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The risks and returns of new public management: political business

Belinda Luke (Queensland University of Technology, Brisbane, Australia)
Kate Kearins (Auckland University of Technology, Auckland, New Zealand)
Martie‐Louise Verreynne (University of Queensland, Brisbane, Australia)

International Journal of Public Sector Management

ISSN: 0951-3558

Article publication date: 31 May 2011

Abstract

Purpose

This article aims to consider success in terms of the financial returns and risks of new public management (NPM) in state‐owned enterprises (SOEs).

Design/methodology/approach

Financial returns of New Zealand SOEs were examined through a review of their annual reports over a five‐year period. Dimensions of risk were examined through interviews conducted in two phases over a two‐year period with senior executives from 12 of the (then) 17 SOEs operating in New Zealand.

Findings

Findings indicate the potential for SOEs to operate as profitable government investments, with clear support for positive financial returns under NPM. However, variations noted within individual SOEs also indicate that profitable and commercial operations may not be possible in all cases. An examination of the risks associated with SOEs' operations reveals a number of dimensions of risk, encompassing financial, political (including regulatory), reputational, and public accountability aspects.

Practical implications

There is a need for an enhanced awareness on the part of internal and external stakeholders (such as the government and general public) of the risks SOEs face in pursuing higher levels of profitability. Also required, is a more acute understanding on the part of internal and external stakeholders (e.g. government and the public) of the need for SOEs to manage the range of risks identified, given the potentially delicate balance between risk and return.

Originality/value

While previous studies have considered the financial returns of SOEs, or the risks faced by the public sector in terms of accountability, few have addressed the two issues collectively in a single context.

Keywords

Citation

Luke, B., Kearins, K. and Verreynne, M. (2011), "The risks and returns of new public management: political business", International Journal of Public Sector Management, Vol. 24 No. 4, pp. 325-355. https://doi.org/10.1108/09513551111133489

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited