How Performance Management Works: Comparing External Accountability and Internal Learning Regimes

• In Event: Performance Management, Budgeting Reforms, and Organizational Design

Abstract

Purpose:
Performance management (PM) has become a widely adopted approach for improving outcomes in contemporary public organizations. Yet findings on its effectiveness remain mixed, suggesting that PM’s effects are contingent on specific conditions. Prior studies have also identified unintended negative consequences, including gaming. Together, these observations underscore the need for research on the processes and mechanisms through which PM becomes effective. 
This study addresses that gap through qualitative analysis. Research on PM effectiveness has been dominated by quantitative approaches, which are well suited to identifying correlations between PM-related factors and performance outcomes but often leave internal organizational processes as a black box. If PM improves performance, it should do so through observable changes in organizational behavior. This study therefore seeks to uncover and model the mechanisms through which PM operates in practice, thereby providing a foundation for future quantitative research. 

  Theoretical Framework:
This study examines PM through the lens of two distinct regimes: External Accountability (EA) and Internal Learning (IL) (Jakobsen et al., 2018). The EA regime, which links goal attainment to rewards and sanctions through strong external incentives, may be ill suited to public organizations whose tasks are complex and depend on autonomous motivation. By contrast, an IL regime—under which organizational actors have greater discretion to define goals and performance measures—may improve performance by strengthening autonomous motivation and reducing unintended behaviors. 
To capture regime-based differences in organizational behavior, the study adopts a comparative qualitative design focusing on public libraries in Japan. Libraries provide a useful setting for this inquiry because many have voluntarily practiced PM based on professional norms, making them plausible cases of an IL regime. At the same time, an increasing number of municipalities in Japan have outsourced library operations to private firms or nonprofit organizations. In these cases, providers are selected through competitive processes and managed under municipal goals and service plans, making these arrangements closer to an EA regime. 

  Research Questions and Methods:
The study asks two questions: What mechanisms link PM to improved performance, and how do those mechanisms differ between EA and IL regimes? To answer these questions, it examines eight public libraries—four under each regime—through in-depth interviews. Combining thematic analysis with process tracing, the study identifies how PM reshapes organizational behavior and develops a conceptual model linking PM to performance. 

  Results:
Preliminary findings show that both managers and frontline staff engaged in goal-oriented behavior, but that PM operated through distinct behavioral mechanisms under different regimes. Under the IL regime, action was not continuous; rather, it was often triggered when interim performance measurement revealed shortfalls. In addition to single-loop learning, double-loop learning—reconsidering the goals themselves—was also observed, although targets tended to be set at modest and feasible levels. Under the EA regime, behavioral change was especially pronounced among managers when performance was tied to payment or when providers faced close competition.

Author

• Satoko Nancy Tanabe, Waseda University
  Presenting Author