Management and Performance in the Public Sector: Evidence from German Municipalities

Abstract

Management matters for the performance of private-sector firms, but evidence for the public sector is still scarce; in particular for developed countries. One challenge is that for many public-sector organizations (beyond hospitals and schools) direct performance measures are not readily available. We survey the mayors and heads of administration of German municipalities to elicit their use of structured management. Even within state, we document large heterogeneity. Management scores correlate strongly with (indirect) local performance measures like revenue, financial health, population growth, business formation, or broadband coverage. The association is particularly strong for the sub-score on human resource management.