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Performance Management Meets Red Tape: Bounded Rationality, Negativity Bias, and Resource Dependence
Author(s) -
Hong Sounman
Publication year - 2020
Publication title -
public administration review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.721
H-Index - 139
eISSN - 1540-6210
pISSN - 0033-3352
DOI - 10.1111/puar.13213
Subject(s) - bounded rationality , negativity effect , rationality , regression discontinuity design , resource dependence theory , government (linguistics) , power (physics) , bounded function , resource (disambiguation) , discontinuity (linguistics) , economics , political science , psychology , social psychology , computer science , microeconomics , mathematics , statistics , physics , philosophy , law , mathematical analysis , computer network , linguistics , quantum mechanics
Governments around the world have implemented reforms to reduce red tape, but little evidence exists about whether they have achieved their goals. Utilizing a quasi‐experimental regression discontinuity design, this research examines the impact of a policy implemented by the Korean central government to reduce local levels of regulatory red tape. The findings show, first, that the centrally designed reform significantly reduced local levels of red tape, but the reduction occurred only among low‐performing localities. This supports the claim that organizations’ responses to positive and negative performance information are asymmetric—the negativity bias hypothesis. This finding is explained by the bounded rationality view of organizational decision‐making. Second, the impact was clearest among localities with high fiscal dependence on the central government. This supports the resource dependence hypothesis, which postulates that a policy's impact depends on the power imbalance between localities and the central government.