Managerial Response to Technological Innovation in Public Sector Organizations

Abstract

Technological innovation is widely seen as a means for raising productivity levels in state and local government. Growing evidence indicates that (1) senior level bureaucrats have primary responsibility for decisions concerning the adoption of innovations, and (2) innovations adopted by state and local governments are of two types—cost-reducing and service-augmenting. A formal explanation is advanced for the apparent preference of bureaucrats for service-augmenting innovations. Service-augmenting innovations tend to increase agency budgets to which bureaucratic emoluments are positively correlated, to expand the clientele served by an agency, and to obscure agency production costs by simultaneously altering both the input mixes and the services being provided. Federal policies designed to foster a more rapid diffusion of technological innovations are, in part, based upon the expectation that technological innovations will lessen the budgetary pressures upon state and local governments. The analysis presented here suggests that there may be countervailing pressures within the adoption processes of state and local governments which weaken the implied relationship between technological change and productivity improvement.