Public Management Literature Review

Literature review

In the past decade it can be stated that the public sector management is closely connected with public policy, policymaking and policy implementation that is, as well as with public administration. These concept do not overlap each other and there are differences in their theory about the typical modes of action in public management, i.e. between policy-making and administration. According to the scholar Cohen is it impossible to make a sharp separation between managerial action, policies and administration in the public sector. In his book “ The effective manager”, he mentioned that public sector management embraces objectives and decision-making, as in policy-making, but that it also takes into account how institutions

In the second half of the twentieth century comprehensive changes had occurred in real life public institutions such as in the theory of public management. These changes made that the standard governance approaches became outdated. According to the author of the book “ The effective manger”, S. Cohen, the twenty-first century will expand these changes in both theory and practice. One of the example of those changes is the new public management (NPM). This theory is the most recent paradigm change in how the public sector is to be governed. It can be stated that the NPM a part is of the revolution on management that has gone around the world, affecting all countries, although in different ways. The theory of new public management is very broad it contains the view from game theory and from the disciplines of law and economics. The changes in the theory of NPM does not NPM does not replace older frameworks but adds a new approach to public sector governance, i.e. contractualism. New public management is the most visible sign of the rapid changes in perspectives upon how government should run the public sector. But it is only one of several ‘scientific revolutions’ that have occurred in the twentieth century concerning the proper governance mechanisms in the public sector. Public sector

In modern public management, government is the principal and the bureau chiefs or the chief executive officers (CEOs), the agents. An elementary understanding of principal-agent theory is essential for the understanding of modern governance (Ricketts, 1987).

Government and its managers may employ in house or outhouse production to arrive at a service supply. It may use taxation or user fees to pay for the services. And the supply of the services may be forthcoming by means of competition or authority. Finally, there may be government regulation in place which restricts the degrees of freedom of government, resulting in a situation where government as the regulator regulates itself as the service provider.

In modern governance, government and its CEOs act on the demand side of the public household, facing a number of suppliers or as we will call them ‘players’ in the economy, looking for government contracts. The modern regulatory scheme requires that all players be treated in an equal manner, entailing that the players with the lowest cost should receive the contract, all other things being equal, e.g. service quality.

Modern public governance, thus, involves four major