An Analysis of Public Sector Reform in Korea: Institutional Isomorphism and Political Legitimacy Chang Soo Choe School of Public Administration Korea University July 17, 2006

Research Question What did Kim Dae-jung(KDJ) Administration pursue in public sector reform? –What was the primary goal of the KDJ Administration’s public sector reform? Why did KDJ Administration introduce NPM-based program as a reform strategy?

Background of Research KDJ Administration’s reform was different from the previous ones. –Past reforms: rearrangement of organizational structure at national government level –KDJ: restructuring public sector including both rearrangement of organizational structure and the change of government management system No explanation on both what KDJ Administration pursued and why it introduced NPM-based program as a reform strategy –Most studies focused on the process and the intermediate results of the reform. –Recent studies discussed relevancy of the NPM- based reform into Korean government.

Results of Research: Arguments KDJ Administration’s public sector reform can be explained as an institutional isomorphic change. –The primary goal of the reform was securing political legitimacy. –KDJ Administration did not focus on efficiency issue. If it did, the reformers did not do it seriously. Under the economic crisis of the nation, KDJ Administration needed to secure political legitimacy from Korean people with the public sector reform which was an action showing government responsibility for the crisis.

Results of Research: Arguments Therefore it included downsizing (laying off) government officials as happened in the private sector, and downsizing with other reform programs politically meant government’s sharing the hardship with the people. Both for political purpose and theoretical reference, KDJ Administration initiated NPM-based programs as a reform strategy which were employed in advanced countries.

How to draw my arguments? Applying 3 mechanisms of institutional isomorphic change into the KDJ Administration’s Reform case Qualitative Analysis –To what extent the reformers did carefully prepare reform programs in order to achieve announced goals of reform programs. –How much the reform programs were sustainable and relevant to Korean situation?

Institutional Isomorphism Organizational change are less driven by the need for efficiency, but it occurs as the result of processes that make organizations more similar without necessarily making them more efficient Institutional rule which is defined as norms or expectations shared by members of a society or a particular industry influences organizational change Following institutional rule provides legitimacy for organization There are 3 mechanisms (or social forces) through which institutional isomorphic change occurs –Coercive isomorphism –Mimetic isomorphism –Normative isomorphism

Institutional Isomorphism Coercive Isomorphism –Formal or informal pressure from environment or other organizations upon which the organization is dependent –Cultural expectations in the society within organizations function –Sometimes organizational change is a direct response to government mandate Mimetic Isomorphism –Uncertainty –Organizational technologies are not specific –Goals of organization are ambiguous –Environment creates symbolic uncertainty

Institutional Isomorphism Normative Isomorphism –Professionalization: collective struggle of members of an occupation to define the conditions and methods of their work to control the production of producers –Formal education –Growth and elaboration of professional networks

Overview of KDJ Administration’s Reform GoalStrategyProgram Small Government Restructuring Downsizing Contracting-out Privatization Efficient Government Innovation of Management System Executive Agency Open Position System Performance Based Salary & Incentives Serving Government Customer- Oriented Service Provision E-Government Public Service Charter Reform of Civil Appeals & System Source: Office of Planning and Budget, Korea

Reform Programs U.K.NZAust.U.S.A.Korea Downsizing ○○○○○ Contracting-out ○○○○○ Privatization ○○○○○ Executive Agency ○○○○○ Open Position System ○○○○○ Performance Based Salary & Incentives ○○○○○ E-Government ○○○○○ Public Service Charter ○○○○○ Reform of Civil Appeals & System ○○○○○ Source: Office of Planning and Budget, Korea

KDJ’s Reform & Institutional Isomorphic Change MechanismsCausesCase: KDJ Administration Coercive Isomorphism Pressure from environment & other org’ns IMF Conditionality Social & Cultural Expectation Social pressure to Govt’s responsibility for the crisis Mimetic Isomorphism Ambiguity in org’nal technology Difficulties in measuring public sector performance Ambiguity in org’nal goal Ambiguities in public orgn’s mission and function Normative Isomorphism Professional educationReformers’ backgrounds & characteristics Professional networkReformers and professional groups

Analysis of Reform Program Reform ProgramReason DownsizingIncrease of Government Officials right after finishing downsizing Contracting-outNo systematic analysis (ex: B/C analysis) PrivatizationLimited privatization: No privatization of decision making power of public enterprises Executive AgencyInsufficient Power of CEO Open Position SystemOccupied by Government Officials Performance Based Salary & Incentives Distribution by seniority, no preparation of evaluation tool E-GovernmentSuccessful Public Service CharterLow level of perception, two many charters Reform of Civil Appeals & System Successful

Downsizing KDJ Administration laid off 13.2% of public officials from 1998 to 2001 However, the total number of government officials started increasing again from 2002 The purpose of downsizing is to cut down expenditures. However, KDJ Administration did not focus on how much money could be saved, but on the number of government officials to be laid off. The ratio of government officials to population in 1998 was still higher than advanced countries: no reason to lay off.

Contracting-out purpose of contracting-out is to diverse the way of service provision, and thereby minimize the cost without sacrificing quality of public services. However, KDJ Administration did not conduct systematic analysis such as B/C analysis for measuring effect of contracting-out. The precondition of introducing contracting-out is the existence of multiple service providers that compete each other for providing designated services. However, in rural and some urban areas, there have not been multiple service providers for designated services.

Privatization The purpose of privatization is to change the ownership of public enterprises in order to decrease government size and to increase organizational competitiveness. Studies on KDJ Administration’s privatization policy pointed out that achievements were limited. Korean government did not fully privatized decision making power of the enterprises.

Executive Agency The purpose of establishing Executive Agency is to improve efficiency of public service provision by managing public organizations like a private organization. In order to achieve intended goals of Executive Agency, CEO of the EA should enough authority in human resource management and budgeting. However, government did not give the CEOs of the Executive Agencies enough power.

Open Position System The purpose of introducing open position system was to improve specialization and efficiency of government organization by opening government positions to the private sector. However, the number of positions open to private sector decreased because of internal resistance. Most open positions were occupied by incumbent or former government officials. Furthermore, low level of salary was one of the major barriers to invite competent people from private sector.

Performance-based Salary & Incentives KDJ Administration introduced performance-based salary and incentive system in order to increase efficiency of government workforce. However, it failed to develop evaluation tools required to effectively implement the performance management system. Because the Korean government bureaucracy has been based on rank system, not on position classification system, it is difficult to apply individual-base performance evaluation system. Some scholars insisted while Korean society is characterized as a collectivist culture, NPM style reform program based on individualism could not function well.

Public Service Charter Public Service Charter programs can be defined as a kind of contract between customer and government for securing quality of public services. Public organizations were encouraged to make and announce more than one public service charter. There are too many public service charters in one public organizations. Most customers (citizens) do not know that each public organizations have public service charters.

Concluding Remarks The primary goal of the KDJ Administration’s public sector reform was to secure political legitimacy under the social pressure on government caused by the economic crisis. –However, it does not necessarily mean that the reform did not intend to improve government efficiency at all. Effects of the KDJ Administration’s public sector reform were minimized. KDJ Administration’s public sector reform can be explained well with institutional isomorphism.