The role of uncertainty in performance information disclosure

• Pages: 583-598
• Published date: 09 July 2018
• DOI: https://doi.org/10.1108/IJPSM-08-2017-0216
• Date: 09 July 2018
• Author: Veronica Allegrini,Fabio Monteduro
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

The role of uncertainty in

performance information

disclosure

Veronica Allegrini and Fabio Monteduro

Department of Management and Law, University of Rome Tor Vergata, Rome, Italy

Abstract

Purpose –The purpose of this paper is to investigate the relationship between the environmental

uncertainty faced by public administrations and their likelihood of disclosing performance information,

particularly at municipal level.

Design/methodology/approach –The existence of the relationship between environmental uncertainty

and performance information disclosure is explored, drawing on organizational information processing

theory. The paper describes an empirical quantitative investigation in a sample of 490 Italian municipalities.

Findings –Municipalities facing more uncertainty are more likely to disclose performance information.

There is no unique set of factors that can explain the difference in the disclosure activity of Italian

municipalities, but this activity appears to be contingent on the level of environmental uncertainty.

Originality/value –The paper explores the under-investigated field of factors influencing the disclosure of

performance information by public administrations. It identifies uncertainty as one of the determinants

of performance information disclosure. The findings suggest that the use of theories and variables not

previously used in this type of study can improve understanding of the phenomenon. The study also suggests

that public officials should consider adequate enforcement mechanisms to promote performance information

disclosure, especially for organizations with lower incentives to improve information processing capabilities.

Keywords Public sector, Uncertainty, Public administration, Information disclosure,Performance reporting,

Organization information processingtheory

Paper type Research paper

Introduction

Over the last fewyears, there has been an increased focuson performance reporting inOECD

countries, particularly under public sector reforms. The New Public Management and

ReinventingGovernment movements have givennew emphasis to performancemeasurement

and external reporting, with public administrations required to be more accountable

(Bouckaert and Halligan, 2008; Hood, 1995, 2007; Van Helden and Johnsen, 2002).

Accountability has become a symbol of good governance and a sine qua non of democratic

governance (Bovens, 2005).

The new importance of accountability has had some consequences. First, there is a trend

toward increasing disclosure of public sector information. Accountability can be effectively

achieved by providing a reasonable level of public information disclosure, and disclosure of

information is the main way to provide valuable accountability to the public (Van de Walle

and Cornelissen, 2014). Increasing disclosure has therefore led to an increase in

transparency and allowed governments to account to citizens for their use of public financial

resources (Brusca and Montesinos, 2016). One of the major changes in public sector

management has been a greater focus on what is being achieved for the resources spent.

The public sector is required to be accountable not only for money spent (inputs), but also

for results achieved (outputs/outcomes) (McGeough, 2015). Performance dimensions can be

both financial and non-financial (Monfardini, 2010). The shift to the New Public

Management paradigm has led to a change in the type of accountability required of public

administrations. Financial information alone is now considered insufficient for

accountability purposes, and non-financial information is also needed. Public sector

performance reporting has therefore also received more attention. In the rest of this paper,

International Journal of Public

Sector Management

Vol. 31 No. 5, 2018

pp. 583-598

© Emerald PublishingLimited

0951-3558

DOI 10.1108/IJPSM-08-2017-0216

Received 20 August 2017

Revised 30 November 2017

Accepted 9 January 2018

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

583

Uncertainty

and

performance

disclosure

performance reporting and disclosure are considered to mean non-financial performance.

Performance information disclosure is widely considered to increase public sector

accountability, both by international institutions (see, e.g. OECD, 2015) and academics

(Hoque, 2008; Hyndman and Anderson, 1995; McGeough, 2015; Monfardini, 2010;

Van de Walle and Cornelissen, 2014). Boyne and Law (1991) suggested that effective

accountability is impossible in practice without accurate performance information.

Some authors also assert that disclosure of performance information is the most effective

tool for improving management and the efficient use of resources (Bakar and Saleh, 2015).

However, others(Kroll, 2015; Moynihan and Pandey,2010) assert that reporting performance

informationdoes not of itself lead to improvements, and what mattersis whether and how the

information is used. A broad stream of literature assumes a managerial point of view and

analyses if, how and why public managers use performance information to support decision

making (Kroll, 2014; Moynihan and Pandey, 2010). There has been little research from a

democratic perspective, and particularly on whether and how end-users –ministers,

parliamentarians and citizens (Pollitt, 2006) –use performance information (for a review see

Van Helden, 2016). Availability of performance information is, however, recognized to havea

role in determining its use (Julnes and Holzer, 2001; Moynihan and Pandey, 2010).

Performance information disclosure is not, by itself, a sufficient condition for use, but it is

a necessary one. The disclosure of performance information therefore enhances both the

chance it will be used and democratic accountability. This paper focuses on accountability,

and we therefore decided to investigate the relationship between performance information

disclosure and environmental uncertainty.

Overall, the development of performancemeasurement and reporting found fertileground

in public sectorreform. The implementation of performance systems has,however, been very

different internationally. In Italy,reform has followed a legislation-driventop-down approach,

consistent with the public sector’s strong legalistic tradition and bureaucratic culture

(Marcuccio and Steccolini, 2009). Several laws have been introduced, providing rules on

performance management for various types of public organizations. The main and most

specific of these is Legislative Decree No. 150/2009 (and subsequent revisions), which applies

to central government organizations (ministries, central agencies and national non-economic

public bodies) and public universities. The aim of this law was to achieve greater levels of

public performance, both personal and organizational, and accountability. It forced

organizations to introduce performance management systems, and to plan performance

objectives, measure and evaluate results and report this information. Other public

organizations aresubject to different regulations: for example, municipalities haveto comply

with LegislativeDecree No. 267/2000 (and subsequentrevisions). This details thefunctions of

planning andcontrol systems in local governments. There are some compulsory control tools,

but Italian local governments have a relatively high degree of freedom about their control

system and can adaptit to meet their needs. For example, thelaw does not prescribe anything

about organizational performance reporting. On the issue of disclosure, Decree No. 33/2013

requires all public organizations to publish on their websites all information related to

governance, administrative bodies, economic and financial documents, performance, ethics

and integrity.The legalistic approach to publicsector reform has not, however, prevented the

developmentof a gap between the expectationand reality of reform. Ongaroand Valotti (2008)

mentioned a general difference between what was prescribed by law and the uptake of the

correspondingmanagement tools, and also a distinctionbetween the uptake and actual use of

management tools. Both these have been seen in performance reporting implementation.

Monteduro (2017) studied the adoption of outcome-related performance indicators in external

reporting, and looked for annual reports containing performance information –such as

performance, social and accounting reports –on the websites of 507 Italian public

organizations(including ministries, centralagencies and non-economic publicbodies, regions,

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