The difficult introduction of management control systems in local authorities: A literature review of the main constraints

Abstract

Local authorities, like all public organizations and services, have gradually come under pressure to shift their operations from an administrative to a more managerial logic. Traditionally administered based on a priori budget allocation, and framed by regulations that protect their operations, the transformation of local authorities took place in the early 1990s against a backdrop of emerging trends in new public management.

The main aim of the LOLF (french acronym for “organic law on the finance laws”) was to establish a genuine performance culture within the administration and to make public management more efficient. This has resulted in a profound change in operating methods throughout the State's public services, and a sharp increase in the need for management tools and trained personnel. Local authorities have not escaped this wave, and have seen their operating principles change.

Local authorities are an obvious example of an organization whose mode of operation and objectives make cybernetic control methods unsuitable. In his view, the local authority cannot be the object of cybernetic control or an alternative model of the "organized anarchy" type. Indeed, this is an extreme case of organization in which power is widely distributed between different groups pursuing widely divergent objectives, making it difficult to achieve measurable performance in quantitative terms.

This paper shows that management control is an important means of steering the performance of local authorities, it also highlights that the specific features of local authorities - such as ambiguity over both the expression and definition of objectives, the double production function of local authorities, and their multiple modes of action, etc. – need to be taken into consideration as sources of difficulty in setting up management control systems within these entities.

Keywords: local authorities, management control system, performance, new public management.

JEL Classification: H11, H00, H79, M00, M10, M19, M40, M49, M48

Paper type: Theoretical Research