Poorly/not well at all
T= Total (%) (n=81)
M= Missing
through the financial period and this resulted in the country experiencing
budget deficits from 2009 to 2012 (Bank of Botswana 2015).
Table 13: Government Budget before and after the Financial Crisis: 2007-2014
Source: Bank of Botswana 2015; Botswana Government 2015; ILO.
7 Conclusion
The paper assessed the public service provision after the 2008 global
financial crisis in public Botswana. On the overall, it emerged from doc-
umented data analysis that the government was able to be resilient in the
provision of social and economic services after the 2008 financial crisis.
This was also supported by respondents’ perceptions from the analysis of
the survey where respondents felt government has managed the economy
and the national budget well. Secondary sources revealed that govern-
ment was able to be resilient in service provision due to the environment
existing prior to the 2008 financial crisis. Botswana has over the years
managed its diamond revenue carefully and has established good finan-
cial management and governance principles. For example, one of the
good qualities the country is known for is the prudent macro-economic
management and well-endowed foreign exchange reserves that can cover
up to 18 months of imports of goods and services (Botswana Govern-
ment 2015). In addition, a stable economic and political environment, a
supportive legislative framework as well as good credit standing accord-
ed by international financial rating institutions such as Standard & Poor
198 Dorothy Mpabanga
References
Bancel, Franck and Usha R. Mittoo (2011), Financial flexibility and
the impact of the global financial crisis: Evidence from France, in: Inter-
national Journal of Management Finance, vol. 7, no. 2, pp. 179-216,
http://www.emerald.com/1743-9132.htm (accessed: 28.05.2015).
Bank of Botswana (2014), Annual Report, Gaborone.
Bank of Botswana (2015), Financial Statistics, Gaborone.
Botswana Guardian (2015), Salaries to increase by 4%,
http://www.botswanaguardian.co.bw/news/item/1326-salaries-to-incre
ase-by-4.html (accessed: 08.12.2015).
Botswana Government (2000), Privatization Policy, Government print-
er, Gaborone.
Botswana Government (2003), National Development Plan, Govern-
ment Printer, Gaborone.
Botswana Government (2005), Privatization Master plan, Government
printer, Gaborone.
Botswana Government (2009), National Development Plan, Govern-
ment Printer, Gaborone.
Botswana Government (2015), The Budget speech by the Minister of
Finance and Development Planning (February 2015), Government print-
er, Gaborone.
Busieka, Mataywa (2013), South Africa’s public administration re-
sponse to the global economic crisis: assessment of lessons and opportu-
nities. A paper presented during the AAPAM conference on global fi-
nancial crisis, Kigali, Rwanda.
Connolly, Ciaran and Tony Wall (2010), The global financial crisis
and the UK PPPs, in: International Journal of Public Sector Manage-
ment, vol. 24, no. 6, pp. 533-542, http://www.emerald.com (accessed:
24.04.2015).
200 Dorothy Mpabanga
Stiglitz, Joseph E. (2001), Stiglitz and the world bank: the rebel within
(selected speeches). Edited commentary by Ha-Joon Chang, London.
Tangri, Roger (1999), The Politics of Patronage in Africa: Parastatals,
Privatization and Private Enterprise, Oxford.
Transparency International (2015), Country profiles: Botswana,
https://www.transparency.org/country (accessed: 11.12.2015).
Missing the Big Picture on State-Owned En-
terprises: Quality of Aggregate Holdings Re-
porting of Public Administrations and Reform
Implications
Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
Summary:
In the context of current debates on sustainable public service provision,
austerity, debts, and cutback management, the governance and manage-
ment of and in State-Owned Enterprises (SOEs) is imbued with special
relevance. An aggregate holdings report (AHR) is an important tool for
public administrations to provide accountability for SOEs and the neces-
sary overview of the institutional structures of the core administration
and SOEs. This study analyses the quality of AHR in Austria, Germany,
and Switzerland on the basis of a quality model with 175 criteria. Find-
ings show that public administrations in many cases do not meet the
identical requirements from theory and practice. Laws on AHR are nec-
essary to ensure the realization of policy goals. First, the study provides
a conceptual contribution for assessing AHR and for future research on
the issues of the model categories. Second, empirical insight into quality
patterns of AHR is provided. The model enables one to answer questions
which are often raised in the reform debates, such as, “which AHR can I
use as a reference to further develop my own AHR?” The study offers
valuable new insights which can enhance sustainable management and
control of SOEs.
Keywords: Aggregate Holdings Report, Public Corporate Governance,
Quality, State-Owned Enterprises
1 Introduction
Reforms in the provision of public services with new institutional ar-
rangements have made State-Owned Enterprises (SOEs) increasingly
relevant in many countries. Newer and older studies for different coun-
tries demonstrate the significant role of SOEs in terms of their economic
Quality of AHRs
(European Commission 2009, 2011, 2012; Goals
European Parliament and the Council 2006a,
2006b, 2014a, 2014b) 6. Financial
EU Relationships
“The ownership entity should develop btw.
consistent reporting on SOEs and publish City and SOE
annually an aggregate report on SOEs”
OECD (OECD 2015, VI, C)
7. Public
Need for Disclosing Financial Information, Service
Corporate Goals, Public Subsidies, Provision Ratios
World Bank Relationships betw. SOEs and other Bodies,
Management Board, Ownership Structure, 8. Management
Public Service Provision Board
(World Bank 2014)
9. Supervisory
Various content-related Demands for Body
Scientific Information Access on SOEs such as Public
Literature Purpose, Goals, Financial Figures and 10. Audit
Relationships, Board and Audit Information Information
. SOE information.
Categories marked with * appear in both dimensions: aggregate and individual
Other categories only occur in the dimension on individual SOE information
Direct and indirect holdings with majority interest and share capital,
balance sheet totals as well as turnover and employee information should
be displayed in organisation charts and tables (OECD 2015; World Bank
2014; European Commission 2011; Bovens 2010; Whincop 2005).
Financial Ratios and Relationships between Public Authority and SOE:
Financial and operational results of SOEs as well as costs to fulfil the
public purpose should be disclosed. In particular, this includes balance
sheet totals, total investments, capital and asset structure, profit situation,
expected liabilities, as well as several other relevant financial ratios but
also financial relationships between public administration and SOEs
(OECD 2015; World Bank 2014; Wong 2004; Whincop 2005).
Personnel / Staff: SOE staff structure and relevant gender equality as-
pects like representation of women on boards, further management lev-
els, and in the whole staff should be disclosed in AHR (European Par-
liament and the Council 2006a, 2014a; European Commission 2012;
Bovens 2010).
Corporate Goals and Public Service Provision Ratios: Corporate goals,
strategic, operative, and especially outcome goals as well as the public
purpose of the SOEs should be stated. AHR should also disclose public
service provision ratios and sustainability and environment-related in-
formation (OECD 2015; European Parliament and the Council 2014a;
World Bank 2014; Schedler and Proeller 2010; Jung 2014; Wong 2004).
Management Board and Supervisory Body Information: The disclosed
information should include the names, and detailed statements on com-
pensation structure. Furthermore, board/body member qualifications,
selection process and board diversity should be displayed and explained
(OECD 2015, sec. VI, A; Tricker 2012; European Commission 2009;
European Commission 2011).
Audit Information: Regarding the international discussions on audit of
SOEs, it is especially important that AHR disclose the external auditing
companies of the last years as well as a statement on the independence of
auditors and on the separation of audit and consulting (OECD 2015;
Tricker 2012; European Parliament and the Council 2014b; European
Parliament and the Council 2006b).
210 Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
1
The board structure varies among the countries. In Austria and Germany,
SOEs are organised on the basis of the Two Tier-System, whereas in Switzer-
land, the One Tier-System is used. In the Two Tier-System, the management
board is responsible for managing the enterprise. The supervisory board super-
vises and advises the members of the management board and is involved in
decisions of fundamental importance. In the One Tier-System, both functions
are combined in one board. However, the model is applicable for both systems.
Aggregate Holdings Reporting of Public Administrations 211
Overall, the analysed national AHRs offer different strengths and weak-
nesses. The Austrian offers transparent display of financial relationships
between public administration and SOEs and receives all possible 6
212 Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
points in this category. Among other details, the report lacks important
information on corporate goals (1 out of 6 points), personnel (3 points in
each dimension), and does not give any information on public service
provision ratios, audit, management board and supervisory body. The
German report provides a comprehensive summary table and organisa-
tion chart on all SOEs and reaches 7 out of 14 points here. Also, supervi-
sory body, management board and general SOE information are dis-
closed in a transparent way. However, the report lacks information re-
garding aggregated overview of financial ratios (2 out of 18 points), cor-
porate goals, audit, and personnel. The Swiss report discloses owner
goals in a transparent and exemplary way and contains distinct ratios on
public service provision (2 out of 3 points), which is unique among the
sample. However, the disclosed information for individual SOEs is not
uniform across the whole SOE portfolio, which makes internal and ex-
ternal comparisons more difficult. Also, the report lacks a lot of infor-
mation, especially in the aggregated section on the whole SOE portfolio.
For Austria, a law for preparing and publishing AHR could be identified
whereas a Public Corporate Governance Code (PCGC) which recom-
mends AHR is available for Germany. PCGC are important instruments
which aim at establishing the role of public administrations as share-
holders of SOEs with more precision and can also foster SOE transpar-
ency (OECD 2015; Grossi et al. 2015; German Federation 2009; Tricker
2012).
Max.
Mean Variation Max.
Dimension Category Points Mean
in % Coefficient Reached
Possible
Aggregate
General Information 5 1.7 34.0 68.0 4
Information
about the
Organisation Chart / Summary Table 14 7.4 52.9 38.2 13
Investment
Overview of Financial Ratios 18 3.1 17.2 126.4 13
Portfolio
Overview of the SOE Personnel 24 1.4 5.8 211.2 15
SOE in general 5 2.1 42.0 53.3 4
Corporate Goals 6 2.4 40.0 46.0 5
Financial Relationships btw. Publ.
6 1.9 31.7 115.0 6
Adm. and SOE
Information
Financial Ratios 43 14.6 34.0 49.6 27
on Individual
Public Service Provision Ratios 3 0.4 13.3 215.1 3
SOEs
Management Board 6 1.2 20.0 58.0 4
Supervisory Body 8 2.9 36.3 61.1 6
Personnel / Staff 28 2.9 10.4 84.8 12
Audit 9 0.5 5.6 160.9 3
Overall Points 175 42.4 24.2 35.7 112
The cities of Darmstadt (112), Berlin (79), and Hannover (79) lead the
local sample and, among other city reports, provide examples that are
worth following for further developing AHR in Germany, but also inter-
nationally. The column “Max. Reached” (see Table 2) shows the best
results for individual categories and illustrates that the model is no theo-
retical illusion.
In Germany, most municipalities are obligated to create and publish
AHR by their respective municipal laws (e.g. Municipal law Baden-
Württemberg § 105, 2b; GemO Hessen § 123a, 3) which can be a reason
for the good availability of AHR on the local level in Germany. For Aus-
tria or Switzerland, no comparable laws could be identified on local lev-
el.
214 Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
References
Bertelsmann Foundation (2008), Municipal Finance and Debt Report –
A Federal Country Comparison.
Bertelsmann Foundation (2013), Municipal Finance Report – Income,
Spending and Indebtedness in Federal Country Comparison.
Bovaird, Tony and Elke Löffler (2003), Evaluating the Quality of Pub-
lic Governance: Indicators, Models and Methodologies, in: International
Review of Administrative Sciences, vol. 69, no. 3, pp. 313-328.
Bovens, Marc (2010), Two concepts of accountability: Accountability
as a virtue and as a mechanism, in: West European Politics, vol. 33, no.
5, pp. 946-967.
Bruton, Garry D., Mike W. Peng, David Ahlstrom, Ciprian Stan and
Kehan Xu (2015), State-owned enterprises around the world as hybrid
organizations, in: Academy of Management Perspectives, vol. 29, no. 1,
pp. 92–114.
216 Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
Appendix
Quality Model for the Analysis of AHR
on supervisory bodies
... in comparison with min. 2
22 54 ... compared to last year
previous years
Total results (profit / loss offset) ... in comparison with min. 2
23 55
of all SOEs previous years
Total number of women on
24 ... compared to last year 56 leading lower hierarchy
levels
... in comparison with min. 2
25 57 ... compared to last year
previous years
... in comparison with min. 2
26 Total of SOEs investments 58
previous years
Total proportion of women
27 ... compared to last year 59 on leading lower hierarchy
levels
... in comparison with min. 2
28 60 ... compared to last year
previous years
... in comparison with min. 2
29 Total subsidies to SOEs 61
previous years
30 ... compared to last year
Dimension 2: Information on Individual SOEs
Nr. Criteria Nr. Criteria
SOE in General 120 ... compared to last year
... compared to min. 2
62 121
Contact details (phone or email) previous years
Link to website or notice that no
63 Public Service Provision Ratios
website available
Note to the office etc. which is
exercising the shareholder
64 122
function / is represented at Overview on relevant key
shareholder meeting performance indicators
222 Ulf Papenfuß, Lars Steinhauer, Benjamin Friedländer
Toru Sakurai
Summary: After the Fukushima Nuclear Accident the question has been
raised whether a new electricity generation, supply and distribution sys-
tem should be introduced in Japan. It seemed that Germany gives us an
alternative model, in which municipal electric utilities have played and
play an important role in quantitative and qualitative aspects. However,
in Japan this has not been the case.
This paper intends to seek the historical roots of such a difference, by
comparing the development of each first electric utility company in
Germany and Japan and the role of concession contracts and public
charge in each municipality.
Keywords: concession, electric utility, financial interest, municipaliza-
tion, public interest, regulation
1 Introduction
Four years have passed since the Fukushima nuclear power plant acci-
dent occurred. What kind of electricity generation, supply and distribu-
tion system should be made continues to be argued to the present.
There are two issues at stake in this matter. One is about the shift of en-
ergy mix from fossil fuel or atomic to renewable energy. The other is
about shifting the generation, supply and distribution system from inte-
gration to unbundling.
The two issues are combined in one issue, i.e. from integrated to decen-
tralized power supply.
However, the Japanese government is about to reopen a nuclear power
plant that had been closed after the Fukushima incident and liberalize
retail and generation without unbundling.
In tackling the two issues, Germany is an alternative model for Japan in
two points: firstly its energy policy, which intends to abolish all nuclear
electric power plants by the end of 2022, and secondly it is argued that
most regional electric utilities are owned and managed in the form of
Stadtwerke by municipalities. One could argue that Stadtwerke, which
seemed to succeed in tackling the above-mentioned two issues, should be
introduced into Japan (Dewit 2015).
Would such an introduction be possible? There are quantitative and qual-
itative differences in German municipal electric utilities and Japanese
ones.
Indeed, Stadtwerke had and have been playing an important role not only
in generating and distributing electricity to their end users, but also in
supplying public services such as gas, water and transport altogether in
the form of Stadtwerke. Remunicipalizations, which occurred during the
2000’s in Germany after privatizations and liberalizations, have
strengthened their role, while Japanese municipal electric utilities have
played a minor role in generating electricity (1.1% in 2012) and no role
in distributing it. Moreover, they are managed separately from other
public services.
Thus, the question of why German municipal electric utilities were also
so much larger after the Second World War arises. According to Ambro-
sius (1984, pp. 121-122), on the national level, electric power was gener-
ated by the three large groups like RWE, Veba and Viag, but on the local
level municipal electric utilities had an important role in distributing
electricity. Indeed, in West Germany in 1952. The electric utilities whose
sales amounted to 500 MWh and more, numbered 731, of which 483
were public enterprises and 75 were public and private mixed enterprises
(Arakawa 1955, p. 130, the original source is VDEW). In 1985, 190
public enterprises whose public ownership were more than 95%, ac-
counted for 14.1% of power generation and 432 public enterprises for
33.2% of electric distribution (CEEP 1987, p. 42).
2.2 Framework
Electricity utilities developed firstly as small power stations in a block of
cities, secondly as allied enterprises with the enlargement of distribution
areas, increasing power generation and necessity of long distance trans-
mission, and lastly developed into centralizations, irrespective of their
being private or state-owned companies. From this electric technical
development theory (Wolff 1932), both Germany and Japan are atypical.
As Stier (1999, pp. 71-72) stated, compared with the British and French
system German electric utilities are not as interfered with by the central
government.
Municipalization and Concession 231
total
10% public
Dividends (A) profit quota payment to B/A (%)
charges
the city (B)
AGStEW
1884 67.5
1885 2.7 2.7
BEW
1890/91 810 193 49 242 29.9%
1895/96 1638 466 198 664 40.5%
1900/01 1953 1113 487 1600 81.9%
1905/06 3465 1920 1790 3710 107.1%
1910/11 6192 3799 3483 7282 117.6%
1915/16 4869 2954 2452 5406 111.0%
BEWAG
special lease total
Lease
Dividends (A) charges and payment to B/A (%)
payment
payment the city (B)
1925 1500 6463 - 6463 430.9%
1930 1500 14078 43169 57247 3816.5%
In short, the two roles of the concession contract represent public and
financial interest of the city in the municipal electric utility. Both inter-
ests were often at odds and the attitude of Berlin City was argued as ex-
cessive financial interest. However, Wolff criticized this argument
(Wolff 1931, p. 83).
The municipalization was directly realized by the fact that the expiration
of the concession contract came and the city purchased the assets based
on the repurchase clause.
Why did the city not choose to prolong the concession contract, but ra-
ther took the path to municipalization? As one of the background mo-
tives, Tegethoff pointed out the influence of the First World War on the
political situation, in which public enterprises were a more favorable
legal form (Tegethoff 1984, p. 416). In contrast to that, Wolff explained,
as a general motive for municipalization, electric utilities came to play
an important role in the city’s management, which had had to cope with
the growing administrative demand from urbanization and industrializa-
tion. Moreover, he pointed out as specific reasons the unsatisfactory
experiment of the concession contract and the existence of the special
profits, which AEG had gotten from the monopolistic position in the
procurement of electric facilities (Wolff 1931, pp. 84-85).
In any case, it is worth noting that concession contracts had led to mu-
nicipalization. Moreover, it is important that the concession contract
remained even after the transformation of the municipal electric utility
from Regie, StEW into the business corporation, Bewag. The transfor-
mation, intended to consolidate the difficult financial situation of the
city, is understood as privatization, as the shares of Bewag were sold
except 30%. The concession contract concluded between the city and
Bewag prescribed that Bewag pay compensations in the amount of 2.24
Million RM (1.6 Million RM in the days of StEW) and the city had the
right to repurchase by June 30th of 1954.
Article 12 conceded the way to the public road, and the rule on the con-
cessions was issued on March 4th of 1941 (Hammerstein/Hoff 2013, pp.
7, 13-14). There is another opinion that the law directed a centralized
character, because it was prohibited to introduce new compensations
which had not previously been levied (Stier 1999, pp. 472-473). After
the Second World War, in 1990, however, the prohibition was abolished
(Hammerstein/Hoff 2013, pp. 7-8).
It was not until the advent of growing generating capacity from hydroe-
lectric power stations that price reductions were realized. However, full-
scale reductions resulted from the competition among TELC, the 1911
city-owned electric utility and another private company.
should be levied not on the base of the net income, but on the base of the
total revenues, because of the unclear character of the former.
Calculating the percentage of all kind of taxes and public charges to div-
idend in the Annual Report of TELC, its figure showed 4.5% in 1887,
8.9% in 1900, 12.7% in 1905 and 15.8% in 1910. After the conclusion of
the compensation contract, its figure increased slightly, to 20.8% in 1913
and 23.8% in 1915, however it did not exceed 26% until 1930 (see table
4). In Berlin, as mentioned above, the compensations exceeded the divi-
dend already in 1905, reaching over 100%.
(thousand yen)
Dividends Public
Fiscal year Revenues B/A (%)
(A) charges (B)
1887 23.3 10.8 0.5 4.5%
1890 102.5 0.0 2.4 -
1895 252.7 71.2 2.2 3.1%
1900 532.7 201.9 17.9 8.9%
1905 1,465.2 560.3 71.4 12.7%
1910 4,756.8 2,655.3 420.1 15.8%
1915 7,333.7 3,382.2 804.8 23.8%
1920 24,338.3 8,905.0 1,954.8 22.0%
1925 84,101.7 25,576.1 1,917.4 7.5%
1930 118,815.9 26,464.7 6,940.3 26.2%
Thus, compensation control gave Tokyo City very little power to regu-
late or control the private company. Tokyo City tried to regulate TELC
by using another measure: the 1911 municipalization of a competing
private company, the Tokyo Railway Company. As a consequence, elec-
tricity prices in Tokyo were significantly reduced through competition.
However, after the agreement in 1917, the supply areas of Tokyo munic-
ipal electric utility were restricted narrowly. In contrast, TELC grew
larger and its supply area developed also outside of Tokyo, even nation-
wide. This situation was one of the causes that led to even more weak-
Municipalization and Concession 243
ness and diminished power of the city. Another cause is the development
of national law about electric utilities.
5 Conclusions
Let us draw conclusions, by comparing the developments of municipal
electric utilities in Germany and in Japan, particularly in each capital, in
Berlin and Tokyo.
Common developments found in each city were that the first electric
utility in both countries was established at the almost same period. Both
took - with the permission of the respective authority - the form of a
small-sized private company that developed rapidly.
244 Toru Sakurai
References
Abe, Isoo (1908), Applied Municipal Government, Hidàka-yurindou
(Japanese).
Ambrosius, Gerold (1984), Der Staat als Unternehmer, Göttingen.
Arakawa, Yasuo (1955), A Few Problems on the Electric Utilities in
West Germany, in: Bulletin of Electric Economy Institute, nr. 2, pp. 128-
145 (Japanese).
BEWAG (1934), 50 Jahre Berliner Elektrizitätswerke: 1884-1934, Ber-
lin.
Municipalization and Concession 245
1 Introduction
Urbanization is a major global trend that calls decision makers to action
with respect to sustainability and living conditions in metropolitan areas.
Currently, cities account for 54 percent of the global population, and
predictions range up to 66 percent for 2050 (United Nations 2014). The
top 600 largest cities already account for over 60 percent of the econom-
ic space, with the amount increasing year after year (McKinsey 2011).
Inspired by advances in such fields as engineering, technology, and par-
ticularly information and communication technologies (ICT), city au-
thorities all around the globe are looking for new, smarter ways to cope
with the challenges of urbanization. At the same time, many metropoli-
tan areas are gradually consolidating their positions as the beating hearts
considered as one of the leading ‘smart cities’ in Europe, (2) the Greater
London Authority has publicly committed to a ‘smart city’ ambition by
publishing a Smart City Plan in 2013, (3) citizen participation is recog-
nized as an important success criterion in the plan, (4) relatively ample
information is publicly available on various ‘smart city’ initiatives in
London.
The scope of this paper is a single case study on ‘Smart London’. The
case study method has proven its usefulness, particularly in exploratory
research settings such as ours, as it allows for developing deep insights
in context-sensitive ways. For this paper, we rely on secondary data
sources available through the Internet.
From such exploration we can in the first place derive theoretical propo-
sitions for further scientific verification. In addition, we can evaluate the
appropriateness of our own methodological steps for future studies on
the value of smart city initiatives for increased citizen participation.
Overall, we aim thus to contribute to the body of knowledge in the areas
of public management, smart cities and citizen participation, and we
strive for relevance for both academics and practitioners.
people can arise, even up to a point where in practice the targeted citi-
zens can get cynical about citizen participation efforts (Cornwall 2008;
Creighton 2005). Another plea for caution with respect to citizen partici-
pation initiatives can be found in the work of Cupps (1977, p. 478) who
wrote that “in spite of the proven accomplishments of citizen groups in
some policy areas, there is growing body of data to support the conten-
tion that public participation which is automatic, or ill-considered can be
dangerously dysfunctional to political and administrative systems”.
Citizen participation is an umbrella term for multiple types of participa-
tion. In previous studies citizen participation has been classified by re-
searchers, of which many have drawn on the work of Arnstein (1969),
who describes eight levels on the ‘ladder of citizen participation’, rang-
ing from ‘no participation’ to ‘full citizen power’. Each level is typified
by increasing levels of democratic processes, paralleled with particular
managerial challenges. The Arnstein framework allows us to classify
various smart city initiatives regarding their intended citizen participa-
tion (see Table 1).
254 Jurgen Willems, Joachim Van den Bergh, Stijn Viaene
We have adopted the Arnstein model for reasons of its clarity, the fact
that it is robust, and its wide-spread application. Adaptations of it have
been used previously in the context of government participation, con-
sumer participation, learner participation and other contexts, proving its
use for classification of very different participation types.
A study on the levels of citizen participation in US cities in the begin-
ning of the 2000s, came to the following conclusion: “Finally, the exist-
ence of participation mechanisms appears to be a preliminary and neces-
sary condition to achieve participation goals in the satisfaction of public
needs, consensus building, and public trust. Participation in decision
making leads to better understanding and satisfaction of public needs and
the building of consensus on service goals, priorities, and performance
Smart City Projects and Citizen Participation 255
dation, and (3) further research avenues. The first area is discussed in the
next section, while the second and third areas are summarized in our
conclusion section.
Smart City Projects and Citizen Participation 259
Targeted primary
Project name Short project description Classification
stakeholder
Citizens can access information on where they can use city
1 Barclays Cycle Hire Informing All citizens
bikes, availability and use of bikes
A Customer Relationship Management system to ensure
Informing /
2 Care connect (NHS) effective management and tracking of requests, supported by All citizens
Consultation
a moderation and case handling service
Free WIFI in public
3 Free WIFI in public spaces Enabler (technical)
spaces
EU funded project to develop an urban platform based on
4 iCity Programme Enabler (technical)
data from public and private sources
Aim is to use technology to work in a more integrated way,
Silo Busting in
5 with joint projects and collaboration across Boroughs, and Partnership Boroughs
administration
service providers
Integrated way finding system helping people move around
6 Legible London Informing All citizens
the capital with over 1250 signs now installed
Level 39/ Catapult/
Accelerator space for finance, retail and future cities start- Enabler (incubator /
7 Urban Innovation
ups; examining options for smart city funding financing)
Centre
Listen London Listen London is a bespoke tool used to listen to social media Manipulation /
8 All citizens
Platform talk about London related issues Therapy
9 Informing All citizens
London Datastore Public availability of various datasets on London Application developers
10 Partnership
(e.g., businesses)
London Schools An interactive online map of London schools, patterns of Informing / All citizens informed,
11
Atlas attendance and future demand for school places. consultation some indicate schools
A public reporting tool on how city is performing and what
12 London's Dashboard Informing All citizens
City Hall and London boroughs are doing about it
All citizens (informing),
Use of apps and mobile phones to report quality issues in Informing /
13 Love Clean London some indicate pollution
cleanness of London streets and parks Consultation
(consultation)
Car plates are digitally recognized, and people get taxed Manipulation / All citizens (traffic
14 Plate recognition
based on care usage in London city centre Therapy users)
15 Virtualize city infrastructure to better manage supply and Therapy / Informing All citizens
Smart grid
demand (e.g. water, energy, road infrastructure, underground infrastructure builders
16 technologies Partnership
assets) across London and/or maintainers
Queen Elisabeth
17 Test bed and demonstrator area for smart technology Enabler (testing)
Olympic Park
Reducing white van IT trials, incentives for collaborative business models, and Businesses operating in
18 Partnership
deliveries project load sharing and customer communication London
Boroughs (when
Smart London Focused on shared open data store between GLA and
19 Partnership considered as
Borough Partnership Boroughs
independent entities)
Business and institutes,
Smart London Series of initiatives to mobilize entrepreneurs, researchers, Placation /
20 or citizen representatives
Innovation Challenge businesses and citizens to develop solutions Partnership
(e.g. boroughs)
A network to link London’s entrepreneurs and innovators Business and institutes,
Smart London Placation /
21 with the organisations already delivering and financing or citizen representatives
innovation Network Partnership
London’s new infrastructure and services. (e.g. boroughs)
Smart London an event to attract the global finance that will help emerging
22 Enabler (finance)
Investment Day solutions to be more rapidly commercialised
Smart London An online platform to enable Londoners to feedback, rate and Informing /
23 All citizens
Platform for feedback shape the type of experience they want to have consultation
An online research community between Londoners and City
24 Talk London hall including polls, discussions, live Q&A, surveys, and Consultation All citizens
focus groups
Team London - Citizens, mainly through
An online marketplace for flexible volunteering and working, Placation /
25 Micro-volunteering civil society partners
to increase the employability of young people (aged 16-24) Partnership
and work platform (e.g. sport clubs)
Centre and meeting space for citizens to discuss and learn
26 Tech City Institute Informing All citizens
how new technologies impact different parts of society
Tech City Stars / Citizens, in particular
Digital apprenticeships for young locals to address digital
27 Technology Therapy those who are in need of
skills gaps
apprenticeships particular skills
28 An online too that encourages users to submit innovative Consultation All citizens
Transport for London
technological ideas to help address London's core transport Partnership Application developers
29 - Innovation Portal
challenges (/Placation) (e.g., businesses)
4 Discussion
Based on the classification of the smart city projects, a distinction has to
be made between projects that have a direct citizen participation aim, and
projects that are enablers for other projects to be successful. Out of 26
projects, five were classified as enablers (Table 2; Projects 3, 4, 7, 17
and 22). These enabling projects focused on providing the necessary
supporting means such as financial capital, knowledge, testing environ-
ments, and technical hardware. Interesting examples are incubator struc-
tures in which other parties, such as businesses or research institutes, are
attracted. Without having a strict focus on the actual content of projects
and their citizen participation aims, such enabling projects have a multi-
plying focus in which a win-win environment is created for all parties
involved.
The other 21 projects could be categorised as having at least one goal
related to citizen participation. For several projects a double classifica-
tion was made, either due to the fact that the project focused on a range
of related participation types, or because various clearly distinct stake-
holder types were addressed, each with a distinct participation level.
A first observation of our classification scheme shows that none of the
projects was classified in one of the highest two levels of citizen partici-
pation (i.e. ‘citizen control’ and ‘delegated power’). Our main interpreta-
tion of this outcome is that for all projects, at least one of the following
three conditions was not fulfilled (in other words, in order to be consid-
ered a smart city project that focuses on ‘citizen control’ or ‘delegated
power’ we believe three conditions should be fulfilled): First, citizens
should be able to participate actively (and they should be aware of their
participation and of the goals of their participation – see further com-
ments below about the levels ‘manipulation’ and ‘therapy’). Second, the
input gathered from citizens (e.g., an electronic vote) should be binding
for the decision-making process of a city in order to cover the control
and delegation aspect of these participation levels. Third, participation
should have a widespread democratic character (e.g. not focusing on an
elite group of non-democratically-selected citizens). For instance, for
those projects for which citizens could decide themselves to participate
or not, no explicit information was found specifically geared to guaran-
Smart City Projects and Citizen Participation 261
the right school (Project 11: London Schools Atlas), pollution (Project
13: Love Clean London project), or sharing ideas on improving transport
in London (Project 28: Transport for London – Innovation portal). Also,
broader discussion platforms are supported in which engaged partici-
pants can formulate topics themselves, and discuss them openly (Project
23: Smart London Platform for feedback; Project 24: Talk London). In
the same category we have classified a major customer relationship
management system, given the fact that it focuses on improving public
services, including providing better information and dealing with com-
plaints. The latter can be considered a particular form of ‘consultation’.
Another project that seems to be iconic – given that the city often refers
to it as a showcase – is London Dashboard (Project 12), through which
Londoners get up-to-date – but still updated at moments chosen by the
city itself – information regarding several key performance indicators
pertaining to decisions or quality of life in London. All the projects in
this second category combine various functionalities that inform citizens
or ask for their input. However, in Arnstein’s classification these projects
are limited to ‘tokenism’ as the gathered input is not binding for the de-
cision makers, nor does it give an indication of the extent to which par-
ticular problems are specific for a particular stakeholder type. Further-
more, they do not guarantee participation of citizens at large. Hence, we
considered active participation and awareness as a distinctive feature for
this group (compared to ‘manipulation’ and ‘therapy’), while the lack of
(1) binding impact on decision processes and (2) a broad democratic
representation distinguishes this group from the higher citizen participa-
tion level projects.
A third group of projects is classified as ‘placation’ and/or ‘partnership’
(Projects: 5, 10, 16, 18, 19, 20, 21, 25, 29). Most of these projects refer
to collaborations with institutes or organisations, in which these partners
take over a part of the actual deployment of the project. Straightforward
examples are projects in which collaborations with businesses are set up
in order to create a context in which it is profitable for an organisation to
deploy a part of the city’s smart city strategy. These can be well-known
partners, such as certain boroughs, departments, or companies that have
been active for a long time in London. In contrast, some projects leave
the exact choice of partners open, and aim to find the best partners
through open-market competition or tendering. It is important for all the
Smart City Projects and Citizen Participation 263
5 Conclusion
In this study we aimed at providing a first insight on how the popular
smart city concept could be a vehicle for higher citizen participation. We
have analysed a single case, which allowed us to make challenges in this
research area explicit, and to set concrete actions for further verification.
We discovered that the type of targeted primary stakeholder is a valuable
dimension that adds relevance to our classification. From contrasting
types of stakeholders with identified participation level, we made a first
proposition for further theoretical and empirical verification.
Our insights, being preliminary and exploratory, need further develop-
ment in multiple directions. Particularly from a methodological point of
view, we consider adding other cities and other relevant dimensions nec-
essary. This will allow for a more robust and generalizable development
of theoretical insights. Furthermore, we have limited ourselves to explor-
ing the relationship between smart city goals and the concept of citizen
participation. Incorporating more detailed managerial challenges and/or
conditions and factors for success as dimensions in our analysis would
also substantially increase the relevance for practitioners. Nevertheless,
we have completed a first step to create a better understanding of citizen
participation levels in smart cities, and how to analyse it.
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Smart City Projects and Citizen Participation 265
David Barrows
Senior Fellow, Centre on Governance, Faculty of Social Sciences, Uni-
versity of Ottawa, Canada
Sheila Bergeron-Barrows
Director Digital Marketing, Vector Media, Canada