The interrelations amongst control system elements in public sector organizations.

The aim of this study is to explain the decisions that public sector organizations make with regard to the design and use of their management control system. New Public Management, based on economics theory, suggests that employees in the public sector should be freed from traditional bureaucratic constraints and mutual monitoring in order to operate more effectively; in return, employee effort should be monitored through performance measures. In an empirical test of this claim, using survey results from 106 municipal departments, I find that the applicability of specific control system elements depends upon the organizational characteristics. In addition, most controls appear to be complements rather than substitutes, casting doubts on the claims of NPM that traditional controls should be abandoned. Finally, ‘excessive’ cultural controls are positively associated with public sector performance, suggesting that organizational behavior theories may provide useful extensions of economics theories to explain management control choices in public sector organizations.