In these times of global financial and fiscal crisis, governments all over the world are looking for ways to reduce the budgetary burden of public organizations and to foster their economical and cost-conscious
behaviour. The budgetary policies of the EU are also a major factor in this. One crucial element is the reduction of overhead costs within public organizations, as this allows
budgetary savings and the reallocation of relative more budgetary means to the primary activities of public
organizations. Overhead costs refer to the resources that organizations invest in supporting functions which
enable the execution of their primary processes. The share of resources spent on organizational overhead (i.e.
spent on non-program expenses) is generally considered to be a good inverse measurement of economical
behaviour of organizations. Hence, for governments and society at large, it is crucial to know what causes large organizational overhead, and hence, a lack of economical behaviour. Moreover, since the 1980s governments around the world have adopted New Public Management (NPM) reforms, aiming to render public organizations more business-like, and make them more economical and cost-conscious as part of a better performance (i.e. economy, efficiency and effectiveness). According to NPM-doctrines, public bureaucracies needed to become 'lean and mean', by among others (1) disaggregating them in smaller, single-purpose agencies at some distance from government and shielding them off from political influence , (2) by giving them large degrees of managerial autonomy and (3) simultaneously subjecting them to result control by the minister through performance contracts and incentives. These changes in the control and regulatory environment of public organizations was believed to enhance economical behaviour, and hence reduce share of overhead costs. Likewise, more private sector oriented management would cut overhead costs. However, until now empirical research remains inconclusive about the extent performance, including economical behaviour, has indeed improved by agencification and other NPM-reforms. Also governments are increasingly sceptical about the extent to which NPM reduced overhead expenses for government as a whole, as NPM reforms, like agencification, seemed to have created proliferation and fragmentation of overhead functions.
By using a dataset on all 70 departments and agencies under the remit of the Flemish government, this project enables to compare the share of overhead between organizations which have been subjected to a different extent to managerial autonomy and result control by the minister, as well as to other NPM reforms. Moreover, the project studies and theorizes the effect of these reforms on organizational overhead. The project deals with the caveats which we identify in the current state of the art of governmental efficiency studies and public sector performance studies, by:
(1) defining a robust theoretical framing of hypotheses, based on neo-institutional economics and alternative theories;
(2) integrating external (i.e. control and regulatory environment, task-specific and political environment) and internal determinants (i.e. management, encompassing structure, tools, values and strategies) in one theoretical model and studying their interaction effects;
(3) explaining public sector overhead across sectors;
(4) having attention for the political environment of public organizations and its effects;
(5) avoiding the use of potentially biased perceptual data or ill-comparable archival data regarding relevant variabels, through the use of a non-obtrusive dataset,
(6) by studying causality through three alternative methods (statistical analysis methods, econometric estimation of parametric frontiers and comparative configurational methods (CCM)), resulting in methodological triangulation.