Using Financial Management Techniqueswith in Public Sector Organizations, Does Result Control Matter? A Heterogeneous Choice Approach



Using a principal-agent framework and multi-country survey data of over 400 public sec-tor organizations, this article examines the effect of result control on the use of fnancial manage-ment techniques in public sector organizations. In order to avoid invalid conclusions, we test for heteroskedasticity and model residual vari-ance using a heterogeneous choice model. This model yields important insights into the effect of result control that would be overlooked in a mis-specifed ordered logit model. Our fndings reveal that result control matters, although size and pri-mary task of the organization also prove to be determinants of the use of fnancial management techniques. Within the context of the continuous attempts being made to improve public sector performance, policy makers should thus devel-op different strategies for different (individual) agencies, while relying on a strong ex-post result control, when they want to stimulate the use of fnancial management techniques.


fnancial management tech-niques, heterogeneous choice model, result control.

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