The Impact of Performance Budgeting on Defense Resource Allocation

Abstract

Performance information utilization is an important method to improve budget efficiency and organizational performance. The nature of performance budgeting is to apply performance information to the budgeting process. Research on the impact of government or department performance budgeting on resource allocation has always been controversial. On the one hand, there are many external interference factors in government or department for integrating performance information and budget; on the other hand, there are defects in the generation and quality of performance information of public organizations, and the impact of performance information at different levels on resource allocation is quite different. Therefore, the objective of this paper is to study the impact of based-program performance budgeting within the department on resource allocation. The U.S. Department of Defense, as the largest single department entity in the world, is typical in integrating performance information and budget processes. Using data from the U.S. Department of Defense for fiscal years 2010-2017, this study finds that performance information at the program level within the department has a positive impact on defense resource allocation. Therefore, the integration of performance information into the budgeting process can improve sector budget in spite of political constraints. However, there are many constraints and organizational differences to successfully integrate performance information into the budgeting process in departmental budgeting.