Week 8 – Signature Assignment: Incorporate Strategic Management to Improve a Public Organization
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ScandPolStud-2016-Johnsen-StrategicPlanningandManagementinLocalGovernmentinNorwayStatusafterThree.pdf
Strategic Planning and Management in Local Government in Norway: Status after Three Decades
Åge Johnsen*
Strategic planning and management was introduced in the public sector more than three deca- des ago and has become a core component in many new public management reforms. Although strategy has been widely adopted in the public sector, the knowledge base regarding its practices and its impacts remains scarce, particularly outside Anglo-American countries. This article replicates an American and British survey by analysing the adoption and impacts of strategic planning and management in Norwegian municipalities. The results show that, in 2012, a majority of the Norwegian municipalities used strategic planning and management, and that the respondents viewed the impact positively overall. Municipalities that had chosen the strategic stance of prospector and had financial resources from positive net operating results margin adopted strategic planning and management more than other municipalities. Municipalities with a high degree of strategic management and high stakeholder involvement had better perceived impacts of strategic planning than other municipalities.
Introduction
Strategic planning and management was introduced in the public sector more than three decades ago (Eadie 1983; Berry 1994) and has been a core component in many new public management reforms since the late 1970s (Hood 1991). New public management has been a contested issue, as has strategic planning and management (Mintzberg 1994). The merits of strategic management in the public sector have been widely debated. For example, Eadie (1983) advocated the use of strategic management, while Goldsmith (1997) cautioned uncritical adoption of business strategy in public administration. Ferlie (2002) developed the idea of ‘quasi- strategy’, which involves customising some strategic management models used in the private sector to fit public management. Despite the subse- quent widespread adoption of strategic management in the public sector in many countries, the knowledge base remains scarce, both with regard
* Åge Johnsen, Department of Public Management, Faculty of Social Sciences, Oslo and Akershus University College of Applied Sciences, PO Box 4, NO-0130 Oslo, Norway. E-mail: [email protected]
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ISSN 0080-6757 Doi: 10.1111/1467-9477.12077 VC 2016 Nordic Political Science Association
to its practices and its impacts, particularly outside the United States and the United Kingdom.
Strategic management has also been a contested issue in Scandinavian local government. Two decades ago, Nylehn (1996) took a critical stance towards the adoption of strategic management in Norwegian local govern- ment. He argued that strategy was a model from the private sector that, due to its competitive aspect, was not appropriate for wider use. However, Johnsen (1998) disputed Nylehn’s assertion of the strategic management’s model failure in local government, arguing that Nylehn’s assertions were based on case studies with observations from only a small number of small municipalities in Norway and from an early stage in the local govern- ments’ adoption of strategy. Moreover, the assertions were based on theo- retical reasoning of the strategy processes without having empirically considered the processes or contents of the strategies in practice or the associated costs and benefits. Nevertheless, descriptive studies indicated that many local politicians seemed to experience a ‘puzzling role’ when their traditional detailed input and single-issue orientation were replaced with more strategic outcome and general-issue orientation during the late 1990s (Vabo 2000). Accordingly, it is interesting to study the status of stra- tegic planning and management in local government after three decades in the making.
If strategic management was deemed inappropriate and inadequate 20 and 30 years ago, it was not likely to be adopted or to be adopted only to a limited degree. However, new public management and strategic planning and management both concern pragmatic efforts to implement democrati- cally decided policies for improving public value (Moore 1995; Mulgan 2009), so one could expect widespread adoption of practices and tools associated with strategic planning and management. To date, no empirical studies of strategic planning and management and its impacts in local gov- ernment in Norway have illuminated these contested issues. This article aims to bridge some of this gap.
Scandinavian local government is an interesting context for studying the adoption of strategic planning and management. The Scandinavian countries have large public sectors and are unitary states. Therefore, with both the motivation and opportunity to reform their public sectors, these countries have been expected to be active new public management adopt- ers (Hood 1995). In Denmark, for example, ‘(e)very organization today has to have written efficiency strategies (service strategies in local govern- ment) that state what management tools the organizations use in order to fulfill their mission from politicians and citizens’ (Greve 2006, 165). At the same time, Scandinavian public management has been known for its corporatist tradition and pragmatic approach to governance and public sector reforms (Rhodes 1999; Pierre & Peters 2000). This makes the
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Scandinavian context an interesting test bed for understanding how strate- gic planning and management – as a doctrinal component of many new public management reforms emphasising decentralisation, self-regulation and outcome orientation (Baldersheim & Ståhlberg 1994) – has been practised outside the Anglo-American context. Studies of strategic plan- ning and management are also interesting for the wider debate on the merits of new public management because the practices, tools and impacts of strategic planning and management are manageable for empiri- cal studies.
However, ‘strategy’ is a broad concept, which helps explain the lack of consensus on its meaning among researchers and practitioners in public management. For example, strategy in the public sector can be concep- tualised as ‘a means to improve public services’ (Boyne & Walker 2004, 231). Mulgan (2009, 19) has defined ‘public strategy’ as ‘the systematic use of public resources and power, by public agencies, to achieve public goals’. Joyce (2012, 2) argued that strategy in public services involves ‘looking ahead and planning ahead when making decisions’ and making use of stra- tegic thinking, planning and management techniques to support public leaders’ decision making and action planning. Vabo (2000) described stra- tegic political leadership in municipalities as dealing with pivotal issues of a general nature, in contrast to local politicians’ traditional concern with details and single issues. By contrast, Knutsson et al. (2008, 296) has pointed out that ‘municipal strategy is not about any single major decision, but rather about series of many small decisions, which taken together, cre- ate a pattern of good municipal resource management’. In sum, strategy in public management is a broad concept that serves different actors, spans different management processes and encompasses several manage- ment tools.
‘Strategic planning’ has been defined as
a systematic process for managing the organization and its future direction in relation to its environment and the demands of external stakeholders including strategy formula- tion, analysis of agency strengths and weaknesses, identification of agency stakeholders, implementation of strategic actions, and issue management. (Berry & Wechsler 1995, 159)
Strategic planning is distinct from traditional long-range planning in that it sees ‘the big picture’ and focuses on purpose, values and priorities. Funda- mental and conflicting organisational issues have to be identified and handled. Attention to the environment is important, and realpolitik and stakeholders must be addressed. The planning is largely dependent on top management. In order to build commitment, the planning focuses on criti- cal issues, actions and implementation (Poister & Streib 1999). Therefore, strategic planning is intertwined with strategic management.
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According to Vinzant and Vinzant (1996, 140), strategic management consists of three core processes: planning, resource allocation, and control and evaluation. Strategic planning is the cornerstone in strategic manage- ment, but it must be integrated with other management processes. Poister and Streib (1999) add performance management as a fourth core process and argue that strategic management aims to implement plans by coordi- nating various high-level management processes in a way that fulfils the organisation’s purpose and vision. Coordinating the management processes ensures a positive impact because the processes supplement and enforce each other.
Conceptually, we know a lot about strategy, but there have been rela- tively few empirical studies of strategy practice and its impacts. Therefore, the purpose of this article is to describe the adoption and impacts of stra- tegic planning and management in Norwegian local government, as per- ceived by the practitioners themselves, after three decades in the public sector. The article has a rationalistic, organisational perspective on strate- gic management and is based on top management’s perception of the practices and the impacts of internal strategic processes and management tools on the organisation.
The following questions are asked in this study: How have local govern- ments adopted strategic planning and management? How do elected poli- ticians and other stakeholders participate in the strategic management processes? How do local governments adopt strategic management tools? Are these tools customised to the public sector context as quasi-strategy or are common strategic management tools adopted as a one-size-fits-all business model solution? What determines the adoption of strategic man- agement? What are the impacts of strategic planning and management, and what determines strategic planning and its impacts?
The reminder of this article is structured as follows. The next section reviews theory on strategic planning and management in local government and presents a conceptual framework. The article then documents the research design and data, before analysis of the results is presented. There follows a discussion of the findings and presentation of the conclusions.
Strategic Planning and Management
Since the early 1980s, there have been many studies of strategic manage- ment in the public sector (Bryson et al. 2010; Poister et al. 2010) that have produced valuable knowledge on strategic planning and manage- ment. Nevertheless, there is still a need for studies that originate outside the United Kingdom or the United States, that process data other than case studies, that provide more information on the use and effects of stra- tegic management tools (Hansen 2011; George & Desmidt 2014), and that
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explore the content and impact of strategies (Boyne & Walker 2010; Hodgkinson & Hughes 2014).
In the British and American contexts, there have been conceptual and empirical studies of strategy in local government for three decades. In an early study, Greenwood (1987) explored how strategy affected structure in English and Welsh local government and found that strategic style did influence structural arrangements. Worrall et al. (1998) identified key issues for strategy practitioners in strategy formation in local government in the United Kingdom. They found that local authorities wanted to become more ‘strategic’ when there were fewer resources, and that politi- cians wanted to ensure that their priorities were met. At the same time, there was no consensus about what being strategic meant. In North Amer- ica, Poister and Streib (1999) discussed the importance and meaning of strategic management in government. They follow up this issue with an empirical study of the use of strategic planning and management in Amer- ican municipal governments with more than 25,000 inhabitants (Poister & Streib 2005). That study found that many local governments had used stra- tegic planning and that there seemed to be increasing use of links to dif- ferent decision-making activities in the strategic management processes. Moreover, the administrators assessed the impacts of the strategic plan- ning positively overall. Hansen (2011) found that new public management reforms in Danish upper secondary schools increased the use of strategic management tools, but that more research is needed on areas such as how local governments use such tools.
According to Bryson et al. (2010), strategic management theory and also practice, to some degree, has evolved from emphasising strategic planning to a more all-encompassing framework where the strategic plan- ning is framing for budgeting, performance and initiatives for improve- ment. Strategic management theory emphasises the formulation of objectives and goals and the development of new projects and services. The theory also pays close attention to performance measurement and stakeholders’ importance for the management processes as well as for the organisations’ performance and outcomes. By acknowledging participative and communicative processes strategic, management theory is congruent with major streams of thought in public management and governance that emphasise open processes and collaborative management processes in the development, provision and evaluation of public sector services (Denhardt & Denhardt 2000; Osborne 2006; Mulgan 2009). This development in stra- tegic management theory has forced empirical studies to address strategic planning and management as processes that may involve more stakehold- ers than managers and top leadership only.
Although strategic planning was criticised for neglecting learning (Min- tzberg 1994), continual learning is also relevant in contemporary strategy
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theory for strategic management. Bryson (1988) and Poister and Streib (1999) have argued that strategic management is a continuous process that integrates strategic planning and implementation. The most important ele- ments in strategy practice are thinking, acting and learning. Strategic plan- ning is only a tool for supporting these activities. Bryson et al. (2010, 495) argue that:
Strategic management may be defined as ‘the appropriate and reasonable integration of strategic planning and implementation across an organization (or other entity) in an on- going way to enhance the fulfilment of its mission, meeting of mandates, continuous learning, and sustained creation of public value’.
Therefore, strategic planning and management consists of several elements and is a continuous learning process that can involve adopting performance management and evaluation.
Adoption of Strategic Planning and Management
Vinzant and Vinzant (1996) developed a model with four progressive lev- els for assessing public sector organisations’ successful adoption of strate- gic planning and management. This model consists of three core processes: planning, budgeting and performance management. Level 1 is the completion of a strategic planning process. Level 2 is the completion of a strategic planning process and the production of a planning docu- ment. Level 3 is the completion of a strategic planning process, the production of a planning document and subsequent changes in the resource allocation process – typically budgeting. Level 4 incorporates the other three levels as well as changes in the control and evaluation processes that provide feedback on the implementation of the strategic plan. Poister and Streib (2005) adapted and employed this model and also measured stakeholder involvement, the use of strategic management tools and certain impacts of strategic planning and management. These are valuable research instruments to replicate in future empirical studies. Figure 1 presents the theoretical framework for the analysis.
Determinants of Strategic Planning and Management
Poister et al. (2010) highlighted the degree of environmental stability in politics, environmental issues and trends as examples of factors that could influence strategic management (and strategy content) in the public sector. For municipalities, the political regime, political competition, growth or decline in population and ethnic diversity may be important environmen- tal factors that create uncertainty for their strategic management. Socialist policies traditionally favour central planning and in-house delivery, while
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liberalist regimes prefer decentralised solutions and market contracting. A large amount of political competition may increase uncertainty and require relatively more stakeholder involvement in planning, more per- formance management in implementation and more evidence-based evalu- ation. Factors such as regulation of the organisational tasks and degree of organisational autonomy are also important determinants. All municipal- ities in Norway have similar regulations. (Oslo is both a municipality and a county, but is not included in the empirical analysis.) Therefore, these latter two factors have been excluded from the analysis.
Vinzant and Vinzant (1996) hold that perhaps the two most important factors for an organisation’s autonomy, and hence its ability to choose strategy content and strategic management, are statutory and fiscal requirements. While minimal financial resources may provide the motiva- tion for strategic management, slack financial resources may provide
Figure 1. Theoretical Framework.
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organisations with an opportunity to adopt certain strategic stances and select a high level of strategic management adoption, which may improve impacts. According to Berry (1994) and Boyne and Walker (2004), organi- sations with slack financial resources are more likely to act proactively and devote resources to strategic planning than organisations with little slack.
Organisational traits such as administrative organisation, organisational culture, human resources and complexity may be important for strategic management. For example, large organisations may be more complex and require more formal management processes and more management tools than small organisations (Poister et al. 2010). Adoption of many elements in strategic planning and management, such as performance management and evaluation, may require competence and capacity that are more prev- alent in large organisations than in small ones (Vinzant & Vinzant 1996). Administrative organisation could also influence performance manage- ment (and impacts). Decentralised organisations may adopt more per- formance management and centralised organisations may adopt more planning than other organisations. Andrews et al. (2009a) found no direct effect of centralisation on organisational performance, but did find that administrative organisation worked through strategy content. Strategy con- tent is related to organisational adaptation of internal capabilities to the environment, and hence organisational performance (Miles & Snow 2003 [1978]; Hodgkinson & Hughes 2014). Miles and Snow’s (2003 [1978]) clas- sical framework consists of four strategic types: defenders, prospectors, analysers and reactors. Boyne and Walker (2006) discard the analyser cat- egory because they feel it is actually a combination of the defender and prospector types and therefore conceptually redundant. Defenders used centralisation to rationalise in order to achieve high service performance, while prospectors used decentralisation to innovate in order to achieve high service performance.
Strategy content is about adapting internal capabilities to the environ- ment, which means that strategy content could also influence strategic management. For example, because prospectors are often innovative within their domains, they could adopt more strategic management than other types and would, in particular, adopt many processes and manage- ment tools for scanning the environment and stakeholder involvement. Prospectors would typically also use decentralisation in order to innovate and adapt rapidly. Defenders could adopt many processes and tools for planning and control and evaluation as well as choose a centralised struc- ture. Reactors would only adopt strategic planning and management tools that are mandated and therefore have a lower level of strategic manage- ment adoption than other strategic types. Such relationships have only attracted scant attention in the literature.
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Determinants of Strategic Planning and Management Impacts
Poister and Streib (2005) found that respondents’ satisfaction with the implementation and achievement of their organisations’ strategic goals and objectives is positive overall. Moreover, several strategic planning ele- ments have positive relationships with an index of the items measuring impacts. In particular, the following appeared to be important elements for perceived impact of strategic planning in the municipalities: linking strategic objectives from the strategic plan to department heads and other managers (responsibility); annually evaluating departments heads and other managers based on their accomplishment of the strategic goals (per- formance appraisal); and tracking performance data over time in order to determine whether performance in the strategic results area have been improved (monitoring).
In addition to strategic planning and management, strategy content should also be expected to have an impact. There have been several empirical studies of strategy content and local government organisations’ performance using the Miles and Snow framework. Andrews et al. (2005) found that English local government prospectors deal well with ethnic diversity and achieve good service performance. Andrews et al. (2006) found that English local authority prospectors have positive organisational performance, while defenders are neutral and reactors negative. This rela- tionship also holds when controlled for strategic actions. By contrast, Meier et al. (2007) found that Texan school districts with defender stances have the highest performance. Andrews et al. (2009b) argue that both defenders and prospectors in Welsh local government service departments have positive performance; when the authors analysed the organisational structure in these local governments, they found that defenders with a centralised and prospectors with a decentralised organisational structure had high service performance. The different results are congruent with the overall view that no strategic stance is superior in all circumstances.
Methods and Data
Many concepts in the theoretical framework, such as ‘strategic manage- ment’ and ‘strategy content’, are ambiguous. Therefore, I have chosen to replicate previously used research instruments in public sector strategy research. In a review of the research on strategic management in the pub- lic sector, Poister et al. (2010, 541; see also Boyne 2010) have argued that
more large-N quantitative analyses along the lines of the English and Welsh authority studies . . . are needed to test specific hypotheses regarding strategic planning processes,
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content, and implementation so findings can be generalized across a variety of settings. Particularly important to this line of research are studies that would specifically examine whether or not strategic planning and/or particular elements or characteristics of the strategic management process actually lead to improved performance.
The ‘improved performance’ could take the form of reduced average service provision costs, better reliability in tax collection, more rapid response in ambulance or fire protection services and higher learning out- comes in education. Therefore, I have replicated the survey instrument developed by Poister and Streib (2005) regarding strategic planning and management in American cities and questions from Andrews et al.’s (2006) study of strategy content in English local authorities. The American survey included questions on the impacts of strategic planning including perform- ance, while the British survey included questions on strategy content.
Strategy is contingent on a complex web of factors (see Figure 1), and it is necessary to take into account different aspects of the organisational environment in empirical studies (Andrews et al. 2009b). Norwegian municipal governments are diverse in many respects, such as polity, finan- cial situation and size. Therefore, I also measured some environmental, institutional and organisational factors that could affect strategic planning and management and its impacts.
Variables and Measurement
The Poister and Streib’s (2005) survey instrument was shortened and some of the questions adapted in order to fit the Norwegian context. Single-item questions on strategy stances and actions were taken from Table 1 in Andrews et al. (2006). The resulting survey instrument had nine sections and asked questions regarding strategic planning documents, stakeholder involvement in strategic planning, the use of strategic manage- ment tools, strategic stances, strategic actions, strategic planning and budg- eting, strategic planning and performance management, and perceived impacts of strategic planning. All but one of the variables on strategic planning and management and strategy content were measured with five- point Likert scales ranging from ‘strongly disagree’ to ‘strongly agree’, including a neutral ‘neither disagree nor agree’. The survey instrument is available from the author upon request.
I developed one index for strategic management and one for the per- ceived impacts of strategic planning, based on similar indexes developed by Poister and Streib (2005). I measured the strategic management index as a continuous variable by developing an unweighted additive index. I did this by combining the answers to a question on strategic planning (see Figure 2), four statements in a question on budgeting (see Table 3), three statements on a question on performance appraisal (see Table 4) and
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seven statements on a question performance management (see Table 5) in the survey. The answers on strategic planning were recoded to ‘no strategic plan’ (value 5 0), ‘has initiated one or more strategic plans’ (value 5 1) or ‘completed one or more a strategic plans’ (value 5 2). The other questions were a five-point Likert scale ranging from 1 (‘disagree strongly’) to 5 (‘agree strongly’). The index for strategic management could theoretically vary from a minimum of 14 (‘no strategic plan’ in addi- tion to the mandatory planning requirements of a four-year rolling budget and ‘disagree strongly’ on all other questions) to a maximum of 72 (‘has a plan’ in addition to the mandatory planning requirements of a four-year rolling budget and ‘agree strongly’ on all other questions). Table 2 reports statistics showing that the performance management index varied from a minimum of 23 to a maximum of 67 with mean of 50.
The impact index was computed by adding all the scores on the Likert scale for all the 19 questions on perceived impacts of strategic planning. This provided an unweighted additive index for overall impact. (Table 6 docu- ments the 19 questions included in this index.) The impact index varied from a theoretical minimum of 19 to a theoretical maximum of 95, with 57 as a lower threshold for a positive assessment of the overall impacts. The statistics for this index are provided in Table 2. The impact index varied from 37 to 91 with a mean of 69, indicating overall positive perceived impacts.
I used secondary data from official statistics (Statistics Norway and the Municipal Organisation Database) to measure certain independent varia- bles in addition to the data collected in the survey.
Political regime was measured as the ratio of socialist representatives in the municipal councils in the 2007–11 election term. Representatives from
Figure 2. Municipal Formal Strategic Planning Documents in Addition to Mandatory Plans (N 5 176).
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the Labour Party, the Socialist Left Party, the Red Election Alliance, the Red Party and the Norwegian Communist Party were categorised as socialist. It should be acknowledged that even though this categorisation is common in studies of local government politics, there are some measure- ment issues. For example, the Labour Party is a social democratic party with a range of members, from liberalists to socialists, and many local par- ties are pragmatic and difficult to categorise according to the traditional left-right dimension that may suit national politics better than local politics.
Political uncertainty was measured with the Herfindahl index for party concentration in the municipal council during the 2007–11 election term. The number takes the value 1 when a single party takes all the seats and a lower number indicates increasing party competition and hence increas- ing political uncertainty.
Environmental instability was measured as the average annual percent- age change in the municipal population during the three latest years (1 January 2009–1 January 2011).
The measurement for environmental heterogeneity was similar to the measure of ethnic diversity used by Andrews et al. (2006). I used a mea- sure for the 2011 municipal population of inhabitants born in Norway, or immigrants or inhabitants born to immigrants from Europe (except Tur- key), Asia (including Turkey), Africa, North America, Central and South America or Oceania. I developed a Herfindahl index to measure popula- tion diversity. I squared the proportion of each group in the municipal population and then subtracted the sum of these squares from 1. This measure gives an approximation to population fractionalisation and, there- fore, environmental heterogeneity in the municipality. A high score on the index represents a high degree of heterogeneity.
Financial resources were measured as the average annual net operating results after interests and mortgages as a percentage of total operating income (net operating results margin) 2008–10. The county governors, on behalf of the government, recommend that an annual net operating results margin of 3–5 percent is sound municipal financial management.
Municipal size was measured as number of municipal inhabitants as of 1 January 2011. The number of inhabitants is a common measure for munici- pal size in local government studies; it is unaffected by the internal organi- sation of the municipality (contracting out, corporatisation, partnership).
Administrative organisation concerns issues such as decentralisation, control and sourcing, and was measured with three measures. The first variable measured decentralisation. This measure was based on a variable that originally measured the number of management levels between the chief administrative officer and the operating managers, which varied from 1 to 4. This variable was recoded in order to measure
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decentralisation, where three or more or varying levels between the differ- ent service areas was coded as 1 and the new scores of 2 and 3 indicated greater decentralisation. The second variable was an index measuring the ratio of performance management (benchmarking) of 14 municipal serv- ices. Each service was coded 0 for no use of monitoring of time-series or benchmarking with similar services and 1 for use of monitoring of time- series or benchmarking with similar services; the total sum was divided by 14. This index varied from 0 to 1. The third variable was an index meas- uring the ratio of contracting out for 15 municipal services. Each service was coded 0 for no contracting out and 1 for contracting out and the sum was divided by 15. This index also varied from 0 to 1. Data for the three variables were collected from the Municipal Organisation Database with data from January 2012 and recoded for this analysis.
Strategy content was measured by adapting three measures for strategic stance and five measures for strategic actions from Table 1 in Andrews et al. (2006). The questions on strategic stance addressed innovativeness (prospectors), focusing on core areas (defenders) and adherence to exter- nal pressure (reactors), using a five-point Likert scale. The questions on strategic actions addressed changes in markets, services, revenue, external and internal organisation. I also developed three new measures to better capture strategic actions by asking about actions for reducing costs, improving service quality and improving service distribution.
The stakeholders that I addressed regarding involvement in the strategic planning included the municipal council, the mayor, the chief administra- tive officer, other municipal managers, lower-level employees, and citizens and other external stakeholders (see Figure 3). The stakeholder involve- ment index was calculated as the sum scores on the five-point Likert scales for the six questions about stakeholder involvement, divided by six, for the municipalities that had initiated or completed one or more formal strategic planning documents. Table 2 reports the descriptive statistics for the stakeholder involvement index. The stakeholder involvement index has a Cronbach’s alpha reliability score of 0.63.
Population and Sample
The population for this study was the 430 municipalities in Norway as of November 2011. The survey was designed as a multiple-informant study and was sent by email to three senior officials in each municipality: the mayor, the chief administrative officer and the chief financial officer. After three reminders, the final responses (182 in total) were received by Febru- ary 2012. One response was discarded due to technical problems. Only five municipalities gave two responses each; I averaged these responses and rounded them to integer values to provide a single score for those
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municipalities. The final sample consisted of 176 of the 430 municipalities, resulting in a response rate of 41 percent.
Table 1 documents an analysis of non-response. There are only small dif- ferences between the population and the sample. The municipalities in the sample are larger and use more benchmarking than the average municipal- ity in the population. Table 2 provides descriptive statistics and a correla- tion analysis of the variables used in the analyses. The 143 municipalities are the ones that provided answers to all the questions in the survey. None of the independent variables had a correlation greater than 0.7, which could have caused problems with multicollinearity in regression analyses.
Using self-reported data from the same survey instrument to measure the independent and dependent variables could have introduced common source bias, in addition to the potential problem with using subjective impact data. I used Harman’s one-factor test to investigate the potential for common method variance to influence the results. Applying this test to the 143 municipalities that answered all the questions in the survey showed that one factor explained less than 30 percent of total variance; this is below the common threshold of 50 percent that indicates common source bias. Although Harman’s one-factor test is not conclusive, it does indicate that the results are reliable with regard to common source bias.
Results
Strategic Planning
Some of the 176 municipalities that answered the survey had not started or finished any strategic plans. By including these municipalities, we can
Figure 3. Municipalities Involving Various Stakeholders in Strategic Planning (N 5 100).
Note: Percentage of municipalities responding ‘agree’ or ‘strongly agree’.
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analyse how common strategic planning has become after three decades in the public sector. Figure 2 shows that 57 percent of the 176 municipalities that responded had initiated or completed one or more strategic planning documents. These figures indicate that strategic planning is common in local government. However, caution should be applied when interpreting these figures. Some municipalities indicated that although they had not ini- tiated any formal strategic planning documents, they had employed strate- gic planning and management (either in their mandated planning documents such as the municipal plan and long-term budget or in other processes). Other municipalities may not have responded to the survey because they did not regard their mandatory planning documents or other management processes as strategic, even though these could have been used for strategic management as well. We do not know how many munic- ipalities faced this problem. However, I have included all the responding municipalities – both with and without distinct strategic planning
Table 1. Analysis of Non-response
Population Sample
N Min Max Mean (SD) N Min Max
Mean (SD)
Socialist repre- sentatives, 2007–11
429 0.00 0.81 0.35 175 0.00 0.68 0.34 (0.148) (0.148)
Party concentra- tion (HDI), 2007–11
429 0.14 1.00 0.27 175 0.15 1.00 0.26 (0.110) (0.095)
Average change in population, 2009–11
430 20.054 0.050 0.006 176 20.054 0.050 0.006 (0.0112) (0.0113)
Ethnic diversity (HDI), 2011
430 0.019 0.399 0.143 176 0.025 0.316 0.140 (0.0536) (0.0527)
Average net operating results margin, 2008–10
429 26.9 25.1 1.9 176 24.8 25.1 1.9 (3.37) (3.43)
Municipal inhab- itants as of 1 January 2011
430 216 599,230 11442 176 216 260392 14297 (34745.8) (29020.4)
Decentralisation, 2012
335 1 4 2.9 144 1 4 2.8 (1.06) (1.09)
Benchmarking index, 2012
322 0.00 1.00 0.45 140 0.00 1.00 0.56 (0.405) (0.390)
Contracting out index, 2012
326 0.00 0.73 0.15 143 0.00 0.73 0.16 (0.135)(0.127)
Source: Statistics Norway and Municipal Organisation Database.
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, 2 0 0 9 – 1 1
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, 2 0 1 2
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8
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n d
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0 .3
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8
N 1 4 3
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1 4 3
1 4 3
1 4 3
1 4 3
1 1 8
1 1 5
1 1 7
1 4 3
1 4 3
1 4 3
1 0 0
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T a b
le 2 .
C o
n ti
n u
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1 2
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7 8
9 1 0
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0 .7
3 5
5 5
5 .0
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4 9 .9
6 9 .3
0 .3
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6 0 .0
0 6
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1 .9
1 3 5 3 5
2 .8
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n d
a rd
d e v ia
ti o
n 7 .9
5 9 .5
4 0 .1
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0 .0
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3 .6
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0 .6
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8 0 .7
9 0 .5
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k e w
n e ss
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1 .3
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2 1 .1
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N o
te s:
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o rr
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n is
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ifi c a n
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th e
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(t w
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a il
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); * c o
rr e la
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n is
si g n
ifi c a n
t a t
th e
0 .0
5 le
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(t w
o -t
a il
e d
).
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documents – in the analysis. Moreover, the analysis of non-response revealed that the sample of municipalities was representative for the population.
Stakeholder Involvement
Stakeholder involvement is held to be a key to successful strategic plan- ning and management (Moore 1995; Mulgan 2009). A total of 100 munici- palities replied that they had initiated or completed one or more formal strategic planning documents. Figure 3 documents the extent to which these municipalities assessed that different stakeholders were central in the development of their strategic plan or a typical strategic plan. The three stakeholders that were most involved in the development of the stra- tegic plans were the chief administrative officer (in 91 percent of cases), other municipal managers (90 percent) and the municipal council (79 per- cent). Lower-level employees (68 percent) and mayors (67 percent) were also centrally involved. Citizens and other external stakeholders were also centrally involved, but less often (57 percent).
Strategic Management Tools
Strategic planning is integral to strategic management and it is interest- ing to study how municipalities use other management tools in addition to strategic planning. I analysed the responses from the 143 municipal- ities that answered all the questions in the survey in order to study whether municipalities that use formal strategic planning use strategic management tools differently than other municipalities. Figure 4 shows that municipalities that had not developed any formal strategic plan- ning documents also used tools commonly associated with strategic management, while municipalities that had initiated or completed one or more formal strategic planning documents had more frequent use of strategic management tools than municipalities without formal strategic planning documents. The three most common strategic management tools were: development of goals and objectives; development of action plans; and review and development of mission, vision and values. Important tools for approximately half of the municipalities with formal strategic planning documents were the evaluation of internal resources and competences, assessments of external threats and opportunities and internal strengths and weaknesses (SWOT analyses), identification of stakeholders’ needs and concerns (stakeholder analysis), and feasibility assessments of proposed strategies. These tools were less important in municipalities without formal strategic planning documents. One inter- esting difference was that stakeholder analyses were much less common
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among the municipalities with no formal strategic planning than in municipalities with formal strategic planning documents. Competition analysis, market analysis and value chain analysis were the three least frequently used tools.
Budgeting and Allocating Resources
Table 3 documents the linking of resource allocation and budgeting to the strategic plans, which is important for a coherent strategy content and strategy implementation. In 71 of the 100 municipalities that reported that they had initiated or completed one or more formal stra- tegic planning documents, the annual budget clearly reflects the objec- tives and priorities established in the strategic plan. Moreover, 58 percent used new money in the budget to pursue the municipal strate- gic goals. For 47 of these municipalities, the strategic plan had a strong influence on the budget requests submitted by department heads and other managers. Performance data tied to strategic goals and objectives played an important role in determining resource allocations in 46 per- cent of the municipalities. The budgeting processes seemed to reflect the strategic direction established in the plans. The allocation of new money, as well as the anchoring of the strategic direction on perform- ance evaluations and bottom-up processes, appeared to be less well developed in the strategic management.
Figure 4. Reported Use of Strategic Management Tools among Municipalities with No For- mal Strategic Planning Documents and Municipalities that Have Initiated or Completed One or More Formal Strategic Planning Documents (N 5 143).
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Performance Management
Table 4 documents the linking of performance appraisal to strategic plans among the 100 municipalities that reported having initiated or completed one or more formal strategic planning documents. In 78 percent of the municipalities, the city council holds the chief administrative officer responsible for implementing the strategic plan. In 70 percent of the municipalities, objectives established for department heads and other man- agers come from the overall strategic plan. Annual evaluations of depart- ment heads and other managers are based largely on their accomplishment of strategic goals and objectives. Addressing responsibility for implementation and establishing objectives for performance assess- ments of managers is more prevalent than annual evaluations appraising managers for accomplishments of goals and objectives, which were impor- tant in only 47 percent of the municipalities.
Table 3. Municipalities Linking Budgets to Strategic Plans (N 5 100)
%
The annual budget clearly reflects the objectives and priorities established in the strategic plan
71
New money in the budget is used to pursue the municipal strategic goals 58 The strategic plan has a strong influence on the budget requests submitted
by department heads and other managers 47
Performance data tied to strategic goals and objectives play an important role in determining resource allocations
46
Note: Percentage of the 100 municipalities reporting that they had initiated or completed one or more formal strategic planning documents responding ‘agree’ or ‘strongly agree’ to each statement.
Table 4. Municipalities Linking Performance Appraisal to Strategic Plans (N 5 100)
%
The city council holds the chief administrative officer responsible for implementing the strategic plan
78
Objectives established for department heads and other managers come from the overall strategic plan
70
Annual evaluations of department heads and other managers are based largely on their accomplishment of strategic goals and objectives
47
Note: Percentage of the 100 municipalities reporting that they had initiated or completed one or more formal strategic planning documents responding ‘agree’ or ‘strongly agree’ to each statement.
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Table 5 shows a strong link between performance measurement and strategic planning: 72 percent of the municipalities tracked performance data over time to determine whether municipal performance had improved; 69 percent benchmarked performance measures against other municipalities to gauge the effectiveness of strategic initiatives; and 65 per- cent reported performance measures associated with the strategic plan to the municipal council on a regular basis. These three elements, in addition to the formulation of goals and objectives reported in Tables 3 and 4, are commonly associated with performance management. Many municipalities also felt it was important to link other elements of performance manage- ment for following up the content (57 percent) and outcome (48 percent) of the strategic plan and targeting programmes for more intensive evalua- tions based on goals and objective of the strategic plan (42 percent). How- ever, only 18 percent felt that reporting performance measures associated with the strategic plan to the public on a regular basis were important.
Levels of Adoption of Strategic Planning and Management
We used the four-level model to assess the adoption of strategic planning and management (Vinzant & Vinzant 1996). Our survey asked about the initiation or completion of formal strategic planning documents. There- fore, the survey had no direct question on levels 0 and 1 regarding whether the municipalities had initiated a strategic planning process. Many of the responding municipalities that had no formal strategic
Table 5. Municipalities Linking Performance Measurement and Evaluation to Strategic Plans (N 5 100)
%
Tracks performance data over time to determine whether the municipal perform- ance improves
72
Benchmarks performance measures against other municipalities to gauge the effectiveness of strategic initiatives
69
Reports performance measures associated with the strategic plan to the munici- pal council on a regular basis
65
Uses performance measures to track the content of the strategic plan 57 Use performance measures to track outcome conditions targeted by the strategic
plan 48
Targets programmes for more intensive evaluation based on goals and objectives of the strategic plan
42
Reports performance measures associated with the strategic plan to the public on a regular basis
18
Note: Percentage of the 100 municipalities reporting that they had initiated or completed one or more formal strategic planning documents responding ‘agree’ or ‘strongly agree’ to each statement.
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planning documents did not answer the questions on strategic manage- ment tools, which prevented us from estimating the percentage of munici- palities on levels 0 and 1. Figure 5 uses the data from all the responding 176 municipalities in order to estimate what percentage of these were on levels 2, 3 and 4 in the model. A total of 100 of the 176 responding munic- ipalities replied that they had initiated or completed one or more strategic planning documents. Assuming that all of the municipalities that started the process of producing formal strategic plans also completed this task, We estimate that 57 percent of the municipalities were on level 2. As 71 of these 100 municipalities also indicated that they used the annual budget to support the goals, objectives and priorities in the strategic plan, it indi- cates that 40 percent of the 176 municipalities were on level 3. Cross- tabulation showed that 38 municipalities that had completed one or more strategic plans used the annual budget to support the goals, objectives and priorities in the strategic plan, and also used performance measures for tracking the content of the strategic plan. Therefore, we estimate that 22 percent of the 176 responding municipalities belonged to level 4.
Strategic Planning and Management Impacts
The survey instrument included 19 questions on possible beneficial or harmful impacts that the municipality’s municipal strategic planning could have on their jurisdiction. The questions concerned the following five issues: mission, goals and priorities; external relations; management and decision making; employee supervision and development; and perform- ance. Table 6 rates the municipalities that responded positively to the vari- ous dimensions of impact of strategic planning. The most positive impacts
Figure 5. Percentage of Municipalities Reporting Successive Levels of Strategic Manage- ment (N 5 176).
Level 4: Performance management and evaluation (22 %)
Level 3: Budgeting and resource allocation (40 %)
Level 1: Strategic planning process
Level 2: Strategic planning document (57 %)
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were on mission, goals and priorities, and performance. In particular, stra- tegic planning was assessed as having a positively impact on orienting the municipality to a genuine sense of mission (88 percent), focusing the city council’s agenda on important issues (82 percent), enhancing employees’ focus on organisational goals (81 percent) and maintaining the
Table 6. Municipalities Rating Various Impacts of Strategic Planning as Beneficial to Their Jurisdiction (N 5 143)
Percentage with formal strategic
planning documents (N 5 100)
Percentage with no formal strategic planning document
(N 5 43)
Mission, goals and priorities (mean) 81 70 Orienting the municipality to a genuine sense
of mission 88 74
Focusing the city council’s agenda on the important issues
82 70
Enhancing employees’ focus on organisational goals
81 67
Defining clear programme priorities 74 67 External relations (mean) 62 47 Maintaining public support 70 65 Communicating with citizen groups and other
external stakeholders 64 42
Maintaining supportive intergovernmental relations
53 35
Management and decision making (mean) 55 40 Making sound decisions regarding programmes,
systems and resources 64 44
Targeting and utilising programme evaluation tools
58 42
Maintaining a functional organisational structure
52 37
Implementing effective management systems 46 37 Employee supervision and development (mean) 60 53 Empowering employees to make decisions and
serve the public 72 63
Building a positive organisation culture in the municipality
67 52
Providing direction and control over employ- ee’s activities
66 63
Providing training and development opportuni- ties for employees
51 37
Improving employee cohesion and morale 46 49 Performance (mean) 67 55 Maintaining the municipality’s overall financial
condition 75 54
Delivering high quality public services 72 54 Managing operations in an efficient manner 53 58
Note: Percentage of municipalities responding ‘agree’ or ‘strongly agree’.
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municipality’s overall financial condition (75 percent). The municipalities that had initiated or completed one or more formal strategic planning documents scored higher on impacts than those that had no formal strate- gic planning documents in addition to their mandatory plans, expect for two issues. Municipalities with no separate formal strategic planning docu- ments scored higher on their strategic planning improving employee cohe- sion and moral and managing operations in an efficient manner than those with formal strategic planning documents. The municipalities assessed the overall impacts of strategic planning positively. There was a significant positive correlation between the strategic management index and the over- all impact index, which indicates that strategic management improves impacts of strategic planning. We have pursued this issue in the regression analysis of determinants of strategic management impacts. We first analyse determinants of the adoption of strategic planning and management.
Determinants of Strategic Planning and Management
The theory section presented some factors that were hypothesised to be determinants for strategic management adoption: political regime, political uncertainty, environmental heterogeneity, environmental instability, organ- isation size, financial resources, administrative organisation, and strategic content. Table 7 documents the multiple regression analysis of these deter- minants of strategic management adoption. The model in Table 7 explains 22 percent of the variation in the adoption of strategic management. The strategic stance of prospector was statistically significant at the 0.00 level with a positive sign in the expected direction. The average annual net operating results margin was statistically significant at the 0.05 level,
Table 7. Multiple Regression of the Adoption of Strategic Management (N 5 142)
Standardised coefficients (beta) Significance
Socialist representatives, 2007–11, percentage 0.14 0.073 Party concentration, 2007–11, Herfindahl index 20.05 0.560 Average annual change in population, 2009–11 0.07 0.412 Population diversity, 2011, Herfindahl index 0.09 0.364 Average annual percentage net operating results
margin, 2008–10 0.20 0.013
Municipal inhabitants as of 1 January 2011 0.10 0.299 Defender 0.15 0.053 Prospector 0.37 0.000 Reactor 20.11 0.148
Notes: Dependent variable: strategic management index, adjusted R 2 5 0.22, F-value 5 5.396
(p � 0.01), highest VIF 5 1.669.
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indicating that slack financial resources increase strategic management. (A regression model with square root transformation of municipal inhab- itants resulted in a one percentage point higher adjusted R2, minor changes in the other statistics and slightly higher variance inflation indi- cators (VIF).)
Determinants of Strategic Management Impacts
In order to estimate determinants of strategic planning impacts, I used the same independent variables as used in the regression of the adoption of strate- gic management. I included the strategic management index and an index for stakeholder involvement in strategic planning as additional independent vari- ables. As Table 8 shows, the model explains 43 percent of the variation in impacts of strategic management. Because the number of variables in this model is high relative to the number of cases in the analyses, care should be taken in interpreting the figures. Four of the variables were statistically signifi- cant. Strategic management was significant at the 0.00 level, stakeholder involvement at the 0.05 level, and defender only at the 0.10 level – all three with the expected positive sign. A high percentage of socialist representatives in the municipal council had a negative relationship, significant at the 0.05 level with impacts. (Regressing the model with a square root transformation of municipal inhabitants resulted in no change in adjusted R
2 , small changes
in the other statistics and slightly higher VIFs.)
Table 8. Multiple Regression of Strategic Management Impacts (N 5 99)
Standardised coefficients
(beta) Significance
Socialist representatives, 2007–11, percentage 20.20 0.024 Party concentration, 2007–11, Herfindahl index 0.20 0.215 Average annual change in population, 2009–11 20.08 0.409 Population diversity, 2011, Herfindahl index 0.01 0.916 Average annual percentage net operating results
margin, 2008–10 20.12 0.180
Municipal inhabitants as of 1 January 2011 20.04 0.686 Defender 0.16 0.059 Prospector 0.10 0.249 Reactor 20.11 0.217 Strategic management index 0.49 0.000 Stakeholder involvement index 0.23 0.019
Notes: Dependent variable: strategic management impact index, adjusted R 2 5 0.43,
F-value 5 7.772 (p � 0.01), highest VIF 5 1.866.
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Discussion
Adoption of Strategic Planning and Management
Strategic planning and management has been heavily criticised since the 1980s. However, our results indicate that strategic planning and manage- ment in municipal government is now being widely adopted. Strategic planning and management does not require the production of formal stra- tegic planning documents. A majority of the Norwegian municipalities that responded to the survey had completed or initiated a strategic plan in addition to the mandatory planning documents required in the municipal act. However, some municipalities likely regard mandatory plans such as the municipal plan and four-year budget as their most important strategic planning documents, and have not produced distinct strategic plans in addition to the mandatory planning documents.
The analyses showed that many municipalities used several strategic management tools and linked different management processes to the plan- ning processes, to varying extents. One-quarter of the municipalities com- bined different management processes extensively and can therefore be characterised as having a fully developed (level 4) strategic management system.
The respondents, coming from the municipal top management, may have overstated the linking of the strategic tools and processes. For exam- ple, there were loose couplings in much municipal budgeting in many Nor- wegian and Swedish municipalities in the 1970s and 1980s, which meant that budgets were often unrealistic and used largely for rituals and legiti- macy (Olsen 1970; J€onsson 1972; Czarniawska-Joerges & Jacobsson 1989). Hence, the budgets and, presumably, the strategies were often loosely coupled to the financial accounts and actions in both small and large municipalities in the 1970s and 1980s (Mellemvik et al. 1988; Høgheim et al. 1989; Olsen 1997). During the 1990s, however, budgeting and fiscal management seems to have been ‘rationalised’, partly as a result of many public management reforms, including a new municipal law in Norway in 1992. The law regulates the municipal budget and accounting process, including publication dates and decision-making powers, and the Ministry of Local Government and Modernisation monitors the municipal budgets and accounts and has certain sanctions (including a public registry) for municipalities without prudent budgets and financial management. Although the lack of realism, participation or transparency in contempo- rary planning processes does not appear to be a major issue, the integra- tion of different management processes in the strategic management is an interesting issue for future comparative research.
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The American cities in Poister and Streib’s (2005) study used strategic management elements to a larger extent than the Norwegian municipal- ities. This difference may be explained by the fact that the average munic- ipal size in their study was higher than that in the Norwegian sample. Large municipalities may need more formal strategic management than small municipalities. The Norwegian municipalities used comparisons and benchmarking a lot, perhaps because many local government reforms in Norway since the 1980s have invested heavily in the development of per- formance measurement and reporting. Performance management seems to have gained relatively extensive usage in the Norwegian municipal sector compared to American cities. Acknowledging that the data are not directly comparable, it is interesting to note that 22 percent of the Norwe- gian municipalities had adopted strategic management on level 4, similar to what Poister and Streib (2005) found for the American cities. Due to research design issues, there are several reasons why the results in this analysis are not directly comparable to the results reported by Poister and Streib (2005). For example, that study surveyed American cities with 25,000 or more inhabitants in the early 2000s, one decade prior to our sur- vey, which was conducted in 2011/12 encompassing municipalities of all sizes in Norway.
Stakeholder Involvement in Strategic Planning
The analysis indicates extensive stakeholder involvement in the strategic planning. According to the respondents, the municipal management was the most central in the practical work concerning the strategic planning. Other stakeholders, such as the municipal council and lower level employ- ees, were also highly involved in the process, albeit to a lesser extent than the municipal management.
Contexts matter in public management (Meier et al. 2015). The impor- tance of stakeholder involvement may vary both over time and between places. In the 1980s and 1990s, many Scandinavian municipalities experi- mented with and adopted new organisational solutions (Baldersheim & Ståhlberg 1994), including reforms for strengthening their strategic leader- ship and management. In the 1980s and 1990s, there were reports that pol- iticians were estranged to strategic thinking (Nylehn 1996) and were puzzled about the transition from a traditional political to a more strategic role (Vabo 2000). In the early 2010s, local politicians’ relatively active involvement in the strategic planning processes indicates that the current roles may be less puzzling for the politicians.
In the Norwegian municipalities, lower level employees were important stakeholders in 68 percent of the municipalities that developed strategic plans. In the American study from a decade earlier, lower level employees
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were important stakeholders in only 46 percent of the cities (Poister & Streib 2005). Employee involvement may be particularly important in Scandinavian local government, which takes place within a corporatist governance tradition.
The ‘Nordic model’ relies heavily on cooperation between trade organi- sations, labour unions and the government, which on a local level may translate to involvement, especially from management, employees and elected politicians in the strategic planning processes. However, there is also variation within the Nordic model and between the Scandinavian countries. Hofstad (2013) compared models in urban planning between Norway and Sweden and found that the Norwegian system and practice combined hierarchical and interactive governance more than the Swedish system and practice. Due to its high involvement of different stakeholders and willingness to compromise as well as reconsider former decisions, the Norwegian system seemed to have higher legitimacy among many stake- holders but resulted in lower operational efficiency of its planning than in Sweden.
This analysis has only considered the involvement in the development of the strategic planning documents. However, the stakeholders could be involved in wider public policy and strategic management issues than our survey has been able to tap into. A possible trade-off between stakeholder involvement and operational efficiency in strategic planning would be an interesting area for future research.
Management Tools and Quasi-strategy
The use of strategic management tools varied greatly. The most common methods were setting overriding objectives and specifying the way to achieve goals; this is consistent with findings on how Danish upper second- ary schools used such management tools (Hansen 2011). Typical business management models such as market, competition and value chain analyses were rarely used. This is hardly surprising given that such tools, except for value chain analysis and similar tools such as lean process management, are mostly used in direct competitive situations that are relatively rare in Norwegian local government. Therefore, the municipalities may pragmati- cally have selected management tools subject to context, resulting in pub- lic management seemingly adopting a quasi-strategy (Ferlie 2002).
However, the notion of quasi-strategy is questionable; it assumes that public management adapts management tools from business strategy. When strategic management was new to public management, the notion of business strategy as ‘complete’ or an ideal practice, or at least the sole source for public management from which to learn, may have been adequate. After three decades of public management reforms, resulting in
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widespread strategic management practices and many public organisations from which to learn, the notion of quasi-strategy may no longer be a valid description of the public sector’s adaptation of strategic planning and management. Rather than describing the public sector as adopting a quasi-strategy modelled after business practices, the public sector may bet- ter be described as adapting a public management strategy. This adapta- tion may be pragmatic and context-bounded resulting in a distinct public sector strategic planning and management with emphasis on certain tools and processes – particularly performance management and stakeholder involvement.
Determinants of the Adoption of Strategic Management
The regression analysis indicated that both the prospector and, to some extent, the defender type increase the adoption of strategic management in municipal government. Financial resources was also an important deter- minant for the adoption of strategic planning and management, corrobo- rating Berry’s (1994) conclusion that slack resources (‘agency slack’) provide capacity to undertake innovation and adoption of management models such as strategic planning and management.
Interestingly, factors that theory often holds up as potential important determinants for adoption (and impacts) of strategic planning (Boyne 2010) showed mixed results in our study. Political and financial factors were significant determinants, while traditional theoretically important contingency factors such as environmental instability and heterogeneity, as well as organisational size, were not. Hansen (2011) also found no strong support for contingency variables such as size and competitors in his anal- ysis of the application of strategic management tools after new public management reforms in Danish schools. The versatility of strategic man- agement, despite different states of the environment and regulations that mandate planning, may explain why environmental instability and hetero- geneity did not turn out to be important determinants for strategic management.
Determinants of Impacts of Strategic Management
Our analysis has shown that many practitioners perceive the impacts of strategic planning and management positively. The analysis also indicates that the impact of strategic management can be improved by producing formal strategic planning documents in addition to other plans and linking them to other management processes, choosing a defender strategy and achieving stakeholder involvement in the strategic planning process. This finding corroborates earlier studies that found that rational strategic
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planning and participation in decision making improve public service per- formance (Andrews et al. 2005, 2009a, 2009b; Meier et al. 2007). There- fore, implementation and stakeholder involvement in strategic planning and management seems to be important.
Conclusions
Strategic planning and management is now widely adopted in Norwegian local governments, often beyond what is mandatory in the planning regu- lation. Overall, the practitioners who responded to our survey, most of whom were top municipal managers, perceived the impacts of strategic planning and management positively. The municipalities have adopted strategic management at different levels, however. The regression analyses indicated that a prospector stance, financial slack and a defender stance were the three most important determinants for the adoption of strategic management. The three most important positive determinants of the impacts of strategic planning were the adoption of strategic management, stakeholder involvement and choosing a defender stance.
Strategy has often been perceived as a top-down driven process aimed at improving an organisation’s competitiveness and fit to the environment. Some studies have been critical of adopting a strategy in local government that is modelled after such a business practice. Our analysis showed rela- tively little adoption of the management tools that are typically associated with competition. The overall pattern is that strategic management tools are common as important elements in municipal governance for agenda- setting, developing action plans, analyses and reviews, and formal strategic planning seems to have an important influence on the extent and consis- tency in the usage of these tools.
Some earlier studies have been especially wary about the politicians’ role in local government strategy. Our analysis indicates that there seems to be extensive stakeholder involvement in the Norwegian local govern- ment strategic planning processes. Unsurprisingly, municipal management was more centrally involved than other stakeholders, but the municipal council and lower-level employees were relatively heavily involved.
This study has certain limitations in its research design and data, includ- ing obtaining predominantly single organisational responses, measuring strategic stances with single-item indicators and employing subjective impact measurements. Despite these limitations, the study has provided new knowledge on strategic planning and management practices and strat- egy content in Norwegian municipal government, and corroborated many results in the Danish, British and American studies. As a systematic repli- cation study, therefore, the results contribute to public sector strategy research and practice both by analysing municipal government strategy
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outside the often-studied British or American contexts and by facilitating international comparisons of strategic planning and management practices in public administration. Moreover, this article has analysed whether stra- tegic management have impacts; judging by subjective data on impacts, the creation of strategic plans and stakeholder involvement in adoption does seem to matter.
This study may be replicated in other countries, providing a basis for more comparative research. The study has also revealed the need for fur- ther studies with other methods and data. For example, some of the ques- tions in the present survey research instrument asked about the respondents’ views regarding the relationship between strategic planning and management and their impact. These answers are interesting, but need to be complemented with analyses of multiple responses from the same municipalities, responses from stakeholders other than just top man- agement and objective performance data. Therefore, more knowledge is still needed about the impacts of strategic planning and management in different tiers of government, in different countries and over time.
ACKNOWLEDGEMENTS
This article is partly based on data collected by Elisabeth Hinderaker and Nina Nikolaisen in 2012 for their master thesis where Åge Johnsen was supervisor. I am grateful to Theodore H. Poister and Gregory Streib who gave us a copy of their survey research instrument for replica- tion. I acknowledge the constructive comments received when an early draft of this article was presented for the 36th Annual Conference of the European Group of Public Administration (EGPA), Permanent Study Group XI Strategic Management in Government, Speyer, 8–12 September 2014. Thanks also to Sissel Hovik, Paul Joyce and the journal’s three reviewers for constructive comments. Some of the data used here are collected from ‘Survey of Municipal Organization, 1996, 2000, 2004, 2008 and 2012 – Municipal Sample’. The surveys were con- ducted by the Norwegian Institute for Urban and Regional Research (NIBR) for the Ministry of Local Government and Regional Development (KRD). The data have been arranged and made available in anonymous form by the Norwegian Social Science Data Services (NSD AS). NIBR, KRD or NSD have no responsibility for the analysis of the data or any interpretations made of these in this article.
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