The influence of technical and institutional environmental demands on performance measurement choice in New Zealand local government

Milo, Gianni, Fowler, Carolyn, and Hunt, Chris (2009) The influence of technical and institutional environmental demands on performance measurement choice in New Zealand local government. In: Proceedings of the 2009 AFAANZ Conference. From: 2009 AFAANZ Conference, 5-7 July 2009, Adelaide, SA, Australia.

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Abstract

Local government performance reporting has changed since the Public Sector reforms in the late 1980s. Currently, under the Local Government Act 2002, New Zealand local authorities are required to measure and report on their performance in terms of inputs, outputs and outcomes. However, there is no formal prescription on what performance measures local authorities have to report. This paper examines the internal and external environmental influences and factors that play a role in the development of the performance measurement framework within local authorities. Particularly, how these authorities respond strategically to these influences and factors in making performance measurement choices. A theoretical framework based on institutional theory is developed and a two-case study approach adopted. The results suggest that local government performance-measurement choices and frameworks are influenced by a number of institutional and technical demands from a variety of potentially conflicting environmental sources. These demands, or pressures, generally meet very little resistance from the local authorities with them conforming (acquiescing) to, or balancing (compromising)with the demands. This low level of resistance was influenced by the amount of resources the local authorities had available. The acquiescence or compromising with institutional demands,dominantly influenced by the auditors, also resulted in decoupled performance measures being chosen intra-organisationally. This internal avoidance or decoupling strategy distinguished between the performance measures used in formal reporting and those designed to manage the organisation. These results suggest that the intentions of the Local Government Act 2002 are not being achieved, which has implications for the communities the local authorities serve and, the local authorities themselves, as some performance measures adopted were neither performance relevant nor decision useful.

Item ID: 8711
Item Type: Conference Item (Refereed Research Paper - E1)
Keywords: local government; performance reporting; environmental demands; technical demands; performance measurement choice
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Date Deposited: 08 Mar 2010 05:32
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150105 Management Accounting @ 100%
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