Abstract
Municipality size has become an issue since the New Public Management doctrine of disaggregating structures into manageable units. In some countries, this doctrine led to the creation of small-scale agencies relying heavily upon transfers from upper-level governments. This paper aims to contribute to performance management literature by providing empirical evidence about some determinant factors that are likely to endow local governments with superior financial performance. Data came from a sample of Brazilian municipalities and refers to the period 2005-2008. The main conclusion of this investigation is that larger cities are more likely to manage revenue and expenditure better than are smaller cities, which aligns with the discussion of amalgamation versus fragmentation. This conclusion stems from the findings that in small municipalities mayors have fewer conditions to improve financial performance due to the difficulty of raising and collecting taxes and of reducing expenditures, which makes their administrations far more dependent upon external sources of money. Therefore, this dependent relationship can be seen as the cause of poor financial performance to the extent that it lowers mayoral discretion when making decisions. Another contribution this paper proposes to theory and practice relates to the fact that in the strong-mayor form of local government, mayoral qualification is likely to have little effect upon performance.
Highlights
Scholars have dedicated a great deal of time and effort to finding the determinant factors likely to improve the performance of public organizations (Andrews, Boyne, & Walker, 2011)
For the Financial Performance Management Index (FPMI), (M = 0.033 and SD = 0.009), the city that had the best financial performance management capacity is the city of Uberaba (FPMI = 0.199) and the worst is the city of Pocrane (FPMI = 0.018)
Another issue that we addressed in this investigation is whether the mayor has previous administrative experience, as indicated by whether this is his/her second political mandate
Summary
Scholars have dedicated a great deal of time and effort to finding the determinant factors likely to improve the performance of public organizations (Andrews, Boyne, & Walker, 2011). As a strong-mayor system of government (Mouritzen & Svara, 2002), mayors are both political leaders and municipal managers and they are empowered to manage the municipality on a day-to-day basis, managing policies and resources, as well as dealing with political issues We regard this issue as critical to the extent that the vast majority of Brazilian municipalities rely heavily on transfers from Federal and State governments (Martell, 2008; Mattos, Rocha, & Arvate, 2011) in order to ensure fiscal equilibrium, which increases local government dependence on good relationships with upperlevel government for ensuring the flow of money (Fenno, 1966; Whitney, 2013) and, reducing mayors’ managerial discretion (Meier & Keiser, 1996). We used ideology (whether the political party the mayor is affiliated to is regarded as to the left or to the right)
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