New Public Management (NPM) BY Christopher Hood

Date:

New Public Management (NPM) has become a significant trend in public administration worldwide over the past 15 years. While most research on this topic focuses on the UK, NPM is not exclusive to Britain.

The rise of NPM can be linked to four major administrative trends:

●        Efforts to reduce government growth in terms of public spending and staffing.

●        The shift towards privatization and outsourcing of government functions, with an emphasis on local service provision.

●        The use of automation, especially in information technology, to improve the delivery of public services.

●        The emergence of a more international agenda, focusing on general issues of public management, policy design, decision-making styles, and intergovernmental cooperation.

NPM is a broad term that encompasses various administrative doctrines. It is a convenient shorthand for the set of similar reform ideas that have dominated the bureaucratic reform agenda in many countries within the OECD (Organisation of economic cooperation and development).

NPM, like many administrative terms, is a flexible concept. Its value lies in its ability to serve as a shorthand for a collection of similar administrative principles that have shaped bureaucratic reforms in various countries within the OECD since the late 1970s. Although its definition is vague, NPM has evoked strong and diverse reactions from bureaucrats.

On one end of the spectrum, there are those who believe that NPM is the only way to address the significant failures and ethical shortcomings of the “old” public management. On the other end, some criticize NPM as a destructive force that undermines the century-long development of a distinct public service ethos and culture.

The rise of NPM has also sparked debates about how to label, interpret, and explain the movement. People question the true nature of NPM and whether its novelty lies primarily in its presentation or its content. Why did NPM gain popularity, and is it a universally applicable approach?

This following article would aim to focus upon these questions and basically upon the broad appeal and applicability of NPM.

WHAT THE EMPEROR WAS WEARING : THE DOCTRINES OF NPM

New Public Management (NPM) is a public administration doctrine developed in the 1980s. It emphasizes market-oriented principles and management techniques to improve the efficiency and effectiveness of public services. NPM advocates for decentralization, performance measurement, result-oriented contracts, competition, and customer orientation. It aims to introduce private sector practices, such as strategic planning, performance-based incentives, and accountability, into the public sector. NPM seeks to enhance service quality, reduce bureaucracy, and promote responsiveness, ultimately aiming to achieve better governance and outcomes in public administration.

WHERE THE DESIGN CAME FROM: NPM AS A MIX OF OPPOSING IDEAS

One way to understand the origins of NPM is to see it as a combination of two different streams of thought. One partner in this mix was the “new institutional economics.” This branch of thinking emerged from the development of public choice theory (expects to study and influence people’s public choice processes to maximize their social utility), transaction cost theory (theory accounting for the actual cost of outsourcing production of products or services including transaction costs, contracting and coordinating costs etc.) , and principal-agent theory ( describes the pitfalls that often arises when one person or group, the “agent” is representing another person or group called as the “principal”) after World War II. It drew on works by scholars like Black and Arrow, as well as Niskanen’s theory of bureaucracy. The new institutional economics contributed to a set of administrative reform ideas centred around contestability, user choice, transparency, and a strong focus on incentive structures. These ideas were quite different from traditional views of “good administration” based on military-style hierarchies and the elimination of duplication.

The other partner in this “marriage” was a series of business-