Rationality as Outcome of a Mimetic Process

The municipalities have been increasingly exposed to normative pressures from the national governance level to improve their management practices and their

‘professionalism’. This learning process, however, is mainly about adopting private sector management principles and techniques (such as the balanced scorecard) in order to improve the effectiveness of administration and local public service provision. Therefore, the normative forces (such as ‘becoming professional’ as the private sector) and mimetic forces (such as ‘imitating’ from the private sector) forces are both pointing the municipalities toward the private sector, which is perceived as more effective and successful in managing and hence, its practices are regarded as more legitimate and more worth imitating. I found it particularly interesting that municipal managers perceive the private sector as more effective and that they also believed that the ‘public’ does so.

Municipal managers increasingly feel that they ‘must have a reason’ why the municipality is in charge of certain activities instead of letting a private company take care of it. As a result, municipal managers not only lack financial resources but also legitimacy as a resource. Embracing more private sector oriented ways of managing and being more flexible, passionate, customer- and outcome-oriented are believed to improve the organizations’ effectiveness and thus, provide legitimacy for the public sector to

‘exist’ and to ‘manage’. However, the private sector is also a useful resource for public sector managers from which they borrow phrases that help justify existing management thinking in the public sector. Especially the notion of ‘professional management is rational management’ is rather a myth than a reality and no one can actually expect that management in the private sector would be rational per se. Therefore, I will explain in the following paragraphs why municipal entrepreneurialism has adopted a private sector

‘rationality’ way of thinking by describing the imitation process as a process of rationalization.

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As presented during my empirical analysis, municipal administration imitates private sector management practices and it mainly does so because of two kinds of motives. One motive is the genuine desire to achieve performance improving effects and to find solutions to problems, which I call ‘altruistic’ imitation; while the other motive relates to merely acquiring legitimacy for the organization and to justify existing beliefs of management, which I call ‘egoistic’ imitation. In both cases the benefit for the organization is not only to enjoy improved management and effectiveness but to obtain legitimacy for its ‘reason to exist’. Legitimacy that is gained through imitation therefore also needs to be seen as the organizations attempt to acquire a resource that will support their actions and their ‘reason to exist’ – not only based on mere grounds of efficiency and effectiveness.

8.1.1.1 Rationality as a Product of an ‘Altruistic’ Imitation Process

In cases where managers faithfully believe that the imitation of private sector and entrepreneurial management thinking and acting improves the performance of their own organization, I developed the category of ‘altruistic imitation’, which is one source for the rationality of municipal managers and urban entrepreneurialism. In this case, the practices that are imitated are perceived as successful and managers dedicate resources to implement the new practices and ways of thinking. This adoption of private sector principles may be a rational decision but in some cases, it is merely collective frustration that renders managers vulnerable to unrealistic hopes and makes them look for magical solutions that will relieve their source of frustration (Abrahamson, 1996; Klapp, 1969).

The managers look for these magical recipes in the private sector because they believe it to be more successful than the public sector, especially in entrepreneurial behavior and the positive outcomes that are associated with it, such as professionalism, self-confidence, success, risk-taking, and competitiveness. But while this makes public sector managers look like they are blindly following the private sector, I also saw a significant amount of doubt in public sector managers that the private sector would be more successful per se. Interestingly, even in these cases, they seemed forced to use entrepreneurial jargon, to imitate the private sector, and to benchmark themselves with the private sector in order to secure legitimacy for the public sector organization by securing stakeholder support.

Public managers engage in this kind of imitation because organizations must appear to be correctly managed, and they do so by adapting management techniques that are collectively believed to be effective and rational (Meyer and Rowan, 1977). If they fail to do so, they may lose stakeholder support (Abrahamson, 1996). Because the municipality is conducting its business in the ‘the right way’, or in what could be described as ‘in the current management fashion’ (Abrahamson, 1996), it obtains legitimacy.

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The rigid application of outsourcing of local public services activities or the implementation of the ‘balanced scorecard’ are examples of the public organization following a management ‘fashion’ since their performance improving effects are promoted by business consultants despite their performance improving effects often being exaggerated⁸.

Imitation is a process of translation (Sevón, 1996) and thus, the outcome of imitation never fully resembles the practice, behavior, or object that has been the subject of the imitation. Instead, the outcome represents a mere variation on what has been imitated.

Such imitation also bears risks. As I showed in my analysis, in the case where local water services require structural reform and a regionalization would be called for, the public sector manager’s rigid application of ‘rational management as it is done in the private sector’ in fact leads to counter-productive outcomes in local public services reform. Local public services and water services reform requires different negotiating parties to concede some of their demands but instead of doing that, municipalities emphasizes the short-term individualistic benefit maximization of municipalities and thus, it hampers the negotiating municipalities’ abilities to form agreements with each other, for example, about regionalizing water services.

However, the counter-productive effect private sector imitation has on the local public sector cannot be blamed on the predominant logics of the private sector itself, for example by arguing that they would foster the municipalities’ individualism. This is mainly because of two reasons. First, processes of imitating are at the same time processes of rationalizing (Sevón, 1996) because what spreads are not practices per se but edited versions of what happened (Sahlin-Andersson, 1996:83). As a result, the imitated private sector style of ‘managing’ is a rationalized version of what is in fact taking place in the private sector and hence, it can be considered a ‘myth’ (Meyer and Rowan, 1977).

Second, imitators usually lack first-hand knowledge of what they imitate (Sahlin-Andersson, 1996:80) and therefore it is understandable that public sector managers lack sufficient knowledge of the necessary ingredients that contributed to the successful private sector management practice. Third, successful imitation requires innovation (Sevón, 1996), which is a resource-intensive activity that requires time, capital, commitment by management, and in the case of local government, also significant amount of political will.

But in situations where the private sector management style is rather used to justify existing management thinking in the public sector organization than to actually change the thinking, the necessary innovativeness and commitment that are a prerequisite for the

8 For example, outsourcing has been described as management fashion and its performance improving effects in the private sector are doubted by a number of authors and traced back to mimetic behavior among private sector firms (e.g. Lacity and Hirschheim, 1993), and a large number of outsourcing failures lead to another, more recent trend of ‘insourcing’ (Lacity and Hirschheim, 1995).

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imitation to be successful are missing. For such cases, I have distinguished between the

‘altruistic’ form of imitation where public sector managers faithfully imitate in order to improve their organizations’ effectiveness and ‘egoistic’ imitation, where managers use the discourse of private sector management thinking to justify their existing management believes and decisions.

8.1.1.2 Rationality as a Product of an ‘Egoistic Imitation’ Process

Extensively calculating and making rational decisions is regarded by municipalities as a

‘better’ and ‘more professional’ way of managing but it also serves an important role as a discourse to justify existing beliefs and behaviors of management.

The application of practices and especially private sector ‘thinking’ allows management to justify its decisions and behavior (Sahlin-Andersson, 1996) by arguing that ‘those’

which are perceived as more successful and ‘efficient’ (usually represented by private sector companies) ‘do it the same way’. Cutting the budget, maximizing the benefits of one’s own municipality, or lacking the ability of compromising is often justified with the argument that ‘no private company would do it either’ although this perception needs to be considered a ‘myth’ of how the private sector conducts its business since there is ample evidence on cooperation and compromising in the private sector.

Private sector companies cannot be blamed for their practices to spread as ‘myths’ but neither can the municipalities be blamed for adopting these entrepreneurial ‘myths’ of the private sector. Sahlin-Andersson (1996:75) argues, as “public agencies are increasingly compared with private companies, and private companies are generally perceived to be more successful, then the ways in which the public agencies differ from the private companies increasingly constitute the definition of what their problems are”. She further refers to Sevón (1996) and says that during uncertainty, actors are on the search for more reliable experiences and models to imitate in order to find a new identity.

Distributed by ‘editors’ such as consultants, researchers, the media, or simply by managers who are eager to learn and keep their eyes open, success stories are encountered and they turn into ‘recipes’ by being made ‘logical’ and they are often promoted by those who were not even present when ‘it’ happened (Sahlin-Andersson, 1996). In this context, I would like to question the effectiveness of management consulting in the entrepreneurialization of municipalities that actively promotes the adoption of private sector management tools and practices. The entrepreneurialization of local government needs to be seen as the attempt to construct a new, more legitimate identity. Because the main components of this new entrepreneurial identity are imported by imitation, they are edited and rationalized versions (often through consultants and academics) of what had really happened. Thus, the municipality with an entrepreneurial identity is benchmarking itself with a type of rational and entrepreneurial private sector organization that only exists as a myth.

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Further, public sector organizations sometimes only borrow or imitate from the private sector what is convenient and not the whole pattern that would be necessary for the imitation to work in its new context (Sevón, 1996). Therefore, I see the matching individualistic and profit-maximizing logics of municipal managers and financial actors as an example of the powerful municipal actors finding other actors that provide them with solutions to their problems that are ‘convenient’. Continuing this argument a bit further, it means that financial actors have no significant role in increasing the municipalities’ entrepreneurialism per se but the solutions they provide are based on financial-rational thinking that conveniently fits to the entrepreneurialized municipalities’

individualistic-rational logic. Hence, I argue that the entrepreneurialization of local government is based on coercive pressures by the state governance level and that the financial actors are merely used by municipalities to solve the problems that occur in this entrepreneurialization process – because their solutions are based on a logic of

‘rationalism, calculation, and benefit-maximization’ that fits the thinking of municipalities.