The Impact of Greater Centralization on the Relevance of Performance Information in European Governments During the Fiscal Crisis

Abstract

The Great Recession resulted in fiscal crises for governments across the Western world. Our article explores whether, as a result of the crisis, the relevance of performance information in organizational decision-making increased. Furthermore, we examine how centralizing shifts in governmental decision-making processes influenced the shifts in the relevance of performance information for public sector organizations. Using a survey of senior government officials in 19 European countries, we find that, in line with the predictions of rationalistic decision-making and principal–agent models, the increase in the relevance of performance information in organizational decision-making was positively associated with our measures of greater centralization.