Laurence J. O'Toole’s research while affiliated with Danish National Centre for Social Research and other places

Over the past 20 years, the subject of public management has received much attention. Although this research has clearly demonstrated relationships between management and performance in the public sector, there have been few attempts to incorporate the management of risk and its effect on performance. In this article, we seek to provide a discussion and research agenda from which scholars can begin to address this gap. After clarifying the notion of risk and distinguishing it from other related concepts, we consider some behavioral foundations for a research agenda focused on how public managers deal with situations in which they face risky prospects. We explicate the relatively limited treatment of risk thus far in the public management research literature, as well as how agencies and governments have typically approached the theme of risk. Fortunately, fields including risk analysis, behavioral psychology, and decision making provide starting points for scholars. We build from these foundations to sketch the beginnings of a theoretically driven research agenda on risk and managerial decision making. It is our hope that this effort draws attention to the subject and points toward an agenda that can stimulate work in this important area.

Accountability pressures have generated complex performance measurement regimes to evaluate and improve public or publicly funded services. Performance management, however, faces many challenges including the tradeoffs posed by numerous dimensions of performance and a lack of consensus on which organizational and environmental factors can improve these results. This study seeks to understand the effect of management and other factors on different dimensions and measures of performance in US public, nonprofit, and for-profit nursing homes. Using a hybrid data set that combines archival government data on performance in nursing homes with a recent nursing home administrators’ survey, we find that innovative management significantly¹ improves the quality of care. In addition, more innovation and less power sharing in management are associated with serving fewer Medicaid-funded clients. Significant differences in performance exist across public, nonprofit, and for-profit organizations. These differences are notable across both the archival and perceptual models of performance.

Although the influence of government regulation on organizations is undeniable, empirical research in this field is scarce. This article investigates how the understanding of and attitudes toward government regulation among public, nonprofit, and for-profit managers affect organizational performance, using U.S. nursing homes as the empirical setting. Findings suggest that managers' perceptions of regulation legitimacy-views of regulation fairness, inspectors' effectiveness, and internal utility of the mandates-positively affect service quality. Subgroup analysis suggests that managers' views of regulation matter in nonprofit and for-profit organizations but not in public organizations. In nonprofit homes, performance declines when managers report higher regulatory expertise-better knowledge of the regulatory standards. In for-profit facilities, frequent communication with regulators lowers quality. These findings suggest that the regulated entities' views of government regulation are central to their success, which necessitates improvements in the regulatory process.

Public management studies are increasingly using survey data on managers' perceptions of performance to measure organizational performance. These perceptual measures are tempting to apply because archival performance data or surveys of target group outcomes and satisfaction are often lacking, costly to provide, and are highly policy specific rendering generalization difficult. But are perceptual performance measures valid, and do they generate unbiased findings? We examine these questions in a comparative study of middle managers in schools in Texas and Denmark. The findings are remarkably similar. Managers systematically overestimate the performance of their organization, perceptual performance is only weakly associated with archival performance, and managers do not provide sophisticated assessment of performance by giving their organization credit for the constraints it meets or discounting the resources it has. Even worse, the use of perceptual performance measures seems to provide biased estimates when examining how management affects performance. This is due to both random measurement error and common source bias.

While recent research has shown that management matters, we know very little about the role of national contexts in shaping management effects on performance. We address this issue by comparing the impact of management of similar organizations—schools—in very different national contexts, the unitary and corporatist Denmark and the fragmented, adversarial Texas. We hypothesize that external as well as internal management matter more in Texas than Denmark. This is because Texas principals can gain power by negotiating the adversarial system, while the corporatist influence of teachers reduces the decision authority of principals in Denmark through collective agreements and important shop stewards. Based on combinations of parallel surveys of school principals and archival data on student performance, we confirm that aspects of both external and internal management matter substantially in Texas while having virtually no effect in Denmark. We therefore suggest that public management research should pay more attention to the role of context.

Recent years have seen a substantial growth in the large-N quantitative study of public management and performance. Much of the progress can be attributed to a small number of data sets on local governments in a few countries. The range of data sets suggests the validity of the overall hypothesis of management affecting performance, but the precise findings also vary across these and other contexts. These various and sometimes conflicting findings suggest that additional gains might be made through developing a theory of context and how context affects the management-performance linkage. This article seeks to take some initial steps in providing such a theory by incorporating such contextual variables as political context (unitary versus shared powers, single- or multiple-level, corporatist versus adversarial, with or without a formal performance appraisal system), environmental context (extent of complexity, turbulence, and also munificence; presence versus absence of social capital), and internal context (extent of goal clarity and consistency, organizational centralization versus decentralization, and degree of professionalism). The theory presents context as a set of variables that condition the impact of management in an interactive model. The theory seeks to unify the existing findings and present a series of hypotheses for further empirical testing.