MG451 Summary writing #2

s11101079 Blended Mode Kiribati Campus

Introduction:
The following summary is based on the four selected scholar articles such as Agency theory by Eisenhardt, Public
management for all season by Christopher Hood, new public management is dead – long live digital era governance by
Patrick Dunleavy, Helen Margetts, Simon Bastow and Jane Tinkler and pessimism, computer failure, and information
systems development in the public sector by Shaun Goldfinch.
Each of the scholar articles are derived on the basis of governance process within the public sector context. They
analyses new contributions to management style within the public sector. Such writing may be within the 19 century of
time but still maintain their influence toward public sector governance.
Generally these selected writing focuses on agency theory, NPM as the management style for all season, the emphasis
on Digital Era Governance and the identified shortcomings and issues of IT projects implemented within certain public
sector contexts.
This summary writing will summaries all main emphasized points stated within each selected scholar articles and then
gives a brief statement on what learning lessons from each writings. This analyses will be made per sub section of
writing main points discussions.
Overall all these articles contributes to the development process of the governance process of the public sector. It
identifies certain strengths of NPM, initiating features of the NPM movement, the components of NPM, the issues of
NPM as well as the contribution of information system into improving the process of governance process. The
summary will be arrange from Agency theory by Eisenhardt, Public management for all season by Christopher Hood,
new public management is dead – long live digital era governance by Patrick Dunleavy, Helen Margetts, Simon
Bastow and Jane Tinkler and pessimism, computer failure, and information systems development in the public sector
by Shaun Goldfinch in an orderly manner.
Agency Theory – Eisenhardt
 Agency Theory
Agency theory is derived from economic stream of field that is further applied into the public sector
management. It is further categorized under the ‘Positivist Agency Theory’ and ‘Principal-Agent Research’.

 Positivist Agency Theory & Principal Agent Research

The positivist agency theory focuses on the identification of situations at which both the principal and agent are
likely to have conflicting of interests and goals and then proper governance mechanisms are derived that
minimizes the agent’s self-serving behavior. The principal agent research focuses on the principal-agent
relationship at which optimal contract type are implemented. There are two type of contracts such as ‘Outcome-
based Contract’ and ‘Behavior-Based Contract’ at which each with varying required conditions for agent
optimal services.

The following lists the requirements for certain type of contracts for optimal relationship between principal(s)
and agent(s):
1. Outcome based contract the agent is more likely to act towards principal(s) interests
2. When the principal(s) have information to verify agent behavior hence behavior based contract is used
3. When outcome uncertainty is high then behavior-based contract is optimal
4. The risk aversion of agent implies the application of behavior based contracts.
5. The risk aversion of principal(s) implies the application of outcome-based contracts
6. The goals differences between the principal(s) and agent(s) is best solved via the application of
Outcome-based contracts
7. Task programmability is best suited with behavior-based contracts
8. Outcome measurability is appropriate with the application of outcome-based contracts
(source: Eisenhardt, 1989 )

 Agency Theory and the Organizational Literature

Agency theory also have certain similarities with other streams of theories. In terms of organization theory,
there similarities involves the nature of cooperative behavior between individuals with differing preferences
(conflicts of goals) engaging in cooperative effort and that of identification of means/ends relationships with
evident goals and linking it with either behavior and outcome control is similar with agency theory of task
programmability and measurability of outcomes to its contract form (Eisenhardt, 1989). Agency theory is also
similar with political models of organizations that assumption of pursuit of self-interest at individual level with
the goal conflict at the organizational level however they differ in solving those conflicts at political models
implement bargaining, negotiation and coalitions while agency theory applies the coalignment of incentives for
agents (Eisenhardt, 1989). And Agency theory is similar with that contingency theory in terms of information
processing approaches as they both uses the theories that information is distributed asymmetrically throughout
the organization in the efficient manner possible. Their differences is that contingency theory focuses on
optimal structuring of reporting relationships with decision making responsibilities whereas agency theory
focuses on optimal structuring of control relationships resulting from these reporting and decisions-making
patterns (in-text referencing). Agency theory shares certain similarities with the organization theory while at the
time have clear differences.
  Contributions of Agency Theory
Agency theory have two main contributions toward the organizational way of thinking. These two contributions
includes the treatments of information and the introduction of risks. Information such as budgeting, boards of
directors and other categories is viewed as a commodity that can be bought and that it has an important role in
controlling agent opportunism. For instance, the board of directors can be used for monitoring shareholders’
interests via the information they provide from the firm top executives reports (Eisenhardt, 1989). The second
contribution involves the risk implications of organizations given that they have uncertain futures. This is
closely related with the ramifications of outcome uncertainty as there are certain outside factors which the
organization cannot predicts and controls (Eisenhardt, 1989). These two contributions have major impacts
toward the type of contracts to be used between the agents and principals.

 Things learned:
From this study, it givens the general views as well as specifications on the principal(s) and agent(s) possible
issues with their identified solutions. Overall it deals with the principal(s) to agent(s) relationships within every
given organization, either public sector or private sector. So far in the study of there are only two types of
contracts that which principals implemented in a certain situation to optimize and align the agents motives
toward that of principals. Also with the introduction of this concept, the motive factor with risk factor while
information system emphasized for proper control are properly introduced into the public sector thinking that
are quite popular within the private sector organizations.

This theory (agency theory) further expands on the public sector paradigm. Also it suggests that further in looks
should be made beyond the scope of economics given that this theory is rooted from such area of knowledge.

A Public Management for all Seasons

 The rise of new public management
New public management is implemented due to the identified issues traditional public management faces.
Traditional public management tends to be red tape with application of bure bureaucracies tends to make public
service rigid and inflexible. From this study, the rise of NPM tends to be associated with the attempts to reverse
the government growth in its overt public staffing and spending, the shift to both privatization and quasi-
privatization for government non-core activities, the emphasis on information technology for efficient and
effective processes and more focus on international agenda, policy design, general issues of public management
and other relevant factors (Hood, 1991)). As it is implied, the NPM is viewed to solve the traditional method of
public management hence it become popular.

 What the emperor was wearing: The doctrines of NPM

The NPM have variety of doctrines at which seven of them are mostly identifiable. These doctrines include the
professional management in the public sector, the transparent standards and measures of performance, the
emphasis on output controls, the disaggregation of units in the public sector, the focus on competition within
public sector for better products and services, stress on the application of private sector management styles and
the emphasis on resource usage discipline and parsimony (Hood, 1991). Most of those applied doctrines are the
 opposite of the processes and practice of traditional public management.

 Where the design came from: NPM as a marriage of opposites

The concept of NPM is derived from two different streams of theories. These include the ‘new institutional
economics’ and ‘latest set of successive waves of business-type managerialism’. The first theory focuses on the
application of public choice, principal-agent theory and transaction cost theory and the second theory emphasis
that professional management expertise to be portable and more important over technical expertise, needs high
discretionary power to achieve results (free to manage) and it is both indispensable and central for better
organizational performance via the development of cultures with active measurement and adjustments of
organization’s outputs (Hood, 1991). With the combination of these two theories main features with their sub-
features, NPM is formed as per according to this study.

 Why NPM found favor: the acceptance factor

NPM during its conceptualization process and after it had thorough take form it is accepted within the public
sector due to certain identified factors. The first factor is that “it is interpreted as a sudden and unpredictable
product of loquocentric success” that is deemed to have to have necessary qualities for pop management
stardom (Hood, 1991). The second factor is that NPM is views as the ‘cargo cult’ phenomenon that implies the
practice of particular type of managerial ritual can gain substantive success in spite of repeated failures (Hood,
1991). The third reason is that NPM is an epoch-making attraction of opposites of German traditional stae-led
economic development by professional public managers while the other opposite is Anglo-Saxon tradition of
liberal economics that has roots in utilitarianism (Hood, 1991). And the fourth reason is that there are changes
in income level, focus on ‘new machine politics, emphasis on white-collar population and the upgrades of
socio-technical system linking with the development of new technologies (Hood, 1991). Those factors are
among the variety of ideas that support the acceptance of NPM within the public sector management style.

 An all-purpose garment? NPM’s claim to universality

NPM is also identified to be a public management for all seasons. The universality applicability of NPM within
the public sector occurred due to two main reasons. The first reason is that NPM is viewed to be ‘portability and
diffusion’ which implies that NPM is advanced in the sense that it able to solve ‘management ills’ within the
variety of public sector contexts such as in education, health care, local to central quangos and government and
other relevant public sector organizations (Hood, 1991). The second reason is that NPM is ‘political neutrality’
meaning that it has an apolitical framework on the grounds that altering the settings of management system
accommodate the varying political priorities and circumstances without the need to rewrite the basic programme
of NPM (Hood, 1991). As per these two reasons, NPM is then viewed to be applicable within every public
sector organizations.

 Counter-claims: Critics of NPM

Despite the many positive features of NPM, there are still counter claims. The first opposing idea is that NPM is
all hype with no substance that new managerialism has changed little apart from the actual language used and
old issues and weaknesses still persist. The second critic is that NPM is ineffective in lowering costs per unit of
service due their budgetary and control framework known as ‘top-slicing’ with ‘creative accounting’ destabilize
the bureaucracy while weakens basic but important front line competences. The third reason is that NPM
seemed to be a vehicle for ‘particularistic advantage’ that promote the elite group of new managerialists’
 interests rather than the majority of public service low level staffs and customers (Hood, 1991). The last
opposing thought is that NPM universality is more related with the administrative values for different public
working environments that goes beyond just the alteration of system setting as per claimed (Hood, 1991).
Within this study finds, these are the identified counter claims toward the positive features of NPM

 Things learned
This study starts with the emphasis on the reasons which motivates the conceptualization of NPM which are all
the identified issues in the traditional public management. NPM is deemed to be a new and improved version of
public management style with an improved doctrines. All of these doctrines are mainly derived from the
economic field of knowledge with that of private sector managerial styles such as in the emphasis on results and
competition for better products and services outputs. Also it is stated within this study that NPM is comprised of
two main area of knowledges economics and new managerial styles implemented within the private sector. The
main reasons why NPM is adopted within the public sector varies but one of them suggests NPM came to be
implemented due to the view that NPM is result of trial and error of managerial styles implemented within
private sector that is now implemented within the public sector due to its positive impacts. NPM is also claimed
to be universal in its applications toward the public sector working contexts as it supported to be solve all
identified managerial issues in every public sector working environments and its framework is apolitical as
well. However given the positive features of NPM brought to the public sector table, there are also certain
critics that which mostly counter most of these positive features. The study concludes that further analysis
should be made on how actually the costs cutting and doing more for less result in better quality management
with different structural design is achieved? and to what extend NPM induces corrosion of traditional values? is
to be further evaluated
New Public Management is Dead - Long Live Digital Era Governance
 The Crisis of New Public Management
The studies carried within United Kingdom, United States, Australia, New Zealand, Canada, the Netherlands
and Japan have made certain shortcomings identified with the NPM. NPM solely focuses on the three concepts
of disaggregation, competition and incentivization at which certain failures had been found with the practice of
these anchoring ideas within the public sector.

The list of identified shortcomings include:

 Separating policy systems with the development of strong corporate managements engender
management attitudes to focus on intermediate organizational objectives rather than the delivery with
effectiveness of service
 The competition components proved to be ‘less’ reversible in relation to quasi-markets as their designed
roles did not find any success but further prove to be more problematic
 The incentivization components are not well justified with incentives associated with highly measured
performance systems due to the failure to cover range of processes and problems relevant.
 Capital markets involved usually ends up on losses without sufficient refinancing gains
 NPM is internally complex at which NPM-oriented managers often construe with what the customers
actually needs.
 NPM changes had powerful adverse impact towards citizens autonomous capacities that mostly does not
solve identified social issues
  Implemented public sector management reforms usually focuses on direct and intended impacts of
policy changes that causes decision makers to disregard less welcome indirect effects of such policies
reforms.
 Increase in institutional and policy complexity via the application of new policy regimes have direct
negative impact toward social-problem-solving factor
 NPM emphasis on competition and disaggregation increases the complexity and dynamic
interrelationships between disaggregated units which this further amplify the issues in citizens social-
problem-solving capacities as well as their levels of competences.

(Source: Tinker, Margetts & Dunleavy : 2005 )

 The Emergence of Digital –Era Governance

The Digital Era Governance emphasis the movement of public sector management toward the application of the
capability of information technology. As per claimed within this study, it is stated that “unifying and
distinguishing features of the current development of public sector organizational and managerial change
mainly revolve around information technology changes and alterations in information systems” (Tinker,
Margetts & Dunleavy : 2005). The key components of DEG includes reintegration, ‘needs-based holism’ and
digitization changes with their own sub-components.

Reintegration focuses on the application of IT in combining NPM discrete processes with institutions that can
be automated via the application of specific designed software. It sub components includes:
 Rollback of agencification
 Joined-up governance
 Reinstating central processes
 Radically squeezing production costs
 Reengineering back-office functions
 Procurement concentration and specialization
 Network simplification

(Source: Tinker, Margetts & Dunleavy : 2005)

Needs-based holism focuses on the simplifying and changing the entire network between agencies and their
clients while at the same time it eliminates all unnecessary processes. Its sub-components include:
 Client-based and needs-based reogarnization
 One-stop provision
 Interactive and “ask once” information seeking
 Data warehousing
 End-to-end service reengineering
 Agile government processes
 (Source : Tinker, Margetts & Dunleavy : 2005)

Digitization changes emphasis on the full transition to digital operations instead of IT being a
supplementary and conventional administrative and business processes. It sub-components include:
 Electronic service delivery
 New forms of automated processes – zero touch technologies
 Radical disintermediation
 Active channel streaming
 Facilitating isocratic administration and co-production
 Moving toward open-book government

(Source : Tinker, Margetts & Dunleavy : 2005)

Things learned:
This study then gives the identified issues in the implementation of NPM within the public sector working environment
which information system can properly addresses. Overall NPM focuses on disintegration, competition and
incentivization that this study suggests to be main sources of NPM shortcomings. So far stated in this study of NPM
shortcomings, information system can via reintegration, need-based holism and digitalization. The foundational idea
was that Digital Era Governance is the next steps in the improvement of public sector management. The strong and
consistent features of NPM will be still used while at the time DEG will be further inputted within the public sector
management to further improve the flow of communication, data storage, management style to list a few relevant
factors. The studies suggests that NPM goes to extreme measures with three main basis such as competition,
disintegration and incentivization that certain issues are identified within NPM practice. DEG on the other hand will
further incorporate NPM strong concepts while at the same time eliminate the identified issued with via the
contribution of Information system as this study claims.

Pessimism, Computer Failure and Information Systems

 Information System Failure
The majority of information systems projects implemented within the public sector mostly are considered
failures whereas the minority of them are only success. This may occurred due to certain circumstances as well
as other relevant uncontrollable factors. Also the assessment of both I.T project success and failure are social
construct which also renders such assessments changeable. But per according to this article, “20 percent to 30
percent of IT development projects are total failures, around 30 percent to 60 percent are partial success
whereas the minority counted as successes” (Goldfinch, 2000). Despite the many supportive scholar articles
regarding the positive contributions of IT to public sector management, it is deemed in this study to be invested
in a conservative manner.
 For the sake of making proper assessment of failure and success, the article author identify the following
factors.
 Project failure: this occurs when the project do not meet its budget, specifications and time frame.
 System failure: this is mainly specification focus at which the designed project may not be performing as
expected, not being used as intended or if work as intended but fails to deliver the benefits required and
may not be operational at a required time as well.
 User failure: the completed designed project is not used by the targeted users due to recalcitrance,
complexity of the new system, lack of staff capacity and training.
(source: Goldfinch, 2000)

 Why do information systems projects fail?

The scholar article author also identifies a certain checklist of “critical failure factors”. These factors include
information or data inadequacies, technical problems, management inadequacies, technical and process
shortages, cultural and political clashes and external environmental factors. The first with second and fifth
critical failures are associated with project doers. The issue with technical fields to be implemented within the
public sector is that mostly involve technical managers mostly work in isolation with the required working
context needs. This occurs due to the wide technological with engineering backgrounds of technical managers
that further make things complex with organization learning process. With such isolation, senior managers with
project manager will have a hard time with monitoring the progress of their implemented IT project at which
they could not anticipate and adjust for both internal and external controllable and uncontrollable factors
(Goldfinch, 2000). This results in the organization to accept the continuation of this project with the assumption
that this perpetuate short term optimization.

 Problems of Enthusiasm
Despite the numbers of IT projects failure, they are still initiated due to the ‘problems of enthusiasm’. They are
four factors identified as part of this concept. These includes:
 Idolization or technological infatuation:
The belief of IT potentials and as the basis of public sector processes reforms that are all not yet
professionally justified
 Technophilia or the myth of the technological fix:
The perpetuating myths that with better technologies most of identified practical problems will be solved
 Iomanism:
The selling company’s employees feigned or genuine enthusiasm on their ability to provide for what
their customers or clients need.
 Managerial faddism:
The enthusiasm that focuses on the providing better or more rational management and appointment of
skilled managers to be piecing buzzle for the current identified issue(s)
(Source: Goldfinch, 2000)
 Problems of Control
The issues with IT projects implemented within the public sector context includes imposing both control and
order via rational models of management and decision making on a complex IT project. As per this study, IT
projects are deemed to be not linear in nature at which the predictions of IT implemented projects is limited at
which even the minor changes of events could result in significant and unpredictable outcomes (Goldfinch,
2000). This issue of control is further worsen via the problems of agency, IT projects complexities and daily
interactions of human beings.

 Problems of Agency and Information

In terms of complex IT projects, the problems of agency is prevalent due to certain reasons. These reasons
include:
 Technical managers (IT specialists) have a very specialized knowledge in terms of programming,
coding, networking and other relevant field of IT at which monitoring managers may lack
understandings on and hence cannot monitor, evaluate and report its progress and status
 Information asymmetry is very likely as the agent (IT specialists) will conceal all bad news within it
scope of work
 Mostly top senior level managers will be performance will be associated with this implemented projects
which will also have motives on further concealing negatives news related with implemented IT projects
within public sector contexts.
 Appointments in bureaucracies are often based on seniority and politically related instead of merit basis
that often leads to loopholes within IS highly complex developments
 Miscommunications between key players of the implemented IT projects is highly likely as clearly
different key players have their own jargons and understanding on their way of work which could easily
cause lack of mutual understandings.
 The inconsistency of both bureaucratic culture with that of IT culture.
 IT implemented projects red lights is mostly ignored due to the majority of believers that encourage the
continuation of the project is stronger than that of abandonment of the project. This is coined as “ it will
be right on the night”.
 Bureaucratic structures inhibits the contributions of frontline staff for their comments at which such
staffs are to simply follow orders despite the identified, real hand work information regarding the
implemented IT project.
(Source: Goldfinch, 2000)
 Things learned:
This study then focuses on the countless failures of implemented Information system projects within the public
sector. The previous study states that the growth of public sector management will be closely aligned with the
development of Information system. However, this study implies that IT projects are all initiated on the
identified enthusiasm biases. Given the current issues found within the complexity and unpredictability of IT
projects as well that of agency problems that ultimately results in principals control issues. Overall positive
contributions of Information system had been identified so far and that proved technologies should be only
implemented within the public sector otherwise the factors of agency problem, unpredictability and complexity
will further aggravate failure rate of implemented information system projects.
Bibliography
 Eisenhardt, K. 1989, "Agency Theory: An Assessment and Review", Stanford University, United States.
 Hood, C. 1991, "A Public Management For All Seasons?", Oxford University Press, England
 Tinkler, J. Margetts, H & Dunleavy, P. 2005, "New Public management Is Dead - Long Live Digital-Era
Governance", Oxford University Press, England
 Goldfinch, s. 2000, " Pessimism, Computer Failure, and Infomration Systems Development in the Public
Sector", Georgetown University Press, New Zealand