Challenges in Building Effective and Competitive Government in Developing Countries

Introduction

One of the key challenges faced by developing countries today is how to make their governments more cost-efficient, effective, and accountable to the public so that public resources can be put to best use to advance economic competitiveness and improve the quality of life for their citizens (Asian Development Bank, 2006; World Bank, 2002). In response to this challenge and economic competitive pressure in the globalized era, many countries have adopted performance budgeting and results-oriented managerial reforms. Although the basic ideas of these reforms originated in the West (Hammer & Champy, 1993; Kaplan & Norton, 1996; Osborne & Gaebler, 1993), many countries in other parts of the world have been adopting them for the past two decades (Asian Development Bank, 2006; Bouckaert & Halligan, 2008; Economic Commission for Africa, 2003; Joint Multilateral Development Banks, 2008; Laking & Norman, 2007; Organization for Economic Cooperation and Development [OECD], 2007; Robinson, 2007; Wescott, Bowornwathana, & Jones, 2009).

Despite the growing popularity of these reforms globally, how to implement them successfully has remained a challenge, especially in developing countries (Andrews, 2005; Tillema, Mimba, & van Helden, 2010). Past studies of development and comparative administration caution us about the direct transferability of Western reforms to non-Western cultures and the dangers of a “one-size-fits all” approach (Andrews, 2010; Christensen, Per Lægreid, & RØvik, 2007; Löffler, 2000). Western experiences with results-oriented reforms also show that they often require complementary system changes and technical support (U.S. General Accounting Office [GAO], 2002), many of which are often lacking in developing countries (Commonwealth Secretariat, 1993). There are also issues about the underlying institutional logic and values that may be incompatible with non-Western cultures and political systems.

Based on new institutionalism—which focuses on the interaction between an organization and its broader context and defines “institution” not only as the formal and informal processes and rules of an organization but also as systems of meanings and normative order that guide, incentivize, constrain, and encourage how individual and organizations operate and interact with each other (DiMaggio & Powell, 1983; March & Olsen, 1984, 1989; Scott, 1994)—this article examines the implementation challenges of Western-styled results-oriented management reform in developing countries. While a few studies have already pointed out the relevance and limitations of institutional theories in analyzing public management reforms at the macro level (Christensen, 2012; Peters, 2012; K. Yang, 2003), not many studies try to integrate these theories and look at the institution–organization links and examine specifically how institutional theories can be used to understand the practice and challenges of results-oriented reforms in developing countries. This article attempts to address these issues by proposing an analytical framework of institutional gaps and examining how these gaps interact with reform strategies and leadership characteristics. We then conclude by suggesting some research directions and a few hypotheses that future comparative studies may pursue further.

The Institutional Logic of Results-Oriented Management Reforms

For the past two decades, the pursuit of results-oriented management reforms has become a global managerial phenomenon. While results-oriented management reforms are often part of the “new public management” (NPM) agenda and share some of the core NPM values such as outcome performance measurement, customer orientation, and emphasis on efficiency, results-oriented reforms have significantly deeper historical roots, dating back to performance measurement and budgeting reforms in the early and mid-20th century (U.S. GAO, 1997; Williams, 2004). Also, results-oriented management reforms focus primarily on organizational processes. NPM reforms, on the other hand, have a broader and more vaguely defined agenda, attempting to redefine the roles of the public, private, and nonprofit sectors; empower the citizenry relative to the bureaucracy; and change the economic and social institutions of public management (Hood, 1991). As a result, the hurdles to NPM reforms are tremendous and the likelihood of decoupling and window dressing is high (Christensen, 2012), while getting government agencies to measure, report, and utilize performance indicators in program management and decision making often seems to be more implementable. For the past two decades, many countries have indeed initiated different types of results-oriented management reforms, even though they may differ in emphases and implementation strategies, such as which executive agencies take the lead, how much discretion departments have in developing performance measures, and whether the legislature is directly involved (Asian Development Bank, 2009; Curristine, 2005; Economic Commission for Africa, 2003; OECD, 1997). In general, these results-oriented management reforms share the following characteristics:

A variety of social and political forces have contributed to this type of results-oriented reform globally. From a functionalist perspective, some suggest that global economic competition is an important contributing factor to public demand for this type of reforms (Asian Development Bank, 2006). To sustain economic competitiveness, governments worldwide need to attract and retain foreign investment and the best talent. This requires governments to be more cost-effective in public service provision so that they can meet the quality of life expectations of business leaders and a more-educated segment of the workforce. Political changes, such as democratization, also provide some pressure for reform since these institutional changes open up more opportunities for citizens to voice their opinions, and they may demand greater value for their tax payments and cleaner, more transparent, and more accountable government. Politicians themselves may also want to pursue results-oriented reforms as a tool to show their progressiveness and enhance their legitimacy in governing (Castro, 2009). Others, however, question the rational, functionalistic view as many reforms may have ambiguous intentions and goals, many reformers are not in full control of the implementation process, and it is unclear how successful these reforms have been in enhancing the effectiveness and efficiency of the government (Christensen, Dong, Painter, & Walker, 2012). Instead, they view these reforms as a phenomenon of isomorphism and the result of learning, imitation, and norm sharing (Christensen et al., 2012; DiMaggio & Powell, 1983; Laking & Norman, 2007). Others are even more skeptical about the rational expectation of these reforms and argue that these reforms are simply political tools of bureaucrats to achieve other purposes, such as maximizing local officials’ self-interests (Caulfield, 2006) or power consolidation within the bureaucracy. Some developing countries also view the reforms as ideological imposition by Western donor countries and international organizations (Laking & Norman, 2007).

Regardless of the reasons why results-oriented reforms are adopted, an inquiry which is not the primary focus of this article, all results-oriented reforms represent a new set of institutions that is supposed to transform government from the former bureaucracy to a more efficient, responsive, and accountable governing system. It should not be surprising to see that organizational reforms such as results-oriented management are supposed to impact governmental institution by changing its organizational design and process. However, as Selznick (1957, 1996) suggests, organizational practices are not institutionalized unless they emerge to have distinctive forms, are infused with value beyond the technical task requirements, and are embedded with rituals and norms. Organizational actors perceive the goals, practices, and tools of organizational reforms and attach value judgments and commitments to them. Over time, these perceptions may change and may even deviate from the original intention (Selznick, 1949). As a result, it is important to examine separately the cognitive and normative elements of an organization, as values, and not necessarily benefit-cost calculus, dominate the frame of reference of individual decision making and perceptions of organizational practices (Im, 2007; March & Olsen, 1989; Peters, 2012).

In addition to the process and cognitive dimensions, we are interested in the implications of results-oriented reform for the power relationships of organizations. On this aspect, we differ slightly with the view of sociological institutionalism, which tends to downplay the roles of power and control and emphasizes more the role of conformity, habit, rituals, and isomorphism (Oliver, 1991). In our view, power and institutions are two separate but connected dimensions. The alignment of interests, the involvement of different parties and stakeholders, and the effectiveness of bargaining, coordination, and political strategies can influence significantly the outcomes of administrative reforms, and bureaucratic life is political in nature (March & Olsen, 1989, pp. 74-78). As Campbell (2004) remarks, “Institutions are settlements born from struggle and bargaining. They reflect the resources and power of those who made them and, in turn, affect the distribution of resources and power in society” (p. 1). Power and institutionalization are intertwined because organizational actors need to exercise power to gain recognition, establish legitimacy, and provide new foundations of authority (Selznick, 1969). They need power and resources to maintain stability and continuity in organizational and social life, which is one of the primary goals of institutionalization (Stinchcombe, 1968). By making claims and deploying human resources—such as physical strength, knowledge, time, and emotional commitment—as well as nonhuman resources—such as money, supplies, and other animate and inanimate objects—organizational actors limit and structure other actors’ choices and opportunities to act (Selznick, 1949; Sewell, 1992). Power is also manifested when someone is perceived to have the legitimate authority to demand actions from others. This recognized authority may coincide with the formal organizational hierarchy, but in some cultures and organizational settings, this power exists in parallel to the formal organizational structure due to separate social norms and informal networks of agents (Crozier & Fridberg, 1980). Socialization reinforces recognition of this formal and informal power and helps agents internalize perceived authority so that they act in a directed and voluntary manner on behalf the interests of those in power.

At the same time, the exercise of power is always contextualized by the institution. While organizational actors may use power to create or maintain an institutional order, their exercise of power is constrained by the existing institutional structure of relationships (Giddens, 1979, 1984). As Friedland and Alford (1991) remark,

The success of an attempt at institutional change depends not simply on the resources controlled by its proponents, but on the nature of power and the institutionally specific rules by which resources are produced, allocated, and controlled. The institutional nature of power provides specific opportunities for not only reproduction, but transformation as well. (p. 254)

Hence, understanding the power relationship in institutionalization is important because power reinforces institutions, but institutions also constrain the use of power.

Based on the above understanding, we view results-oriented reforms as attempts to transform the process, normative values, and power distribution of public organizations, which simultaneously constrain the intention, strategies, and results of reforms. On the process dimension, results-oriented reform often introduces procedural changes, such as new reporting steps, goal setting, and strategic planning. These reforms may also create new offices, such as agencies specializing in program evaluation, and new processes, such as new systems of program evaluation and new communicative protocols between agencies and policy makers, to help officials focus more on results that matter (Andrews, 2005; Curristine, 2005). Business process improvement tools, such as Six Sigma and Total Quality Management, may also be used to streamline the production process and cut costs (Chiu, 1997), and appropriate monitoring and control systems can be introduced to prevent fraud, abuse, and corruption (Wescott & Jones, 2007). These process and organizational changes may be intended to enhance the technical efficiency and goal-orientation of the operations of public organizations. However, they may also challenge existing values and power distribution (Ho, 2007).

Results-oriented reforms also represent a new normative and interpretative order of organizational behaviors. For example, when policy makers demand public agencies to “do more with less,” criticize public programs as “wasteful” and “bureaucratic,” and demand that public officials measure and report the outcomes of public spending and become more “accountable” to taxpayers, they are implicating certain values, such as technical rationality, openness and transparency, and citizen authority over the bureaucracy (Talbot, 2010). They also represent a new set of norms that focuses on results, innovation, managerial flexibility, employee empowerment, and citizen preferences. These normative values represent a challenge to traditional thinking within the bureaucracy, which tends to emphasizes stability, seniority, low risk, and rule compliance. Hence, results-oriented management reforms are also attempts to change organizational culture and create a new socially constructed reality.

By introducing process and value changes, results-oriented reforms often lead to new power dynamics and re-shape the interests and power equilibrium of different actors and stakeholders within an organization. For example, the chief executive’s office may require more elaborate performance reporting under results-oriented reform. These paperwork procedures may seem purely organizational and process-driven, but can have significant power implications as they seek to give the chief executive’s office or the budget office more power and tighter control over departments (Ho, 2007). Sometimes, results-oriented reform may be a purposive attempt to redistribute power between the executive and legislative branches of the government (Halligan, 2007; Ho, 2007). Similarly, an attempt to use measurable program outcomes as the basis for personnel evaluation and promotion not only changes the substantive focus of a process, but also the potential power relationship between senior and junior workers, or between the management and the union. The requirement of public performance reporting and incorporating citizen input in service result evaluation also implies a shift in power from bureaucratic dominance to power sharing between the government, politicians, and the general public (Shah, 2008; Siddiquee, 2006). Hence, by changing what performance measures departments should use, to whom they should report performance results regularly, and how resources should be allocated based on reported performance information, results-oriented reforms may realign the power relationship among key actors and re-define their sources of legitimacy within a public organization (Pollitt & Bouckaert, 2011; Stone, 1997; Van Dooren & Sterck, 2006).

Given the implications of results-oriented reforms for the process, value, and power dimensions of public organizations, one of the key challenges of results-oriented reforms is to align the changes in these subsystems to achieve the desired reform outcomes. Ideally, reform strategies should be logically consistent and mutually reinforcing. For example, results-oriented reform may introduce new processes and tasks, such as new training programs, employee recognition systems, and organizational awards for innovation, to reinforce the values of result-oriented thinking and organizational innovativeness. The personnel system may also introduce new rules and incentives to promote employees who support these core values.

However, in reality, the process, value, and power dimensions of public organizations often have internal conflicts and tension, and organizations may not function as rationally as one may hope. For example, March and Olsen (1989) remind us that the history of administrative reorganization is a history of rhetoric without much evidence of real cost savings and improved efficiency and effectiveness. Reorganizations often become garbage cans because policy problems and solutions are ambiguously defined, goals and values are unclear, political actors are diverse and fragmented, and the reform process seldom matches the right solutions to the problems at the right time with the right actors (Cohen, March, & Olsen, 1972; March & Olsen, 1986, 1989). As a result, reorganizations often digress to symbolic actions without substantive impacts.

We agree with March and Olsen’s observations about the history of administrative reforms, but want to add that part of the root cause of the challenges they see is institutional—the misalignment of inter-institutional logics and elements (Thornton, Ocasio, & Lounsbury, 2012). All organizations are embedded in wider institutional environments that have their own sets of cognitive rules, symbolism, rituals, and power distribution. As North (1993) remarks,

If institutions are the rules of the game, organizations are the players. . . . The constraints imposed by the institutional framework (together with the other constraints) define the opportunity set and therefore the kinds of organizations that will come into existence. (p. 62)

For example, the network of organizational entrepreneurs and their interactions with other external actors may influence the availability of information and ideas about institutional changes and may shape leaders’ subjective perception of the value and consequences of changes (North, 1993). DiMaggio and Powell (1983) look at institutional influence on organizations from another perspective and introduce the concept of organizational fields. Professional norms, interaction among organizations, and the development of a mutual awareness among organizational actors at the level of organizational fields lead to three sources of institutional isomorphic changes: coercive pressures by other organizations, mimetic pressure to respond to environmental ambiguity and uncertainty, and normative pressures to enhance legitimacy among peers. Friedland and Alford (1991) also suggest the need to pay attention to the interactions, conflicts, and exports between macro-institutions, such as family, state, and corporation, and how those interactions influence, but not dictate, organizational and individual behaviors. These perspectives suggest that organizational change, such as results-oriented reforms, does not happen independently. They are influenced by the elements and changes in the larger institutional context, such as the normative structure of organizational fields, society, and the global system.

The complexity and conflicts of inter-institutional layering cause many organizations to struggle with institutional change (Thornton et al., 2012). This is especially true about results-oriented reforms in developing countries, which face the global pressure of isomorphic changes, but at the same time, need to reconcile conflicts among different institutional orders, such as the traditional social relationship, cultural values, and the notion of the democratic state from Western countries. In the following, we discuss specifically how features of Western results-oriented reforms may sometimes conflict with developing countries’ institutional settings, and how these conflicts impact the implementation strategies and results of the reforms.

Challenges of Results-Oriented Managerial Reforms in Developing Countries

Table 1 summarizes some of the institutional challenges of results-oriented reforms in developing countries. On the dimension of formal organization and procedural change, one of the most obvious challenges is capacity constraints (Mimba, Van Helden, & Tillema, 2013; World Bank, 2004). In many Western developed countries, there is considerable organizational capacity to develop and use quantifiable performance indicators, and managerial processes such as strategic planning, public reporting, or performance-based personnel evaluation system are usually well-established. These conditions are usually absent in many developing countries. Capacity constraints are severe not just in terms of staff availability but also in terms of data management and staff competency to use and analyze the data for managerial decision making (Andrews, 2005; Asian Development Bank, 2006; Castro, 2009).

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Table 1.

Challenges of Results-Oriented Reforms in Developing Countries.

Traits of results-oriented reform		Challenges commonly found in developing countries
Use of quantifiable indicators to measure performance	Process and organizational design view	Significant capacity gap in the personnel and data management capacity
		Difficulty in deciding which agency should be responsible for defining the measures and doing the evaluation effectively and reliably
		Questionable system to protect the integrity of the measurement and reporting system
	Power view	Questionable power relations that allow the lower level of the bureaucracy to ignore the requirements or pay lip service only
		Lack of power for the analytical staff and insufficient collaboration from line agencies
	Cultural view	Personal relationships may be more important than technical rationality or transparency
		Acceptance of being evaluated
		Legitimacy based on tradition or history rather than on performance
		Lack of public trust in the integrity and/or competency of the bureaucracy
Use of performance indicators to guide strategic planning and resource allocation	Process and organizational design view	Significant disconnect between data management and resource allocation
	Power view	Unstable power relations that allow subordinates within the bureaucracy to hide information and delay the decision-making process
		Superiority of executive branch to the legislature owing to information monopoly and non-compliance in policy implementation
	Cultural view	Short-term perspective
		Resource allocation that may be based on relationship networks and social norms more than technical data
Use of performance indicators to guide personnel decision making	Process and organizational design view	Insufficient safeguards for civil servants to use performance logic in decision making
		Respect for traditional hierarchy
		Limitation of performance measurement owing to difference between explicit and implicit results
	Power view	Loyalty being viewed as more important than performance
		Performance indicators as instruments of top-down control regardless of data reliability and validity
	Cultural view	Seniority rule
		Favoritism and family-like organizational culture
		Decision-making process as a means of conventional value of members rather than as scientific procedures
Public reporting of performance results	Process and organizational design view	Lack of organizational capacity of public reporting
	Power view	Information monopoly and a tightly controlled classified document system
		Poor public relations
		Public reporting as an instrument of organization control and propaganda by leaders
	Cultural view	Lack of democratic and public accountability tradition
		Cultural resistance to public reporting as open conflict, and discomfort with public embarrassment of policy leaders and senior officials
Focus on outcomes, cost-efficiency, and responsiveness	Process and organizational design view	Bureaucratic expansionism
		Significant disconnect between outcomes, cost-efficiency, and responsiveness
	Power view	Supremacy of bureaucratic elites
		Inefficiency and unresponsiveness sacrificed by power relationship in organization
	Cultural view	Collective justice rather than distributive justice
		Emphasis on stability rather than on cost-efficiency or effectiveness

In addition, the organizational design of departments, as well as check-and-balance mechanisms to ensure public accountability and data integrity, are well-defined in Western developed countries and have sometimes been taken for granted (Rosenbloom, 2002). These institutional assumptions, however, are questionable in many developing countries. In many situations, who is accountable to whom and for what results may be very unclear (Andrews, 2005). For example, the scope and boundary of organizational units to be measured, such as the program and departmental structure of government spending, may not be well-defined. The division of labor and power relationships between agencies, such as between the budget office, the auditor’s office, line departments, and the evaluative agencies of the legislature, may be highly ambiguous and unstable because of lack of rule of law, constant changes of political leadership, and legislative instability. In some cases, “rule of men” operates more than “rule of law” in the organizational reality. Also, the vertical accountability relationship between supervisors and their subordinates of the government may be very fluid. What makes the situation worse is that there may be weak safeguards for departmental officials’ tenure and security, such as the right to a salary based on performance or a well-defined discipline and grievance process that is apolitical. As a result, department officials may face more political pressure to follow the will of the political leaders than to use performance-based logic in their daily work.

On the cultural dimension of institutional changes, reformers in developing countries also have to overcome many hurdles. In many Western countries, rule of law, constraints on state power, the constitutional rights of citizens, democratic control, and checks and balances between the executive and legislative branches are well-accepted in society because of the historical tradition of democratic development built over centuries. As a result, it is perfectly legitimate for the legislative branch to ask for performance indicators to monitor the bureaucracy, and for citizens to expect the government to report data and information about how tax money has been used and to question the data and results to hold agencies accountable. Inside a bureaucracy, public employees also expect equal treatment in personnel practices because of the long-held belief in equal rights and anti-discrimination based on race, age, or other social and political characteristics. All these cultural norms and values embedded in results-oriented management are more easily accepted and internalized by public employees because they are consistent with the macro cultural and value institutions of Western societies.

However, such micro–macro institutional consistency is not necessarily present in many developing countries because of key differences in cultural heritage and history. For example, because of their different historical and political heritage, many developing countries’ personnel systems may reward loyalty to the superior more than performance or public accountability. Discrimination by sex and age often exist de facto and are unchallenged. Also, long-standing, paternalistic cultures in some developing countries may lead to a more hierarchical view of social order and the dominant roles of the state (Abbott, 1988; Cho & Im, 2010; Powell, 1991, p. 191; M. M. Yang, 1989, p. 32). Similarly, some countries, such as many Asian countries that share the cultural heritage of Confucian philosophy, or African countries that are still influenced heavily by the traditional tribal culture, emphasize collectivist and relation-based social norms in organizational behaviors (Laking & Norman, 2007). Because of these cultural settings, performance logic may not be the dominant philosophy of management and program outcomes and individual merit may not matter.

On the power dimension of results-oriented reform, many developing countries also face unique challenges given their history and developmental path. For example, many of them are still immature democracies, and so their parliamentary or political party systems are comparatively weaker than the executive branch. As a result, resource allocation in developing countries is usually dominated by the executive bureaucracy, and informal power relations among leaders are very important in the decision-making process. There are also relatively weak check-and-balance mechanisms to ensure data integrity or the public accountability of the government (Asian Development Bank, 2006). Results-based reform may have little significance in the political process since the legitimacy of the government may rely heavily on the personal charisma of the political leadership, or merely on the dominant power of the governing regime, rather than on the competency and performance of governmental agencies. As a result, bottom-up innovation sharing power with the general citizenry to allow for greater transparency and public accountability may face significant resistance in the bureaucracy (Cho & Im, 2010; Laking & Norman, 2007; M. M. Yang, 1989, p. 32).

Implications for Results-Oriented Management Reform in Developing Countries

When imported reform ideas conflict with some of the existing institutional settings in developing countries as discussed above, two possible strategies of reform may occur. First, Western ideas may be modified to adapt to the local institutional contexts so that challenges to the existing institution can be minimized, the benefits to the existing power structure can be increased, and the risk of reform failure can be managed carefully. No countries share the same history, socioeconomic settings, cultural heritage, and political dynamics, and even if they have similar institutional backgrounds, individual leadership at a particular historical moment can interpret and react to institutional norms and challenges differently (Friedland & Alford, 1991; Thornton et al., 2012; Toonen, 2001). As a result, even developed countries have varying practices of results-oriented management because of local institutional constraints (Andrews, 2010; Bouckaert & Halligan, 2008; Kuhlmann, 2010; OECD, 2007; Pollitt, 2003, 2006). However, what makes local adaptation more important and challenging in developing countries is that unlike developed countries, they do not necessarily share the same overarching, macro-institutional orders, such as rule of law, professional norms in government administration, constraints on state power, multisectoral governance in society, and multiparty democratic institutions. As a result, institutional entrepreneurship and local adaptation are needed to make Western ideas work better in different local contexts. For example, China does not have Western-styled legislative democracy and the executive and legislative branches have asymmetric power balance (Lu & Xue, 2011). As a result, when some Chinese local governments tried to implement results-oriented reforms, they tried to incorporate results-oriented management principles into the Communist Party’s target responsibility and policy indicator system, rather than through the legislative accountability system (Chan & Gao, 2008, 2009; Gao, 2009).

Besides local adaptation, the second path of reform strategy is “window-dressing” of the reform (Christensen, 2012). Under this strategy, reformers present the highly rationalized formal structure and reform strategies publicly, such as strategic planning, a new organizational chart, or a new budget process, but the actual practices of the organization are decoupled or loosely coupled with the formal structure (Meyer & Rowan, 1977). Decoupling may be a defensive response to maintain internal operational efficiency and protect it from inter-institutional conflicts (Boxenbaum & Jonsson, 2008). Decoupling can also be a strategic response to purposively impress the key stakeholders to gain legitimacy, resource support, and other advantages (Elsbach & Sutton, 1992). Finally, it can be the result of rational political calculation—when local adaptation is too risky or costly, institutional incompatibility and resistance to change may force reform leaders to back down and make the reform a symbolic gesture only (Larsen & Gronitzka, 1995).

For example, South Africa introduced performance-based budgeting in the early 2000s, but performance information was presented separately from the financial portion of the budget, the appropriation process remained largely unchanged without sufficient integration of performance evaluation into the budgetary process, and political representatives and managers were not incentivized to pay attention to the performance information (Andrews, 2005). Similarly, Malaysia followed the British experience and introduced a “citizen charter” for agencies, with the hope that it would enhance customer focus and improve service quality (Sarji, 1993). However, the implementation result shows that agencies seldom changed their organizational process and consulted citizens in their citizen charters. The culture of bureaucratic dominance remained, and many services in fact diminished citizen voice because of privatization and the exclusion of low-income residents who could not afford the services (Siddiquee, 2006). India also implemented a series of reform in the 2000s to introduce results-oriented management and outcome-based budgeting. However, despite all the paperwork and new procedures in place, studies have shown that the reform did not lead to much substantive impact and real improvement in services because the reform on paper at the national level was not matched with capacity building, organizational change, cultural reorientation, and power realignment on the ground (Gupta, 2005, 2010). Similar “window-dressing” strategies were found when China tried to introduce zero-based budgeting in the 1990s to improve efficiency and effectiveness of government spending (Ma, 2005; Niu, 2010).

Implications for Comparative Performance Management Research

Given the above understanding, we suggest that future comparative studies of results-oriented management and budgeting reforms need to pay closer attention to the institutional expectations of Western-styled reform, and the gaps between those expectations and local institutional characteristics. These gaps are not just about organizational design and process capacity, such as the educational background of civil servants or the informational capacity of agencies to measure and analyze performance but also about the normative understanding of the roles of government and government–society relationship, and the implicit power assumptions between different branches of the government and between supervisors and subordinates within the bureaucracy. If there are significant gaps between the reform ideas borrowed from the West and the local institutional contexts, reform goals, content, and strategies will have to be adjusted accordingly to prevent failures.

Figure 1 conceptualizes this idea of institutional gaps. The three dimensions of institution discussed above are represented in the three axes in the diagram. The space, W, outlined as the area of ABC, represents the ideal characteristics of results-oriented reform based on Western developed countries’ experiences, such as reliable and valid data collection (process), a strong focus on transparency and customer-oriented thinking (culture), and constraints of executive power and good check and balance mechanisms to prevent frauds and abuse (power). The space, S, which is outlined as the area of abc, represents the existing institutional status quo of a country. The gap between W and S, designated as G and outlined as the area between ABC and abc, is the potential space for results-oriented reform.

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Figure 1.

Conceptualization of the institutional gap analysis.

The challenge for reformers is to set the goals and strategies of reform (xyz) ambitiously but also realistically so that the reform results are achievable within the existing institution context, or they may face the danger of loose decoupling and window dressing as discussed above. The space, R, which is the area outlined by (x − a)(y − b)(z − c), represents the institutional space that is intended for change by the reform. The institutional status quo certainly constrains and provides the backdrop of reform strategies by framing reformers’ attention and ideas, providing the opportunities to act, and limiting possibilities of resource mobilization (Greenwood, Suddaby, & Hinings, 2002; Kirzner, 1997; Thornton et al., 2012).

Based on the above understanding, we hypothesize that the current institutional status quo (S) and its relative position to the idealized institutional setting (W) should constrain the possibility of reform space (R) and incentivize certain reform strategies, such as decoupling. Specifically, we hypothesize that,

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Figure 2.

Institutional contexts and hypotheses of reform strategies.

At the same time, R and S do not have a deterministic relationship, as suggested by Friedland and Alford (1991). Certain organizational factors and reform strategies themselves may alter the reform landscape. For example, past studies have shown that the support of the top leadership can make a difference (Laking & Norman, 2007). Individual leadership characteristics, such as the charisma of the reform leaders, their ability to articulate a clear vision for others to follow, and their ability to connect with other key stakeholders to mobilize their support, are very important and can alter the institutional landscape and release the constraining forces. Hence, we believe that the intention and strategies of reform, leadership, and institutional contexts are dynamically interconnected. We therefore hypothesize that

Another positive factor for reform is the presence of public pressure for reform. As Pollitt and Bouckaert (2011) remark,

. . . although lay citizens are unlikely to be brimming with concrete proposals for better management, they can, and, on occasion, do exert pressure for change. If, for example, citizens become used to very rapid and customer-friendly transactions in banks, building societies, and shops they may become progressively more and more discontented with post offices or benefits payment agencies which are slow, inflexible, and inhospitable. Such discontent with low standards of service in state institutions may then be expressed to political representatives, or the media, who then communicate them onwards to the elites. . . . [Thus, citizens] constitute an important background influence. (p. 39)

Implicit in this remark about the citizen power is the availability of institutional channels that allow citizens to express their opinions and frustration, and the legal rights to protect their freedom of speech through the media. When these institutional conditions are present, citizen demand for change will push for more space for reform. Hence, we hypothesize that

Certain strategies, such as decentralization, may also foster more ambitious reforms despite the institutional constraints. Past studies show that there seems to be no clear relationship between political decentralization and the aggressiveness of results-oriented reforms. At least among developed countries, the heavy users of performance budgeting include both decentralized countries, such as Australia and the United States, and centralized countries, such as the Netherlands and the United Kingdom (Pollitt & Bouckaert, 2011). However, there are also evidences suggesting that at the local level, countries that allow for more decentralization and local experimentation are more likely to see meaningful usage of performance information, more fruitful learning process internally, and greater political relevance of the reform results (Kuhlmann, 2010). Hence, reform strategies that allow for more local adaptation and institutional entrepreneurship should encourage greater scope and depth of results-oriented reform.

To test these hypotheses, more empirical studies across non-Western countries focusing on not only the relationship between institutional contexts and causes of reforms but also on the dynamics between institutions, leadership, and local adaptation strategies are needed. Also, more attention should be given to the timeframe of reform (Im, 2010), as time is a critical contextual factor (Giddens, 1979), the reform path and pace may vary over time (Pollitt & Bouckaert, 2011, p. 211), and what seems to be ineffective in the short run may have different results in the long run (March & Olsen, 1989, p. 86). If this is true, then students of institutional reforms such as results-oriented management may also need to take a longer time perspective in evaluating the above hypotheses.

Conclusion: Institutions, Strategies, and Reform Leadership for Performance-Oriented Reforms in Non-Western Cultures

Given the global trend of public management reforms and the increasingly obvious diffusion of reform ideas from the West to other countries (Andrews, 2010; Christensen, 2012; Christensen et al., 2012; Christensen, Lisheng, & Painter, 2008; Hood, 1995; Pollitt & Bouckaert, 2011), the time for more comparative reform research is ripe. However, as the pressure of isomorphic change continues to mount, it is common to observe politicians and scholars from developing countries taking advantage of reform rhetoric and talking about the desirability of “state of the art” reform ideas from Western countries, but not pursuing any substantive actions that cause real change (Brunsson, 1991; Laking & Norman, 2007). Also, there is still insufficient understanding among academics about different inter-institutional layering problems, such as how and why Western reform ideas are perceived and accepted by local institutional entrepreneurs; how local organizational, political, and cultural settings influence the process of local adaptation; what reform strategies and implementation tools are pursued in the adaptation process; and what impacts these strategies and tools have made. As Bouckaert and Halligan (2008) point out,

the question of context and agreement and alignment between different management components has been a live issue in the reform era . . . There are many cases of incompatibility of management techniques with the governance framework, a famous historical case being PPBS in the United States. The implication is that it is difficult for performance management to thrive within a traditional framework. There are different tasks to perform in working through and implementing reform, and different orders of change can be distinguished: adaptation and fine tuning of accepted practices at the most basic level; the adoption of techniques; and the set of ideas that comprise the overall goals—the framework guiding action. (pp. 172-173)

Even though Bouckaert and Halligan (2008) focus primarily on reforms in developed Western countries, their remarks are extremely relevant in developing countries. If developed countries are struggling with results-oriented reforms even though they have greater administrative capacity and a longer history of rational institutional reform, there is no question that developing countries will have an even harder time implementing results-oriented management due to capacity constraints and institutional differences.

Using institutional theories, this article examines the assumptions and challenges of results-oriented reform in non-Western countries and cultures. It points out that the reform has many embedded institutional assumptions that are often not compatible with the inherent political, social, and cultural institutions of developing countries. As a result, reformers have to be sensitive to their unique institutional constraints and mindfully adapt the reform features to the interest alignment of different stakeholders and to specific sociocultural settings. Of course, institutions are not static and homogeneous, and conflicts and incompatibility among institutional settings are inevitable (Friedland & Alford, 1991; Greenwood & Hinings, 1996; Orren & Skowronek, 1996; Sewell, 1996). The challenge for reformers is therefore to find the right balance of de-institutionalizing the existing system enough to cause positive changes, but not to shake up the existing institutions so much that reforms will fail due to too much resistance and incompatibility problems. Finding this balance, however, is an art rather than a science, and leadership and strategies matter. This article calls for more institutionally sensitive research and proposes a few hypotheses for future studies. It is hoped that through these efforts, policy makers and governmental reforms may have more evidence-based guidelines on how results-oriented reforms should be implemented, especially in developing countries that face vastly different contexts from developed Western regimes.