Social Capital and Public Financial Performance: Lessons from Florida

ABSTRACT

This article investigates the role of social capital in public financial performance in the United States—a topic that has not been adequately examined in the public administration literature. Research in this area will provide insight into how the public sector can be managed more effectively, efficiently, and innovatively. Moreover, this research is timely, given the context of financial and economic recession that has left local governments in the United States with persistent and long-term fiscal challenges. Using county-level panel data from the state of Florida over a seven-year period, the article finds strong support for the hypothesis that community social capital is positively and significantly associated with public financial performance. Findings reinforce the need for deeper understanding of social capital, as well as other community-level factors that are external to public sector agencies, in investigations of the different dimensions of public sector performance. The article includes policy recommendations on how to recognize and build community social capital due to its instrumental value in public management.

KEYWORDS:

• community
• community dynamics
• county
• financial management
• financial performance
• Florida
• local government
• public administration
• social capital

Acknowledgment

The authors would like to extend their thanks to Dr. Shaoming Cheng and Ms. Amelia Pridemore for feedback on this article.

Notes

The conceptualization of financial performance presented here is similar to the conceptualization of financial condition in other studies (e.g., Wang, Dennis, & Tu, 2007). However, such conceptualization makes it possible to be more consistent with, and to contribute to, the emerging literature on social capital and performance management in general, and on public financial performance specifically.

Presidential elections occurred in 2004 and 2008. Therefore, the analyses for 2004, 2005, 2006, and 2007 use the 2004 election turnout rate; and the analyses for 2008, 2009, 2010, 2011 use the 2008 election turnout rate.

The decennial census occurs every 10 years. Therefore, the analyses for 2005, 2006, 2007, 2008, and 2009 use the 2000 decennial census response rate, while the analyses for 2010 and 2011 use the 2010 response rate.

Additional information

Notes on contributors

Michele Tantardini

Michele Tantardini is an Assistant Professor in the School of Public Administration at Penn State Harrisburg.

Hai (David) Guo

Hai (David) Guo is an Associate Professor of Public Administration at Florida International University.

Nazife Ganapati

Nazife Ganapati is an Associate Professor in Public Administration at Florida International University.