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The purpose of this paper is to analyze the under-investigated role played by different key organizational actors engaged in the practice of performance-based budgeting (PBB) (e.g. Ministry of Finance, National Audit Office, Sectoral Agencies) to explore how they influence the practice of PBB, contributing to lead the change or create resistance toward it.

The empirical evidence has been collected through a multiple case study based on semi-structured interviews and document analysis in Sweden and Finland, which have long traditions with PBB, and has been interpreted through the lens of institutional and organizational change theory.

The results show that, despite the lengthy experiences with PBB, the lack of sound dynamics across key actors makes the budgetary use of performance information limited and partial, placing the reform in a “gray area” between the complete implementation of the practice and the total resistance toward it.

The knowledge obtained from the exploratory analysis has relevant implications for understanding differences and similarities across key organizational actors and underlining their crucial role in making a change feasible. Indeed, PBB may represent a radical change even in presence of embedded performance management systems.

This paper studies the usability of LG financial statements as perceived by local councillors. By drawing on a comparative view of two countries with different periods of accrual accounting use in the public sector, the authors investigate how local councillors assess the usability of LG financial statements in order to question accounting reform success. Determinants that influence the usability assessment are explored.

Exploratory design: data were collected from questionnaires with 24 local councillors from five Finnish local governments (LGs) and 30 local councillors from six German LGs. An adjusted variant of the system usability scale was analysed with descriptive statistics and non-parametric group comparisons.

In both countries, the usability assessment of financial statements seems to be positive, indicating a successful reform process. In Finland, where the accrual government accounting reform has had a longer time to settle in, councillors seem to assess usability only partially better than German councillors. Several determinants of the usability assessment were detected, such as size and debt level of the LG as well as local councillors' gender, political orientation and education. Generally, councillors need more assistance and training in using financial statements.

The study is the first to conduct a quantitative assessment of the usability of LG financial statements as perceived by councillors. The system usability scale was adjusted to a public sector reporting context. The paper adopts a transnational comparative approach.

The highest decision-making body in a municipality is the council, whose members are elected every fourth year. Therefore, local politicians are in the key position in using financial information in decision making. The purpose of this paper is to study Finnish local politicians’ use of financial information.

This paper studies the speech of local politicians as they describe financial operations and financial position of the municipalities they represent. Here, the words of local politicians are considered an expression of their use of financial information. The use of financial information includes its impact on decision making. The focus is on the impact of different individual characteristics of financial information use in speech about financial operations and financial position. The paper employs qualitative empirical data collected through semi-structured thematic interviews with members of the Finnish local government. Data are analyzed with descriptive statistical methods.

Local politicians use financial information when they talk about financial operations and financial position of their municipality. Individual characteristics, such as political experience, affect the use of financial information. Experienced local politicians are familiar with financial information and use it more systematically than inexperienced politicians. Contrasted to expectations, financial expertise has a negative impact on financial information use. Moreover, in general, the ideology of politicians does not affect their use of financial information.

The paper sheds light on the value of individual characteristics of financial information use. It develops and tests hypotheses based on previous research on the impact of individual attributes of local politicians in the Finnish local government.

In this paper, the authors focus on participatory budgeting (PB) as an organizational issue in local government. The aim of this study is to analyze the premises of PB becoming institutionalized in local governance by scrutinizing the factors that enable or disable PB as a collaborative innovation process, and that in turn build innovative capacity. The authors study how the collaborative innovation process constructs the innovation capacity of local government and further how this enables PB to institutionalize in local government. With this study, the authors deepen the understanding of PB as a collaborative innovation process that may encounter obstacles and hindrances, but also enablers and drivers for creating and transforming sustainable collaborative practices in local government.

In this paper, the authors present a case study from one Finnish local government, the city of Lahti. The authors employ multifaced empirical data collected from the city of Lahti in two PB rounds between 2019 and 2022. Data include surveys for citizens and employees and municipal councilors and altogether 24 interviews with employees and councilors. The authors also gathered data by observing the PB process in Lahti, taking parts in workshops and meetings between 2019 and 2022. Municipal documents were likewise used as data in this study.

The institutionalization of PB in a local government organization requires organizational innovation capacity, not only individuals who are keen, motived and committed to work on PB. However, the Lahti case shows that successful PB results from the citizens' viewpoint can on one hand be reached while simultaneously the sustainability of PB needs more organizational commitment and support that materializes into managerial activities. The authors found that adequate resourcing is a key question in the institutionalization of PB.

In the present study, the authors approach the often-neglected topic of PB from the professional viewpoint in public administration. The originality of the empirical setting is the multifaced data collection during the first two rounds of PB in Lahti. It is highly relevant to analyze PB in its early stages as the organizational difficulties and resistance are at the time at their highest. This study offers a unique perspective on to the initialization of a novel participatory method in a city where no such efforts on this scale have been implemented before.

Although politicians' use of performance information affects political decisions and, through them, the well-being of society, there is a lack of studies exploring what contextual factors are associated with annual active performance information use among politicians. Furthermore, past studies on this subject have been cross-sectional rather than longitudinal.

In this qualitative case study, triangulation of observations and 10 semi-structured interviews were used to ensure the robustness of findings. The study was conducted in a Finnish municipality known as Kangasala.

A dialogue culture, constructive political climate, trusted information sources and high-quality information attained via accessible information channels explained the high information use in primarily unfavorable conditions to such use. The authors’ findings contradict many prior interview and survey studies that did not recognize the simultaneous contributions of the information provider, channel and quality, along with organizational and environmental factors to high performance information use. The results contradict to some extent the findings from other countries as these studies have explained high levels of use with unique combinations of drivers, whereas we identify common attributes of these combinations and talk about their meaning in the success of Kangasala's public financial management. However, the findings of this case study cannot be generalized.

This study describes a case organization that created a supportive environment for politicians' frequent performance information use that contributed to improvements. Past studies provide little knowledge about establishing sustained high levels of information use among politicians, so the case offers ideas and inspiration for improving this use.

By focusing on the perspective of politicians, this paper aims to question the change brought about by local government financial statements for accountability. It applies the Burns and Scapens’ (2000) framework of accounting change to explore politicians’ routines when using the accrual accounting information and which type of change was induced by financial statements on financial accountability to politicians and citizens.

Considering that accounting reforms take time to unfold their effects, this paper studies two countries that have 11 years of difference in the reform implementation and thus a different accounting maturity. A qualitative research approach was used based on 55 semistructured interviews in five Finnish and six German municipalities with 25 councilors from Finland and 30 from Germany.

Councilors with a longer period of time to adjust to the accounting reforms seem to have developed more routines in using financial statements to assess the financial situation and performance. The change induced in accountability to politicians is partly formal and more evolutionary than revolutionary. The complexity of financial statements can lead to regressive change, especially in financially distressed local governments. As for accountability to citizens, a real change is not observed, reflecting a regressive type of change.

The study contributes to the empirical studies on financial accountability in the public sector context by analyzing the use of financial statements in two-way accountability relations from the perspective of politicians. Thereby, the paper adopts a transnational comparative approach and draws on old institutional economics.

Sustainability is a pressing challenge of governance and public financial management. One key element of sustainable governance is the role of citizens. Participatory budgeting (PB) is a participatory tool with which citizens can influence public administration. PB is a democratic process that grants people real power over real money and it has spread around the world. This special issue explores the role of PB in the context of sustainable governance. In this editorial, the authors aim to approach PB as a form of sustainable governance.

In this editorial, the authors collaborate in the analysis of how PB is implicated in the public management of complex social, economic and ecological issues. The authors identify key dimensions of internal and external sustainability based on prior research. The authors approach these dimensions as an internal–external nexus of sustainable governance in which organizational and financial sustainability are the internal dimensions and socio-political and environmental sustainability are the external dimensions.

Even though PB can be seen as one tool for citizen participation, it has the potential to foster sustainability in multiple ways. PB, as a form of sustainable governance, requires a financially and administratively sustainable organizational process that results in the institutionalization of PB. It also includes thorough consideration of socio-political and environmental sustainability impacts of PB.

Academics are actively studying PB from various perspectives. However, most of this work has approached PB from the viewpoints of design and results of PB, and less is known about its institutional settings. PB has not yet been adequately studied in the context of sustainability, and there is a need to scrutinize PB as a form of sustainable governance.