Legitimacy and relevance of a performance measurement system in a Finnish public-sector case

Abstract

2020). Legitimacy and relevance of a performance measurement system in a Finnish public-sector case. Abstract PurposeWe investigate the difficulties involved in translating stakeholder expectations into action and maintaining legitimacy through the use of a performance measurement system (PMS) created in a Finnish regional development company (RDC). This longitudinal case study illustrates the fluctuating and socially constructed nature of legitimacy in the public sector. Design/methodology/approachThis qualitative case study longitudinally analyzes the various developments occurring during and after the development of a PMS system for the case organization. Empirical data include interviews, workshops, observation, and other materials relating to the case organization. FindingsThe initial interest in operational improvement changed to legitimation-seeking behavior by the case organization when the measures created were modified to accord with the changed preferences of the key stakeholders. However, the pursuit of legitimacy for the RDC was made difficult by the outcome oriented, changing, and contradictory nature of stakeholders' demands. Our findings reveal a continuous mismatch between organizational activities and the board's expectations, leading to the eventual closure of the organization. Practical implicationsThe findings help to analyze the legitimacy and relevance of PMSs in public-sector projects. The study highlights the practical importance of analyzing the different legitimacy priorities of various stakeholder groups, such as politicians and entrepreneurs. Originality/valueThe study analyzes fluctuating nature of legitimacy longitudinally in the public-sector context from the stakeholder perspective. This study analyses a situation where the stakeholders' evaluations of the legitimacy of the organization, and the PMS developed, change over time, complicating the accounting for stakeholders.

The influence of institutional pressures on the implementation of a performance measurement system in an Egyptian social enterprise

“…Therefore, we argue that the prevalence of one institutional logic over another may take place at the organisational and individual levels because of organisational field pressures and government funding opportunities, not because of other conflicts within the organisation. This finding contributes to previous PMS literature on institutional logics and SEs complexity (Ferry and Eckersley, 2020;Mättö et al, 2020;Knardal, 2020;Nielsen et al, 2019;Kaufman and Covaleski, 2019;McMullin and Skelcher, 2018;Busco et al, 2017;Carlsson-Wall et al, 2016). For example, although Mauris' board chairman suggested 50% criteria for urban and rural revenue, the need for financial survival was so acute at the start of the safe water project that the firm's leadership could not have halted the urban water business even if it exceeded 50% of the firm's total sales revenue.…”

“…Secondly, performance metrics that focus on measuring social value creation and societal outcomes. Thirdly, performance metrics developed for investors in social businesses who expect both financial return and "social return" such as improving their societal acceptance and legitimacy (Mättö et al, 2020;Arena et al, 2015;Luke et al, 2013). Likewise, Kaufman and Covaleski (2019, p. 42) contend that "budgetary practices emerge as an observable, material expression of institutionalised beliefs within a particular setting at a particular time".…”

“…Democratic oversight, under the Social Enterprise Act ( 2011) and the government model of funding and accountability, constitutive of the SEs status, is a suitable means of controlling strategy and operations, enabling Mauris to fulfill local social demands. Hence, the motive for social acceptance and political legitimacy of this welfare logic is to contribute to Mauris' social mission (Mättö et al, 2020;Gebreiter and Hidayah, 2019;Pache and Santos, 2013). In contrast, regarding Mauris' commercial logics, the field-level mission is to trade goods and/or services in the market for an economic surplus that Mauris can legitimately reallocate to implement social (drinking water) projects that meet rural population needs.…”

“…Moreover, it is argued that the logic of motivationally driven social cognition is applicable, regardless of whether motives are held only by individuals or are shared in groups within the organisation (Ishaque, 2020;Manville and Greatbanks, 2020). In a SE context, the motives are the willing in gaining societal acceptance and legitimacy at the field level to signify good performance, governance and compliance with its regulatory body (Mättö et al, 2020;Luke et al, 2013;Nicholls, 2010).…”

“…The implementation of a PMS is clearly connected to and plays a more pivotal role in SEs' institutional complexity than previously mentioned in previous literature. Such shifting relationships between commercial and social logics reflect an increasingly complex attitude for SEs' internal PMS, which now emphasises developing business-critical activities, instead of simply presenting performance data as a tool to promote good governance and compliance to their regulatory bodies (Mättö et al, 2020;Manville and Greatbanks, 2020;Carlsson-Wall et al, 2016). This ends with the fact that institutional logics and their interplay are "in a state of flux" within SEs' internal PMS.…”