Giuseppe Grossi

Municipal corporatization in Germany and Italy

Abstract During the last few years, the local government sector in European countries has undergone a number of important changes. Among the various reform initiatives has been the externalization of public services, such as corporatization, contracting-out, public–private partnerships and privatization. The key goal of this article is to describe and explain the evolution of local public services provision in the two selected countries, with a particular focus on ‘corporatization’. The article seeks to draw a picture of the actual municipal landscape with the administrative core and its various corporations. Furthermore, it will discuss the reasons for corporatization trends and their impact on the corporate governance structures of municipalities in Germany and Italy.

Effects of Outsourcing on Performance Measurement and Reporting: The Experience of Italian Local Governments

Much has changed over the past few years regarding the financial and non-financial information Italian Local Governments (LGs) publish even as a consequence of the process of externalization of local public services. This paper is aimed at describing the causes and the effects of the administrative reform process that interested Italian LGs and at identifying the possible different dimensions of LG performance. In particular, this paper distinguishes among performance achieved by LGs strict sense (general performance), performance attained by the municipal group (group performance), and performance achieved by all other producers of local public services (global performance). The group and global dimensions of performance are briefly discussed, as well as the tools used to measure them.

Corporate governance and accountability of state-owned enterprises: relevance for science and society and interdisciplinary research perspectives

Purpose - The purpose of this paper is to introduce the special issue and outline its major themes and challenges, their relevance and the research opportunities the field presents. Design/methodology/approach - The paper reviews prior literature and outlines the need to analyse challenges for corporate governance and accountability of state-owned enterprises (SOEs) as a precursor to introducing the contributions to this special issue. Findings - Corporate governance, accounting and accountability of SOEs are crucial and growing topics in public management and other research disciplines. Public service provision and budget consolidation cannot be realized effectively and efficiently without powerful governance and management of SOEs. However there are significant corporate governance challenges and important empirical research gaps in comparison to other fields. Broader theoretical perspectives, methodological approaches, accountability mechanisms and sector/context are identified and discussed and encouraged in future research. Research limitations/implications - This paper aims to stimulate interdisciplinary research on emerging issues affecting governance and accountability of SOEs considering their growing importance in the society and their changing nature. Practical implications - Effective mechanisms and good practices may contribute to better performance of SOEs. Findings may help politicians, administrations, board members, auditors, consultants, scholars and the media striving for improvements around the world. Originality/value - The paper condenses theoretical and empirical findings to highlight the relevance of this field and important research gaps. The special issue offers an empirical examination of interdisciplinary literature and innovative experiences of SOEs to strengthen public service motivation, board composition and roles, trust and control, transparency, public value and to enhance the ability to manage, steer and monitor contracts, performance and relationships.

Consolidation in the public sector: a cross-country comparison

This article analyses consolidated annual accounts in the public sector in six countries (Sweden, the UK, the USA, Canada, New Zealand and Australia) highlighting the differences and similarities in approaches. The authors also examine international trends and take an in-depth look at the International Public Sector Accounting Standards Board (IPSASB).

Bridging the accountability gap in hybrid organizations: the case of Copenhagen Malmö Port

Previous research on hybrid organizations has drawn attention to the accountability gap that is believed to emerge when the provision of public services is transferred to a hybrid organization. In this article we take our point of departure in that research and use a case study method to explore whether this gap can be bridged by existing corporate governance systems or if governance systems specially tailored to hybrid forms need to be developed. The result of the study shows that the process is equally important as the system in place. That is, it is not only the actual system but also how the system is implemented and used that affects the ability to bridge the accountability gap. Points for practitioners This article provides insight into how the hybrid form alters the relationship between citizens, elected politicians and organizations performing public services and, consequently, how the ability to secure accountability in public services changes. The results presented in the article provide politicians and managers in the public sector with knowledge regarding how, by focusing on organizational processes, relationships between stakeholders and performance evaluation can work with improving accountability in hybrid organizations. Further, the article stresses the need for performance evaluation to encompass not only financial aspects, but also the societal values of the public services performed by the hybrid organization.

Theme: Whole of government accounting— international trends

Whole of government accounting (WGA) is an integral part of the accruals accounting and financial reporting changes accompanying public sector reforms internationally. The adoption of accruals accounting is generally rationalized for micro-economic purposes, such as economic efficiency. At this micro-economic level, WGA reflects the governance changes in the public sector involving the provision of public services through decentralized entities (public, private or public and private), and the increasing role of co-ordination and control performed by governments (Osborne and Gaebler, 1992; Christensen and Laegraid, 2007). According to the Organization for Economic Co-operation and Development (OECD, 2004, p. 4), these decentralized governance structures ‘created new challenges for governments to maintain central direction and control’. Consequently, WGA developments help governments to retain a whole of government approach towards the fulfilment of public interest, as well as to be accountable for the ‘whole basket’ of services provided (Grossi and Mussari, 2008). Macro-economic rationales support the use by governments of fiscal rules, such as commitments to balanced budgets and specified debt levels. With the introduction of such rules, rationales for WGA have been extended to include macro-economic purposes as well, and the reporting boundaries have been extended. HM Treasury in the UK has gone furthest with this, seeking to encompass the whole of the public sector, including all levels of government within one WGA. The idea of WGA is ambiguous, because it may refer to a government (central, regional or local) producing a single financial report that encompasses all government activity within its area of authority. Alternatively, it may refer to a central government’s efforts to produce a single financial report that encompasses public sector activities throughout the country. This would mean including the WGAs of all governments at lower levels, as well as the central government’s activities in its own right. Clearly WGA is a complex development that carries with it multiple tensions, both in relation to the stated aims, and in relation to the accounting rules adopted. In attempting to fulfil micro-level objectives, efforts to converge governmental accounting practices with business-style accounting—such as the International Federation of Accountants’ efforts to converge International Public Sector Accounting Standards (IPSAS) with the International Accounting Standards Board’s International Financial Reporting Standards (IFRS)—may be difficult, but they become even more complicated with efforts to fulfil macrolevel objectives at the same time by aligning the accounting requirements with macro-level statistical accounting requirements (see, for example, IPSAS 22). This themed edition of Public Money & Management contains articles based on papers initially presented last year at an international workshop in Italy on ‘Whole of government financial reporting: international trends’. The workshop, organized jointly by the University of Siena and the University of Sydney, was held at Santa Chiara College in Siena from 31 August to 2 September 2008 with the aim of creating an atmosphere in which scholars and practitioners could analyse and debate the similarities and differences among diverse WGA approaches adopted internationally. Attending the workshop were approximately 50 scholars and experts from 16 countries (Australia, Belgium, China, Estonia, Finland, Germany, Italy, The Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Switzerland, the UK and the USA), as well as representatives from extra-national organizations (the European Commission and the United Nations). The workshop commenced with guest speakers. The first, Professor Klaus Lüder of Speyer University, noted that, although the fragmentation of governmental structures as part of the public sector reforms had increased the perceived need for WGA, reform proponents, especially those from the AngloAmerican countries, had sought WGA from the beginning. Lüder observed a lack of clarity surrounding what is meant by WGA and a gradual extension of the concept of ‘whole of government’ for financial reporting purposes. While WGA may begin at the level he labelled Theme: Whole of government accounting— international trends

Jointly owned companies as instruments of local government: comparative evidence from the Swedish and Italian water sectors

The combination of features from the public and private sectors in jointly owned companies imposes challenges to the governance and control mechanisms of these organisations, which have been criticised for lacking accountability. Where there is fragmented ownership, the interests of different owners need to be coordinated. The aim of this article is to consider how such companies can be governed in order to avoid this lack of accountability. The focus is on Swedish and Italian experience with joint public–private water supply companies in the local government area. The analysis draws on the literature on corporate governance in the public sector and shows that, even though contextual differences exist between the Swedish and Italian cases, there are also similarities in regard to the need to manage the conflicts of interests that surface due to fragmented ownership.

Comparative Aspects of Institutional Variants for Local Public Service Provision

This chapter addresses the various institutional arrangements for the delivery of local public services in France, Germany and Italy. It has a comparative focus but provides an analysis of how the different institutional variants of service provision have developed over time. In particular, it examines what new arrangements have been adopted and what effects may be expected for municipal governance. The chapter is intended to offer a critical analysis of the overall structures and trends rather than an analysis based on sectoral developments (e.g. water or social care). These may be found in other chapters of the book. With regard to the broad portfolio of local services, our intention is to concentrate on services usually provided by local utilities and which are mostly traded on (regulated) markets (in EU terminology: services of general economic interest), for example infrastructure services and basic services such as water, energy and transport. The chapter is organized as follows. It begins with an overview of institutional patterns in the three countries under study. We make a comparative analysis focusing on corporatization, that is, on the ongoing process of transforming local government units into (semi-)autonomous corporations, most with independent legal status and enjoying considerable managerial freedom. We also identify similarities and differences in patterns of service delivery.

Appropriateness and Use of Performance Information in the Budgeting Process: Some Experiences from German and Italian Municipalities

ABSTRACT This article contributes to the debate on the use of performance information in the context of public sector performance management. Based on case studies, the authors analyze the appropriateness of the performance information provided in the newly established performance budgets of municipalities in Germany and Italy. They also examine the interest of politicians and senior managers in using such information for decision-making and monitoring within the municipal budget cycle. They find that the use of performance information is generally quite modest, and that the interest of different local actors varies to a great extent. Politicians are generally less interested in such information than top managers, particularly chief financial officers. The results are discussed by applying a theoretical framework based on institutional and legitimacy theories, and are compared with the literature on performance information use.

New development: Consolidated financial reporting as a stimulus for change in Italian local government

This article analyses the potential effect of consolidated financial reporting (CFR) on the accounting and reporting systems in Italian local government. As consequence of the increased use of decentralized entities in delivering a variety of public services, Italian local government needs to improve internal and external accountability. Although a number of obstacles (technical, legal and cultural) have been encountered in Italy, initial experience in Tuscany has demonstrated that CFR has benefits for internal and external users. CFR, in addition, is a potential stimulus for the full implementation of accrual accounting and reporting.