Budgets, Bureaucracy, and Performance in State Transportation Agencies

• In Event: The Bureaucratic Dynamics of Government Budgeting

Abstract

This study empirically explores how the quality of the bureaucracy mediates how organizations transfer budgetary inputs to performance outcomes. Resource dependency theory states that financial resources are a key factor in the performance of public organizations. Part of the basic theory states that increasing money for programs should lead to better outcomes, while cutting funds will worsen organizational performance. However, research has shown that this connection does not always hold. As part of refining this theory, we examine how the quality of the bureaucracy can mitigate how effective financial resources are at influencing performance. We expect that higher quality bureaucracies can achieve better performance with monetary increases in comparison to lower quality bureaucracies. We empirically test the predictions using data from state highway transportation agencies. Our panel data consists of 50 state Departments of Transportation (DOTs) from 1995 to 2013. The dependent variable is state-administered highway quality measured as the percent of poor roads. The independent variable of budgetary changes is the annual percentage change in state-administered maintenance and capital spending. The other independent variable, quality of bureaucracy, is assessed by the Government Performance Project Capital Management score. Multivariate empirical analyses reveal that higher quality bureaucracies do get better performance scores from budgetary increases that lower quality bureaucracies.

Authors

• Carla M. Flink, American University

• Can Chen, Florida International University