Theories Of Public Sector Management

Public sector management is closely connected both with public policy, policymaking and policy implementation that is, as well as with public administration.
Yet, these concepts do not overlap, and there are differences in real life between the typical modes of action in public management, i.e. between policy-making and administration. It is impossible to make a sharp separation between managerial action, policies and administration in the public sector. Public sector management embraces objectives and decision-making, as in policy-making, but it also takes into account how institutions constrain the employment of resources, as in administration. The effort in a theory of public sector management is to integrate all three entities: goals, means

Extensive changes have occurred both in real life public institutions as well as in the theory of public management in the second half of the twentieth century, which have made the standard governance approach outdated. The twenty-first century will extend these changes in both theory and practice.
New public management (NPM) is the theory of the most recent paradigm change in how the public sector is to be governed.NPM is part of the managerial revolution that has gone around the world, affecting all countries, although to considerably different degrees. The theory of new public management contains the insights from game theory and from the disciplines of law and economics. 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 governance theory started with public administration and moved to the public

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 parties:
(1) government;
(2) the CEOs ; (3) the players in the economy;
(4) the citizens and the