External Pressures and Internal Dynamics in the Institutionalization of Performance-Based Budgeting: An Endless Process?

ABSTRACT

The well-known practice of performance-based budgeting (PBB) is a relevant component of the New Public Management (NPM) reform agenda and has become widespread, with varying approaches and results across countries. However, its variation within specific countries has remained largely unexplored. This study analyzes three organizations operating within the same context—three ministries in Italy—to contribute to a new understanding of PBB variation by illustrating why the same PBB practice can or cannot be implemented and internalized similarly across these organizations and thus become (or not) fully institutionalized. The study adopts and enriches the institutional approach by extending beyond isomorphic convergence toward PBB and explaining practice variation, linking the interactions between external pressures and internal dynamics at the organizational level to PBB institutionalization. The empirical analysis shows how a lack of alignment between external pressures and internal dynamics contributes to an unfinished and apparently endless process of institutionalization.

KEYWORDS:

• central government
• institutional theory
• Italy
• performance-based budgeting
• practice variation

Additional information

Notes on contributors

Sara Giovanna Mauro

Sara Giovanna Mauro is a Research Fellow at the Institute of Management, Scuola Superiore Sant’Anna, Piazza Martiri della Libertà, Pisa, Italy.

Lino Cinquini

Lino Cinquini is a professor at the Institute of Management, Scuola Superiore Sant’Anna, Pisa, Italy.

Giuseppe Grossi

Giuseppe Grossi is a professor at the Department of Economic Analysis and Accounting, Nord University, Bodø, Norway.