Governmental financial resilience under austerity in Austria, England and Italy: How do local governments cope with financial shocks?

AuthorIleana Steccolini,Carmela Barbera,Iris Saliterer,Martin Jones,Sanja Korac
Published date01 September 2017
Date01 September 2017
Governmental financial resilience under austerity
in Austria, England and Italy: How do local
governments cope with financial shocks?
Carmela Barbera
| Martin Jones
| Sanja Korac
| Iris Saliterer
Ileana Steccolini
Università Cattolica del Sacro Cuore, Milan,
Nottingham Business School, Nottingham
Trent University, Nottingham, UK
Department of Public, Nonprofit & Health
Management, Alpen-Adria-Universität
Klagenfurt, Klagenfurt, Austria
Department of Public and Non-Profit
Management Local Government Studies,
University of Freiburg, Germany
Newcastle University London, Newcastle
University, London, UK
Ileana Steccolini, Newcastle University
London, Newcastle University, 102 Middlesex
Street, London E1 7EZ, UK.
The recent economic and fiscal crisis provides an opportunity for
learning lessons of general and practical relevance about how gov-
ernments face shocks affecting their financial conditions. This arti-
cle draws on the resilience concept to investigate the
organizational capacities that are deployed and/or built by local
governments (LGs) to respond to such shocks, looking at their
combinations and interactions with environmental conditions. The
article presents the results of a multiple-case analysis of 12
European LGs across Austria, Italy and England. The analysis
allows us to highlight and operationalize different patterns of
financial resilience, that is, self-regulation, constrained or reactive
adaptation, contented or powerless fatalism, that are the result of
the interaction and development over time of different internal
and external dimensions.
Governments throughout the world have been challenged by the recent economic and fiscal crisis. An increasing
number of contributions have explored governmental responses to what has become commonly referred to as the
crisis(Pollitt 2010; Peters 2011; Peters et al. 2011; Kickert 2012a; Lodge and Hood 2012), often focusing on aus-
terity, decline and cutback management (Kickert 2012a; Posner and Blöndal 2012; Raudla et al. 2015). Surprisingly
fewer studies deal with the long-term strategic and managerial consequences of such phenomena for public organi-
zations (Bozeman 2010; Pandey 2010; Pollitt 2010) or the processes and capacities which allow them to respond to
crises. Calls have thus emerged to develop crisis research, with attention to the skills and capacities required to
cope with crises (Boin and Lodge 2016). This article responds to this scholarly call and practical need by drawing on
the concept of resilience. Looking at local governments (LGs), it explores the multiple facets of governmental finan-
cial resilience, that is, governmentsability to anticipate, absorb and react to shocks affecting their finances over
*The authors are listed alphabetically.
DOI: 10.1111/padm.12350
670 © 2017 John Wiley & Sons Ltd Public Administration. 2017;95:670697.
time. In doing so, the article identifies the internal and external dimensions and capacities that shape governmental
financial resilience, and sheds light on how their interaction gives rise to different resilience patterns.
In order to capture the organizational processes and capacities behind governmental responses to the crisis,
12 case studies across Austria, Italy and England are analysed. These countries represent different administrative
traditions (Meyer and Hammerschmid 2010; Pollitt and Bouckaert 2011) and financial vulnerabilities (see Lodge
and Hood 2012), providing evidence that, if some processes and dynamics may be specific to the country settings
or dependent on environmental conditions, at the same time similar resilience patterns can be identified across
countries, depending on how external conditions and internal capacities intertwine over time. Although the study
is placed in the context of a financial crisis and its aftermath, the aim of the article is not to look at country-level,
or specific, responses to the crisis. Rather, the variety of cases and countries under analysis allows us to highlight
and operationalize patterns of behaviours of more general relevance to public management and resilience
The article is structured as follows. The next section reviews the current literature on financial and organiza-
tional responses to shocks and resilience, highlighting the purpose and main research questions of the article. The
third section specifies the methods. The results are presented in the fourth section. Section five discusses the find-
ings, and the final section draws the conclusions and implications for research and practice.
2.1 |Responding to shocks
The recent crisis has brought about a resurgence of interest in governmental fiscal stress and organizational reac-
tions to shocks. The financial management literature has seen in the crisis an opportunity for reviving the long-
standing academic interest in decline and cutback management (Levine 1978, 1979; Schick 1980; Hood and Wright
1981; Levine and Posner 1981). Studies of how governments tackled the crisis and austerity have been developed
in the aftermath of the crisis (Scorsone and Plerhoples 2010; West and Condrey 2011; Kickert 2012a, 2012b; Kick-
ert et al. 2013; Overmans and Noordegraaf 2014; Cepiku et al. 2015; Raudla et al. 2015), most of them contributing
to an accumulation of contextual knowledge on fiscal and organizational response strategies by providing detailed
and rich accounts and classifications of governmental reactions. Fewer studies also take an explanatory stance, look-
ing at the role of organizational and/or contextual factors in affecting such reactions (Maher and Deller 2007; Hen-
drick 2011; Jimenez 2012, 2014; Cepiku et al. 2015; Overmans and Timm-Arnold 2016), while generally paying less
attention to explaining how these factors influence each other over time, thus leaving governments more or less
vulnerable to the next crisis.
The crisis has also revived research focusing on the effectiveness of organizational reactions to shocks and tur-
bulence (e.g., Boyne 2006; Boyne and Meier 2009a, 2009b; Meier and O'Toole 2009; Meier et al. 2010; O'Toole
and Meier 2010). This predominantly quantitative research stream highlights the role of organizational capacities,
but has pointed to the need to further explore them in more depth and over time (Bettis and Hitt 1995; Boyne and
Meier 2009a; Meier and O'Toole 2009), that is, to explore how organizational capacities are not only deployed to
cope with shocks, but also evolve and interact with environmental conditions before, as well as following such
The recent financial crisis provides fertile ground for addressing these aspects and learning new lessons by
adopting a long-term view (Bozeman 2010). This study uses the perspective offered by resilience (Sutcliffe and
Vogus 2003; Davoudi et al. 2013) to contribute to enrich and integrate the insights coming from the above streams
of literature. A resilience perspective not only captures organizational processes behind governmental responses to

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