Exploring the Change in Strategy Formulation and Performance Measurement Practices Under Turbulence

This article adds to the growing literature exploring the impact of cutbacks and environmental turbulence on organizational operations by studying the changes in strategy formulation and performance measurement practices in the public sector in the wake of the Great Recession. Survey data were collected from public transit agencies in small and medium-sized cities at the beginning of the recession in 2009 and again in 2013. The analyses found that transit agencies dealt with the fallout from the economic crisis by increasing their use of logical incrementalism approaches to strategy formulation through negotiating with organizational stakeholders and responding to newly emerging information through continuing changes in strategy. Agencies also placed greater emphasis on performance measurement practices. While the use of formal strategic planning itself remained constant under turbulence, the blended approach of formal strategic planning and logical incrementalism showed significant increase. Theoretical and practical implications of the findings are discussed in the conclusion

The Impact of Performance Management Under Environmental Turbulence

Performance management is an established concept in the public sector, with several empirical studies supporting its beneficial impact on organizational performance. Research on performance management, however, is still in initial stages and mostly examines the impact of this practice under stable environmental conditions. This study adds to the literature by analyzing the effect of this system on performance of local transit agencies in a turbulent environment characterized by the Great Recession and its aftermath. Exploratory factor analysis (EFA) on survey responses from 162 local transit agencies in the United States is used to extract the four components of performance management, namely, formal strategic planning, logical incrementalism, performance measurement, and performance information use. Ordinary least squares (OLS) regression analysis shows that an independent use of formal strategic planning and logical incrementalism has a negative impact on organizational performance under turbulence. Performance measurement and a blend of formal strategic planning and logical incrementalism, however, show a positive impact

Strategy Formulation and Performance: Evidence from Local Public Transit Agencies

Building on an initial stream of research on the relationship between strategy process and performance, this article analyzes the effect of strategic planning and logical incrementalism on the performance of 104 small and medium-size urban transit agencies in the United States. Data on strategy development were obtained through an online survey of agency managers, while objective performance data were drawn from the National Transit Database. Ordinary least squares regression models were used to test the effects of the two planning approaches and of the interaction between them in 2008, controlling for contextual and operational variables as well as performance in 2004. The results suggest that strategic planning exerts a positive influence on effectiveness and system productivity measures, but does not influence efficiency or cost-effectiveness measures. Logical incrementalism by itself appears to have a negative effect on the number of passenger trips per capita and transit system productivity measures. However, conducting strategic planning efforts within a larger framework of logical incremental decision-making, as represented by the interaction term, positively affects both the effectiveness and the system productivity measures. Taken together, these results suggest that strategic planning, whether on its own or combined with logical incrementalism, has a positive effect on some dimensions of performance, at least within the context of the public transit service industry

Mutual Relationship of Strategic Stances and Formulation Methods, and their Impacts on Performance in Public Local Transit Agencies

This study is a continuation of previous work that emphasizes an alignment between the internal management (strategy formulation) of public organizations and their environment (strategic stance). As public organizations formulate strategy through strategic planning or logical incrementalism, they relate to their external environments through the strategy stances of prospector or defender. Current research asserts that organizations with a prospector stance perform better when they adopt logical incrementalism, whereas organizations with a defender stance perform better when they formulate their strategy through formal strategic planning (FSP). Our study on the transit industry, however, could not find support to these assertions

Operationalizing Strategy Content: An Example from the Transit Industry

While models of organizational strategy saturate private sector research, public sector research lags behind. The model created by Boyne and Walker (2004) is an exception. The main objective of this study is to operationalize this model using a unique data set from the US transit industry. Through a survey of 103 local transit agencies, we developed separate strategy profiles for each agency that help us answer important questions about organizational strategy. We find that not only do the organizations adopt a mix of strategic stances through the action areas; they also have distinct profiles, which vary greatly between agencies

Does Performance Management Lead to Better Outcomes? Evidence from the US Public Transit Industry

Although performance management processes are widely assumed to be beneficial in improving organizational performance in the public sector, there is insufficient empirical evidence to back this claim. In this article, the authors examine the impact of performance management practices on organizational effectiveness in a particular segment of the public transit industry in the United States. The analysis utilizes original survey data on performance management practices comprising both strategy formulation and performance measurement in 88 small and medium-sized local transit agencies in conjunction with comparative outcome data drawn from the National Transit Database maintained by the Federal Transit Administration. The results provide evidence that more extensive use of performance management practices does in fact contribute to increased effectiveness in this segment of the transit industry