Changing Strategy Processes and Strategy Content in Public Sector Organizations? A Longitudinal Case Study of NPM Reforms’ Influence on Strategic Management
| Date | 01 April 2016 |
| DOI | http://doi.org/10.1111/1467-8551.12157 |
| Published date | 01 April 2016 |
British Journal of Management, Vol. 27, 373–389 (2016)
DOI: 10.1111/1467-8551.12157
Changing Strategy Processes and Strategy
Content in Public Sector Organizations?
A Longitudinal Case Study of NPM
Reforms’ Influence on Strategic
Management
Jesper Rosenberg Hansen and Christian Bøtcher Jacobsen1
Department of Management, Aarhus University, Aarhus, Denmark, and 1Department of Political Science,
Aarhus University, Aarhus, Denmark
Corresponding author email: jhansen@mgmt.au.dk
New Public Management reforms havebeen argued to intensify the use of strategic man-
agement in public organizations, but there is a need to understand how reforms influence
specific aspects such as strategy processes and strategy content. The NPM reforms are
expected to formalizeand professionalize strategy processes and strategy content towards
greater competitiveness,but this may counter cooperation between organizations, which is
essential in many areasfor overall service provision. Researchhas provided little empirical
knowledge about the simultaneous competition and cooperation in the public sector.This
study oers such knowledge via a panel case studyof five Danish upper secondary schools
over a ten-year period during a large NPM reform. The study includes three rounds of
interviews with school principals before, during and after the reform, combined with sec-
ondary data. The study shows that, during reform implementation, strategy processes
become more formalized and professionalized, and that teachers, in particular, lose in-
fluence. Regarding strategy content, the authors find an increase in external focus and
competition, though schools maintain a focus on cooperation. The results suggest that
NPM reforms can significantly change strategic management in public organizations,
and that this is not necessarily at the expense of cooperation, at least in the short run.
Introduction
In recent decades, public service provision in most
countries has undergone New Public Management
(NPM) reforms, having changed from traditional
hierarchical governance towards market-inspired
coordination (Pollitt and Bouckaert, 2011).
Many of these reforms have introduced aspects
such as decentralized administrative autonomy,
The authors would like to thank The Rockwool Founda-
tion for providing funding for part of this project, and
Professor Kurt Klaudi Klausen for helping making this
project possible.
performance-based budgets and competitivestruc-
tures (e.g. quasi-markets) to incentivize public
organizations towards a more strategic focus on
long-term goals (Ferlie, 2003; Hansen and Ferlie,
2016). Such structures are expected to make it
more opportune for managers to pay attention to
strategic aspects such as competing actors, client
needs and financial stability. Studies have also
associated strategic management in public orga-
nizations with desired organizational outcomes
(Moore, 1995; Poister, Pitts and Edwards, 2010)
and positive eects of strategy on performance
(Andrews et al., 2012). However, others have
raised concerns about NPM reforms because
© 2016 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
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374 J. R. Hansen and C. B. Jacobsen
of unintended eects such as opportunistic be-
haviour, gaming and collective action problems
(Andersen and Serritzlew, 2007; Christensen and
Lægreid, 2007; Le Grand, 2010; Soss, Fording and
Schram, 2011). Thus, the consequences of NPM
reforms for strategic management are contested –
also in associated literature streams such as New
Public Governance (Osborne, 2006, 2010).
However, there is only limited empirical knowl-
edge about how NPM reforms aect strate-
gic management in public organizations (Hansen
and Ferlie, 2016), particularly about how pub-
lic management reforms translate into practice
(McDermott, Fitzgerald and Buchanan, 2013),
how roles in public organizations change (Burgess
and Currie, 2013) and how reforms unfold as
strategic management in practice (Hansen, 2011).
In this study, we use a longitudinal, qualitative
case study design to generate comprehensive and
holistic knowledge about NPM reform influences,
which has been called for in the literature (Ash-
worth et al., 2013).
The study investigates an NPM reform that in-
creased the Danish secondary schools’ autonomy
considerably and linked financing with student
activity. From a strategy-as-practice-inspired
perspective (Jarzabkowski, 2005; Johnson et al.,
2007), we investigate whether and how this reform
has changed strategy processes and content at five
schools during reform implementation, and how
each school applied strategic management in light
of specific factors such as school size, location and
specialization. The research design answers a call
for qualitative approaches to strategic manage-
ment in the public sector (Bryson, Berry and Yang,
2010); it applies three rounds of qualitative inter-
views with principals and key actors at fiveschools
before, during and after reform implementation.
Furthermore, we use background interviews
with bureaucrats and representatives from interest
organizations as well as administrative data to illu-
minate the context. Based on this panel case study
design, we address the followingtwo research ques-
tions: First, how does an NPM reform in Danish
secondary schools change their strategy processes
and their strategy content. Second, has this
increased competition and reduced cooperation?
Overall, the findings regarding the first research
question show that strategy processes change
considerably and become more centralized and
formalized, and that the teachers lose influence at
the expense of management. These are important
consequences of NPM reforms that the literature
on public organizations often overlooks. We dis-
cuss how these findings may challenge the general
strategic management literature, which empha-
sizes more participative strategic management
with more employee inclusion. In terms of strategy
content, we see a stronger orientation towards the
students (‘customers’) and a stronger orientation
towards attraction and retention of students.
Thus, competitive orientation increases, but con-
currently the principals underline continued coop-
eration. This is an important answer to the second
part of the research question, which shows how
competition becomes more important, and that
institutional factors sustain cooperation. We dis-
cuss this finding and the possibilities of integrating
strategic management literature on public organi-
zations with studies on simultaneous competition
and cooperation (Bengtsson and Kock, 2000) and
on models of New Public Governance (Osborne,
2006). Furthermore, we discuss the practicalimpli-
cations for decision-makers, who should be aware
of the increased use of strategic management in
public organizations following NPM reforms, and
we discuss the implications for public managers,
who are met with demands for simultaneouscoop-
eration and competition to an increasing extent.
Below,we present the theoretical framework for
the relationships between NPM reforms, strategy
processes and strategy content. After a brief intro-
duction to the Danish secondary school sector and
recent reforms, we describe the study design, data
and methods. We then move on to the qualitative
analyses of the eects of reform on strategy pro-
cesses and content. The final section discusses our
findings, their implicationsand suggestions for fur-
ther research.
Strategic management in the public
sector
The strategic management literature isvast, cover-
ing various perspectives on strategic management
and its execution (Mintzberg, Ahlstrand and
Lampel, 2009). We define strategic management
as an organization’s determination of long-term
goals and objectives, the orientation of actions
and resources to meet these goals (Chandler,1962;
Ferlie and Ongaro, 2015), and as the process of
matching an organization with its environment
(Ferlie and Ongaro, 2015; Hofer and Schendel,
© 2016 British Academy of Management.
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