vertical strategic alignment and public service ... - Wiley Online Library

doi: 10.1111/j.1467-9299.2011.01938.x

VERTICAL STRATEGIC ALIGNMENT AND PUBLIC SERVICE PERFORMANCE RHYS ANDREWS, GEORGE A. BOYNE, KENNETH J. MEIER, LAURENCE J. O’TOOLE JR. AND RICHARD M. WALKER We report the results of a study examining the effects of vertical strategic alignment (that is, the degree to which strategic stances are consistent across different organizational levels) on public service performance. Longitudinal multivariate analysis is undertaken on a panel of public organizations over four years. We find that alignment on a prospecting strategy leads to better performance, but that no such effect is observed for a defending strategy. We also find that high levels of prospecting alignment produce stronger positive performance effects in centralized organizations and when environmental uncertainty is high. The implications of these findings for research and practice are considered in the conclusion.

INTRODUCTION A central challenge for public organizations is to achieve internal alignment of management and organization at different levels as a mechanism to achieve higher performance (OECD 1995, 2005). While much recent academic and policy debate has focused on the delivery of public services in networked settings, intra-organizational coordination remains a critical issue (Pollitt and Bouckaert 2004), and is a longstanding theme in organizational theory and public administration (Blau and Scott 1963; Thompson 1967; Greenwood et al. 1975). In the present study, we investigate vertical strategic alignment (VSA), that is, the degree to which priorities on strategic stances are consistent across different levels within an organization (see Hofer and Schendel 1978). This is a timely and important topic because public agencies are typically multi-level and responsible for the coordination of multiple service delivery functions. Some facets of VSA have been subjected to scholarly enquiry (Moore 1995; Fernandez 2005; Walker and Boyne 2006; Bourgault 2007; Moynihan 2008); however, the impact of VSA on public service performance has not previously been theoretically explored or empirically tested – to date empirical evidence is restricted to studies of private firms in North America (see, for example, St John and Rue 1991; Rapert et al. 2002; Joshi et al. 2003). These prior studies commence from the premise within the strategic management literature that alignment of priorities results in higher performance, and that misalignment damages organizational effectiveness. The assumption of alignment leading to higher performance is generally upheld, however little evidence is brought to bear on the misalignment hypothesis. In this article we seek to answer important questions concerning vertical strategic alignment in public organizations – that is, shared understanding among members of an organization on the extent to which different strategies are being followed (Bowman and Ambrosini 1997). In particular, we examine the consequences for the performance of the whole organization when the senior management team (SMT) and middle management (MM) pursue the same strategy. Are the results that are achieved better or worse Rhys Andrews and George A. Boyne are in Cardiff University Business School. Kenneth J. Meier is in the Department of Political Science, Texas A&M University and Laurence J. O’Toole Jr. is in the Department of Public Administration and Policy, University of Georgia. Richard M. Walker is in the Department of Public and Social Administration, City University of Hong Kong. Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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when strategies at the two levels are in alignment with each other? Are the effects of alignment between top and middle managers contingent on other important internal and external characteristics? More specifically, do organizational structure and the environment matter? While these questions are argued to be critical to progress knowledge in the strategy literature (Kellermanns et al. 2005), the public sector context gives them added urgency – public organizations have been encouraged to be more strategic and oriented towards performance management and target setting (Moore 1995; Blair 2002; Boyne 2010). However, key characteristics of public organizations, including low levels of decision-making autonomy and politically turbulent environments (Rainey 2010), may pose greater challenges for attempts to achieve VSA. Evidence on the benefits (or otherwise) of VSA in public organizations therefore has the potential to make a contribution to the literature on public and private management. The next section of the study presents theoretical aspects of the VSA literature together with our research hypotheses. Methods, measures, and the research design are then outlined prior to the presentation of our statistical results. Our findings provide evidence of the independent and joint effects of VSA for an innovative strategy of prospecting, but not for a conservative strategy of defending. In the final section we discuss the implications of these findings, outline the limitations of the study and make suggestions for further research. BACKGROUND AND HYPOTHESES DEVELOPMENT We commence this section with theoretical arguments on the effects of vertical strategic alignment. We then integrate these with the classical principal-agent perspective on organizing which has hitherto not been applied in the VSA literature, and derive hypotheses on the relationship between VSA and performance. Vertical strategic alignment Arguments supporting the positive effects of alignment are principally based upon the increased coordination and cooperation it brings to the process of realizing strategies. Support for this notion can be found in work on strategic management and performance management in public agencies. Moore (1995) notes the need for strategic alignment to create public value, and Lane and Wallis (2009, p. 118) argue for the importance of leadership in theories of strategic management that ‘includes both higher-level and middle-level mangers’. Indeed, the strategy literature contends that reductions in transaction costs through the effective coordination of organizational effort are dependent on the development of coherent and mutually supportive strategies across managerial levels (Skinner 1974; Floyd and Lane 2000). In particular, the efficacy of the ‘vertical linking process’ is thought to be critical to the pursuit of organizational strategies because it achieves common behaviour on intended strategy that may have positive effects for performance (Hrebniak and Joyce 1984; Bowman and Ambrosini 1997). These arguments suggest that organizational action, in this case the implementation of strategy, involves more than simply relying on the chain of command and control. For a strategy to be realized to its fullest extent, a shared understanding of the direction of movement is required throughout the organizational hierarchy. This is because strategies are, typically, not fully spelt out in written documents. Managers are generally expected to act independently when implementing strategies, making decisions on the basis of their own assessments of operating circumstances (Floyd and Wooldridge 1992; Noble 1999). Without strategic agreement, upper-level management must engage in extensive Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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oversight or impose significant reporting or other transactions costs on lower levels of the organization. Thus, Floyd and Wooldridge (1992, p. 27) point towards the need for agreement on strategy across an organization: ‘Implementation problems . . . are often the result of poor middle management understanding and commitment to strategy’. Achieving agreement on strategies and then being able to implement them matter at multiple levels (Moore 1995; Bowman and Ambrosini 1997; Markoczy 2001). Floyd and ´ Lane (2000) argue that managers in different echelons or levels of the hierarchy (Aiken and Hage 1968), play important but distinct roles in the strategy process – an assertion increasingly supported by evidence from public management (Walker et al. 2007; Frazier and Swiss 2008; Walker and Brewer 2008). To gain a complete picture of the strategic management of an organization, it is necessary to explore strategy among top and middle management (MM) – that is, to consider both corporate or senior management team (SMT) and service or departmental level strategy (see Ginsberg and Venkatraman 1985; Moore 1995). Principal-agent theory and the alignment of organizational levels The principal-agent model is widely used in management, sociology and economics to explore relationships between leaders and members within organizations and across organizations (see Pratt and Zeckhauser 1985; Perrow 1986; Eisenhardt 1989; Rasmusen 2007). It offers a series of important insights into questions of cooperation, coordination and alignment in organizations. In particular, from a principal-agent perspective, the objectives of top management constitute the priorities that are set for organizations. Middle management then becomes the agent (in this case, a set of individuals) that implements the principal’s strategy. The logic of the principal-agent model is built around two concepts – goal conflict and information asymmetry. In the present case it would be assumed that there is goal conflict between top management and middle management. This goal conflict need not involve major disputes over goals; it might be as simple as the agent’s sharing all of the principal’s goals except that the agent would like to portray himself in the best possible light to the principal (see Downs 1967). Goal conflicts between the principal and the agent are especially problematic because the agent has more information than the principal. In all organizations, individuals at lower levels can be expected to know more about programmes as they actually operate them, and may also have the advantage of specialization, greater interaction with clientele, and/or more technical training (see Rasmusen 2007, p. 183). The basic problem of hierarchy in all organizations (Downs 1967) is thus that agents selectively condense the information they possess as they pass it upwards. Although failure to do so would overwhelm the principal with a flood of information, the condensation process contributes to information asymmetry; and because the agent will likely be selective in the information passed upward, the agent is advantaged in a fashion that can be used to implement objectives different from those held by the principal. The classic solution to the principal-agent problem is to select an agent with the same values as the principal – that is, in the terms of this study, to select so as to have vertical strategic alignment. In theory, then, by maximizing her values the agent also maximizes those of the principal – and the organization’s performance improves. This arrangement does not completely solve the principal-agent problem, because the agent still has an incentive to distort information to portray herself in the best possible light (the moral hazard of hidden information, see Rasmusen 2007, Chapter 10) and the agent might prefer Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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to put in less effort than necessary to generate the desired result. But VSA should put some limits on the generation of organizational ineffectiveness by reducing goal conflict between the principal and the agent. As noted, simply selecting an agent with the same values does not completely solve the principal-agent problem. The model’s solutions to this problem involve crafting incentives for the agent to comply and monitoring the agent’s performance for compliance (for a discussion of incentives see Miller and Whitford 2006). Both of these activities add transaction costs to the management of the organization. Monitoring takes time and might even involve effort to spell out organizational goals in greater detail. Resources devoted to incentives thereby create opportunity costs because they cannot be used in other ways to enhance performance. This variance in transaction costs within the principalagent model will be used in the present analysis to generate a set of hypotheses about how the context of the organization affects the impact that VSA has on organizational performance. Focusing on the context of the organization is important, because the principal-agent model suggests that goal congruence is not necessarily the best option in all circumstances. The work of Gary Miller (1992) has directly challenged the notion that principals should always select agents who share their goals. A common example is that corporations need to select auditors who are completely independent of the organization to make a credible commitment to stakeholders that the information that they are provided is accurate. Within an organization, complete goal alignment, or total VSA, could well generate ‘group think’ and the inability to generate new ideas to address problems (Janis 1972). Rather than respond to stakeholders’ demands for change, such an organization is likely to defend actions by pointing to the lack of dissent in the organization, or perhaps to similar actions by comparable organizations (isomorphic rationality). In short, the alternative theoretical hypothesis that VSA might not be a good thing can also be derived from the logic of the principal-agent model. It is, therefore, conceivable that too much alignment can be a bad thing. Strategic stances In this study we emphasize the importance of alignment on the intended strategy and the relative priority accorded to that at different levels in the organizational hierarchy (see Bowman and Ambrosini 1997). While findings on the positive benefits of VSA have been published, prior research has typically focused on specific operational processes rather than overarching organizational strategic behaviour. For example Joshi et al. (2003 p. 366) examine management priorities in manufacturing (‘ensuring accuracy in manufacturing’, ‘improving labour productivity’), St John and Rue (1991) explore decision scenarios on competitive strengths and weakness in the US carpet industry and Rapert et al. (2002 p. 305) focus on competitive methods in hospitals (‘innovation in marketing techniques’, ‘high quality standards’). Furthermore, this focus on micro-level operational processes, rather than macro-level strategic behaviour has been criticized as a likely cause of varied research findings (Kellermanns et al. 2005). We draw on Miles and Snow’s (1978) well-known strategic categories of prospecting, and defending to conceptualize and measure VSA. We focus on Miles and Snow’s concepts of prospecting and defending because these have been the subject of empirical enquiry in public management for some time (Greenwood 1987; Boschken 1988). Moreover, to date, few adequate alternatives to the Miles and Snow framework have been developed for application in the public sector (Walker 2010). For example, the competitive orientation of Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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Porter’s (1980) generic strategy model is often thought to render it inapplicable to public sector settings. ‘Prospectors’ are organizations that ‘almost continually search for market opportunities, and . . . regularly experiment with potential responses to emerging environmental trends’ (Miles and Snow 1978, p. 29). In public organizations a prospector is likely to be a leader in their field, a ‘first mover’, or winner of innovation awards. A prospecting public agency may be seeking to expand its budget, may invade the ‘policy space’ of other agencies (Downs 1967), or may be innovative within its pre-existing budget where organizational slack permits (Bourgeois 1981). Strategy in a public sector prospector would revolve around being more proactive than other agencies, innovating, and risk taking (Boschken 1988). ‘Defenders’, in contrast to prospectors, are not proactive organizations. They are likely to take a conservative view of innovation, and do not seek to be leaders in the field, instead they are late adopters of innovations once they have been tried and tested elsewhere. They emphasize core business, key services, and the costs of service delivery rather than new products or markets and ‘devote primary attention to improving the efficiency of their existing operations’ (Miles and Snow 1978, p. 29); in short, they seek better performance on a limited number of tried and tested core services to retain their existing activities and protect their share of the public budget. Miles and Snow argue that prospectors and defenders will both perform better than reactors. These are organizations in which top managers frequently perceive change and uncertainty in their environments but lack a consistent and stable strategy. A reactor ‘seldom makes adjustment of any sort until forced to do so by environmental pressures’ (Miles and Snow 1978, p. 29). A reactor stance is equivalent to strategy absence, because an organization largely responds to external forces, and has no consistent or coherent strategy of its own (Inkpen and Chaudhury 1995). Empirical research at the organizational level of analysis has typically demonstrated, in a number of contexts, that prospectors are high performing organizations (Andrews et al. 2006) often, though not exclusively, trumping Miles and Snow’s defender stance (Andrews et al. 2009). A reactor stance, by contrast, is very infrequently associated with higher levels of performance (see Meier et al. 2007), but is rather viewed of as the ‘lemon’ of strategic management and harmful to performance. Hypotheses The foregoing discussion leads us to assume that VSA amongst SMT and MM on the strategic priorities of prospecting and defending will be positively correlated with performance for two key reasons. First, the principal-agent literature suggests that top managers will desire middle management to hold values similar to their own so that when top management makes a decision, middle management will implement the decision as given rather than transform it into something else (Ross 1973; Mitnik 1980; Perrow 1986). Where this is not achievable transactions costs will rise, because top management will have to make and implement all key decisions by themselves or engage in extensive monitoring of subordinates. Failure to take these actions means that decision-making will become fragmented – in either case it will harm performance. Thus, if there is alignment between the strategies of the top and middle management, transaction costs should diminish, thus enabling organizations to invest more human and physical resources in service development. Second, the strategy literature leads us to conclude that VSA is necessary to fully capture the positive benefits of cooperation and coordination across levels of an organization’s hierarchy. Existing studies tend to confirm the positive impact Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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of VSA (see, for example, Whipp et al. 1989; Bowman and Ambrosini 1997). Our first hypothesis is therefore: H1: Vertical strategic alignment is positively related to organizational performance. Ginsberg and Venkatraman (1985) argue that strategy researchers need to pay more attention to the likely moderating effects of organizational variables on the relationship between VSA and performance. Our second hypothesis relates to the moderating effect of organizational structure (Wooldridge and Floyd 1989). Differing arguments have been presented on the merits of decentralization (see, for example, Osborne and Gaebler 1993) and centralization (see, for example, Goodsell 1985). Decentralization could assist in the attainment of the performance effects of VSA by according middle managers the discretion to independently adopt and implement top management’s strategy in the most operationally appropriate manner (Miller 1992), whereas centralization may restrict middle managers’ autonomy and commitment, and have adverse consequences for performance (Hackman and Lawler 1971). Applying the principal-agent model, though, suggests that decentralization increases transaction costs associated with achieving VSA and that centralization will likely strengthen the positive impact of VSA on performance. Attaining VSA entails substantial transaction costs. The most effective option for top management might be to centralize the decision making of the organization and thus obviate the need to expend substantial resources to gain this high level of alignment through costly processes of consultation and coalition-building. For example, centralized planning has also been shown to be important in the implementation of organizational change (Fernandez and Rainey 2006), though it has limits and the complete centralization of decision making in a senior executive is likely to be harmful for performance (Bourgeois and Eisenhardt 1988). If transaction costs related to control are key, rather than the ability to gain additional expertise via decentralization, then VSA will matter more when transaction costs are low – that is, in a centralized organization. Our second hypothesis is: H2: The relationship between vertical strategic alignment and performance will be strengthened by centralized decision making. The rate of change in organizational environments is likely to disrupt established patterns of behaviour and coordination and cooperation between different organizational echelons. This is because the rate of change and the level of uncertainty are beyond the control of public organizations and their managers. There is disagreement about the contingent effects of organizational environments in the literature, typically based on questions of measurement – for example, while objective measures of turbulence are generally associated with poor performance (Boyne and Meier 2009), perceived environmental uncertainty is sometimes associated with the increased environmental scanning that leads to high performance (Daft et al. 1988). Notwithstanding these measurement questions, uncertain and turbulent environments are generally seen as harmful to organizations (Anderson and Tushman 2001). This is because in uncertain environments the value of information increases and underscores the information asymmetry aspects of the principal-agent model. As environmental uncertainty increases one would expect that the gap in information between middle managers and top managers to widen. So while environmental uncertainty is therefore liable to be correlated with disagreement on strategy, organizations that maintain VSA may perform better than their less well-integrated counterparts. Since the need for managerial action will be greater in difficult environmental circumstances, Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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alignment can minimize the transaction costs associated with implementing decisions under conditions of uncertainty (St John and Rue 1991). Our final hypothesis is therefore: H3: The relationship between vertical strategic alignment and performance will be strengthened in the presence of environmental uncertainty. RESEARCH CONTEXT, METHODS AND DATA The units of analysis for this study are English local governments. These are elected bodies, operate in specific geographical areas, employ professional career staff, and receive approximately two-thirds of their income from the central government. They are multi-purpose organizations and deliver services in the areas of education, social care, land-use planning, waste management, public housing, leisure and culture, and welfare benefits. In England there are 386 local governments of five types: 32 London boroughs, 36 metropolitan boroughs, and 46 unitary authorities are primarily found in urban areas and deliver all of the services listed above; in predominately rural areas, a two-tier system prevails with 34 county councils administering education and social services, and 238 district councils providing welfare and regulatory services. County councils are by far the larger of these organizations (according to the most recent UK national census serving, on average, 675,574 people, while districts serve on average 96,501) and account for around two-thirds of local service expenditure in the two-tier system. In this study, we do not include district councils because our dependent variable (organizational performance) is not available at this level. Dependent variable Measures of the performance of public agencies are typically derived from either administrative datasets or surveys. Administrative measures are derived from data collected and published by government organizations themselves (and often mandated by a higher level of government) and scores issued by regulators. Surveys of the perceptions of citizens, service users and public managers are frequently collected by academics and polling organizations, and can be requested by political superiors. Performance is a multidimensional construct that covers many concerns such as quality, efficiency, effectiveness, responsiveness and equity. Different performance measures from different sources may satisfy some stakeholders’ interests in the performance of public agencies but not others. For example, the relative level of satisfaction of housing tenants with the service they receive is (rightly or wrongly) unlikely to trouble private homeowners. Along with these conceptual complexities, administrative and survey measures have varying benefits. Survey data are able to tap complex perceptions of stakeholders’ assessments of public agencies, yet are criticized for common source bias, notably in relation to managers’ assessments of how their own organizations are performing. Administrative data are often judged as the ‘gold standard’, given that they are taken from secondary datasets; however, there is evidence of cheating on these measures in public and private organizations. The analysis presented here focuses on a performance metric that combines the strengths of administrative and survey data and captures a number of dimensions of performance. The measure represents the views of the primary external stakeholder on the service performance of English local governments: UK central government. The major external assessment of English local government performance carried out by central government inspectors is the Comprehensive Performance Assessment (CPA) conducted by the Audit Commission between 2002 and 2008. For four years during the period covered by Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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this analysis (2002–2005), this effort classified the ‘core service performance’ of local governments by making judgements about their achievements in six key service areas (education, social care, environment, housing, libraries and leisure, and benefits) together with their broader ‘management of resources’ (Audit Commission 2002, 2003, 2004, 2005). For each of the seven service areas, the core service performance score is based largely on administrative performance indicators, supplemented by the results of inspection and assessment of statuary plans (Andrews et al. 2005). The administrative performance indicators cover six aspects of organizational performance: quantity of outputs (for example, number of home helps for the elderly), quality of outputs (for example, the time it takes to carry out public housing repairs), efficiency (for example, cost per benefit claimed), formal effectiveness (for example, average school passes at 16), equity (for example, equal access to public housing) and consumer satisfaction (for example, satisfaction with waste collection). The last-mentioned satisfaction rating is a survey measure that is subsequently audited. These indicators were referred to as the Best Value Performance Indicators (BVPI) and were drawn up in collaboration with professional associations and local government officials as key measures of the achievements of English local governments (see Department of the Environment, Transport and the Regions 1999). Inspection of services draws upon internal improvement plans, field visits and other documentation. Inspection teams include Audit Commission officials, service users, citizens and local government specialists. Statutory plans are assessed against the criteria of the service’s relevant central government department. While local government employees can be involved in the production of different forms of the performance data contained in the core service performance index, all assessments are conducted by evaluators external to the local authority. The core service performance score is constructed by the Audit Commission by giving each service area a rating from 1 (lowest) to 4 (highest). The service scores are then weighted by the Audit Commission to reflect the relative importance and budget of the service area (children and young people and adult social care = 4; environment and housing = 2; libraries and leisure, benefits, and management of resources = 1). Finally, these weighted scores are summed to provide an overall service performance judgment, ranging from 15 (12 for county councils which do not provide housing or benefits) to 60 (48 for county councils). Because these scores are not directly comparable across all types of authority, each government’s score is taken as a percentage of the maximum possible score for the relevant group. Independent variables Data on perceptions of organizational strategy, structure, and environmental uncertainty were derived from an electronic survey of managers in English local governments carried out each summer from 2001 to 2004. Email addresses for the survey were collected from participating organizations, and questionnaires were delivered as an Excel file attached to an email. Participants in the research had eight weeks to answer the questionnaire, save it, and return by email. Informants were assured of the confidentiality of their responses, their right to respond and of the arrangements made to safeguard data during and after the study. A number of psychological and temporal remedies were used in the design of the questionnaire to overcome potential respondent biases associated with self-reports (Podsakoff and Organ 1986). For example, the items measuring strategy were placed in a different section of the questionnaire than those measuring centralization and environmental uncertainty to control for priming effects. In addition, a survey piloting Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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process improved many survey questions, thus reducing the likelihood of item ambiguity and evaluation apprehension (Tourangeau et al. 2000). In each participating organization, questionnaires were sent to at least three corporate officers who were members of the SMT and four MM or service officers who worked in the service delivery departments discussed above. In 2001, the total sample consisted of 121 organizations, with a 56 per cent (1259) informant response rate. In 2002 and 2003, the total sample of organizations was 77, with informant response rates of 65 per cent (922) and 56 per cent (790) respectively. In 2004, the total sample of organizations was 136, with an informant response rate of 54 per cent (1052). The cases in our analysis are representative of the diverse operating environments faced by English local governments, including urban, rural and socio-economically deprived areas (results available from authors). Prior operationalization of the Miles and Snow (1978) typology has often involved placing organizations in a single strategic category (see Greenwood 1987; Conant et al. 1990). Rather, following Boyne and Walker (2004) we argue that organizations are likely to pursue a mix of strategies. Therefore, the strategy measures reflect the extent to which survey respondents agree that their organization can be characterized as prospecting, defending and reacting. In operationalizing the Miles and Snow framework we draw on single items. Single items can be criticized for not adequately measuring complex constructs; this line of argument advocates that index measures should be used. However, research evidence points towards the veracity of well-designed single measures (Wanous and Hudy 2001; Wall et al. 2004). Furthermore, adequate measurement has to be traded off against response rates that are likely to be lower with longer and more complex research instruments. A prospector stance was operationalized through a measure of innovation because this is central to Miles and Snow’s (1978) definition, which includes risk taking and pro-active responses to changes in the external environment (‘The authority/service is at the forefront of innovative approaches’). To explore the extent to which local governments displayed defender characteristics, focusing upon tried and tested strategies in an existing market, informants were asked whether their approach to service delivery focused on their ‘core business’ (‘Focusing on key business areas is a major part of our approach to service delivery’). Reactors are expected to await instructions on how to respond to environmental change. We therefore asked our informants about the extent to which auditors and inspectors affected their approaches to service improvement (‘Pressures from auditors and inspectors were important in driving performance improvement in our service’). We based all of our measures of strategy on prior work (Snow and Hrebiniak 1980; Miller 1986), and measured them on a seven-point Likert scale (1 = disagree and 7 = agree). Given that top managers are likely to view strategy as a pool of initiatives across the whole organization, we quizzed our SMT respondents about the authority as a whole, and MM about their service as these managers are more likely to be aware of specific strategy at their level in the hierarchy (Hambrick 1981; Wooldridge and Floyd 1989; Kellermanns et al. 2005). Mean responses for these two levels of management were then taken in each organization as measures of SMT and MM strategy. To gauge the degree of alignment between the SMT and MM strategies in English local governments, we take the absolute value of the distance between the mean scores for the prospecting and defending measures in each of the two echelons. Each of the resulting alignment measures was subtracted from 10 to ensure that a higher score indicated greater alignment. We do not create a VSA measure for reacting since reactors essentially eschew deliberate strategy. Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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Moderating variables We use a single survey item measuring managerial perceptions of the extent of (de)centralization: ‘Control is devolved to service managers’. This measure taps the degree of participation in decision-making that is at the heart of theoretical perspectives on organizational centralization (see Hage and Aiken 1967; Carter and Cullen 1984). To ensure that the coefficients for the measure indicate the moderating effects of the extent to which decision-making is centralized, we reverse its direction (labelled centralization). To measure environmental uncertainty at the organizational level, we use two survey items focused on managerial perceptions of their socio-economic and external political circumstances faced by their organizations: ‘The socio-economic context the service operates in has become more uncertain during the last financial year’ and ‘The external political context the service operates in has become more uncertain during the last financial year’. These aspects of the environment are especially likely to be important to English local governments, as they are increasingly expected to be responsible for community well-being and are subject to considerable political pressures to improve their performance and management from a host of external stakeholders. Our perceived environmental uncertainty index has a Cronbach’s Alpha score of .62, an acceptable level of reliability for a new scale (Loewenthal 1996). To calculate an organizational mean for the moderating variables, we first calculated a mean of corporate officer responses and a mean of service officer responses, giving equal weight to each tier; the organizational score is then an average derived from these two means (Aiken and Hage 1968). Control variables The context within which a public agency operates plays an influential role on outputs and outcomes (Thompson 1967; Pettigrew et al. 1992). To this end we have isolated five external constraints that have been shown to impact on the performance of English local government (Andrews et al. 2005). A single proxy measure for the deprivation of local residents was used – the average ward score on the index of multiple deprivation in 2000 in each local area. This is the standard population-weighted measure of deprivation used by UK central government. This measures the level of service need, and as service need increases so performance is anticipated to fall. Two dimensions of diversity of service need are measured: ‘age diversity’ and ‘ethnic diversity’. The proportions of the various sub-groups within each of the different categories identified by the 2001 national census within a local government area (for example, ages 0–4, Black African) was squared and the sum of these squares subtracted from 10,000. The measures give a proxy for ‘fractionalization’ within an area, with a high score on the index reflecting a high level of diversity (see Trawick and Howsen 2006). High levels of diversity of need are expected to harm performance because it harder for public agencies to meet multiple needs. It is argued that local governments can reap economies that will have a positive effect on performance. The first of these is organizational size, and it is suggested that local governments serving big populations can accrue economies of scale by distributing fixed costs over more units of output (Boyne 2003). The relative size of local governments was measured using population figures for each local area from the 2001 census – labelled ‘population’. Second, public organizations in densely populated areas may reap scope economies by offering multiple services from the same site (Grosskopf and Yaisawamg 1990 – though it is possible that such efficiencies may be offset by the multiplication Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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of social problems that local governments face within urban areas). To control for such effects we include a measure of ‘population density’. Beyond these measures of external constraint we include financial slack and prior performance. A measure of the ‘financial slack’ available to each local government was derived by dividing its net service expenditure per capita by its Standard Spending Assessment (SSA) per capita. The SSA is an index of service needs used by central government to distribute grant funding to councils. The inclusion of this measure of slack shows whether governments spending above the level deemed necessary to meet their service needs perform better or worse than their more economical counterparts. Public organizations alter only incrementally through time (O’Toole and Meier 1999). This indicates that performance in one period is strongly influenced by performance in the past. To ensure that the coefficients for VSA are not biased it is important to include prior achievements in statistical models of performance. We control for the effects of past performance by entering core service performance in the year before alignment is measured in our analysis (see the Appendix for measurement issues associated with this variable in 2001). STATISTICAL RESULTS We commence our discussion of the statistical results with a brief overview of the descriptive and bivariate relationships prior to the multivariate analysis. Table 1 presents the descriptive statistics and correlations for the performance, strategy and alignment measures used in the analysis. The descriptive statistics suggest that ascription to strategies of prospecting and defending is higher amongst MM than SMT. Table 1 also illustrates that there is a strong positive correlation between prospecting across the two levels of management, but that there is a much weaker positive correlation for defending. Performance is positively correlated with both measures of prospecting and negatively correlated with both measures of reacting at statistically significant levels. Defending is positively correlated with performance, but not significantly so. These correlations reflect findings in other studies drawing upon this dataset (see, for example, Andrews et al. 2006). The alignment correlations indicate that the TABLE 1 Strategy and performance descriptive statistics and correlations M 1 Core service performance 2 SMT prospecting 3 SMT defending 4 SMT reacting 5 MM prospecting 6 MM defending 7 MM reacting 8 Prospecting alignment 9 Defending alignment 10 Centralization 11 Environmental uncertainty ∗p

SD

1

2

3

4

5

6

7

8

9

10

−.26∗∗ −.09 .28∗∗ −.21∗∗ .03 .09 −.07

−.01 −.13 .26∗∗ .23∗∗ −.09 −.12+ .18∗ −.01 .07 −.04 −.52∗∗ .05 .19∗∗ −.20∗∗ .00 −.00 .20∗∗ .07 −.03 .01 −.03

69.24 9.10 5.10 1.13 .48∗∗ 4.46 1.08 .14 5.08 .91 −.17∗ 5.29 .55 .44∗∗ 4.86 .71 −.12 4.59 .66 −.23∗∗ 9.23 .60 .31∗∗ 9.04 .75 .13 2.82 .55 −.38∗∗ 3.32 .62 .02

.001 −.27∗∗ .07 .53∗∗ .09 −.11 .23∗∗ −.21∗∗ .12 .55∗∗ −.14 .06 .54∗∗ −.47∗∗ .02 −.08 .02

≤ 0.05; ∗∗ p ≤ 0.01.

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adoption of a particular strategic stance at one organizational level is positively associated with its adoption at another. Prospecting at the SMT level is positively correlated with prospecting at the MM level. Likewise, SMT defending is positively correlated with MM defending, and SMT reacting with MM reacting. As one might expect, there is a negative relationship between prospecting and reacting within and between the two managerial echelons. However, there is no clear pattern of correlations between prospecting and defending, or defending and reacting, within or across echelons. Hypotheses were tested using Generalized Least Squares (GLS) regression with random effects estimations to control for time correlation, panel heteroscedasticity and within panel autocorrelation (Beck and Katz 1995). The results for the GLS regression models of performance are shown in table 2. Five models are presented: Model 1 regresses the control variables onto the core service performance measure. The additional explanatory power offered by the measures of corporate and service level strategy is then assessed by including these in Model 2. The third Model includes the measures of prospecting and defending alignment to gauge their effect on performance, and tests H1. Model 4 presents the results for the prior variables plus centralization and environmental uncertainty. Finally, Model 5 includes interactions between strategic alignment and centralization and environmental uncertainty, and provides a test of H2 and H3. Some cases could not be matched when the survey variables and performance measures were mapped, due to panel attrition and missing data within the respective datasets. In particular, only organizations where there were responses from more than one informant within the SMT and more than one MM were included in our analysis to ensure that our measures of corporate and service strategy were representative of different views within each managerial echelon. The statistical analysis of the relationship between VSA and performance was therefore conducted on an unbalanced panel of 49 organizations in 2001, 34 in 2002, 45 in 2003 and 50 in 2004 that responded to our management survey and for whom at least two respondents from both top and middle management provided information on organizational strategy. The inclusion of dummy variables for the first three years of the survey reduced the possibility of within panel autocorrelation (see Beck and Katz 1995). The average Variance Inflation Factor score for all the independent variables used in the Models 1-4 is about 2.0 indicating that the results are unlikely to be seriously distorted by multicollinearity (Bowerman and O’Connell 1990). Some multicollinearity arises in Model 5, but it does not invalidate the results (for a discussion of this issue, see Jaccard and Turrisi 2003). As we discuss below, the results remain significant in the face of multicollinearity. The table highlights that, when entered alone, the control variables account for about 48 per cent of the variation in the performance of this sample of organizations. In particular, the relative performance of local governments tends to be stable from one year to the next, while age diversity has a significant negative association with performance. Some of the control variables that have been shown to be significant predictors of local authority performance in previous studies (such as local prosperity, see Andrews et al. 2005) appear to be having little effect. It is likely that, on this occasion, the past performance variable has captured much of the impact of these constraints. (Re-running the model without the past performance variable uncovered similar results to those presented by Andrews et al. 2005.) An f-test revealed that inclusion of the measures of top and middle management strategy makes a statistically significant improvement of about 8 per cent to the explanatory power Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


249.274 106.05∗ .48 .45

−.011 −.025 −.001 .815 .900 −2.773 .342 2.72∗

−.15 −2.36∗ −1.31 .70 .96 −1.02 4.30∗ 179.470 148.67∗ .54 .53

−.050 −.018 −.001 .332 .937 −2.999 .313

1.428 .945 .125 2.465 −1.087 .816

Model 2 Slope

z-score

Model 1

Slope

2.14∗

−.70 −1.91∗ −1.20 .28 1.11 −1.28 3.94∗

2.33∗ 1.86∗ .21 2.16∗ −1.35 1.06

z-score

Model 3

176.734 146.79∗ .56 .54

−.038 −.020 −.001 .456 1.027 −3.633 .317

.852 1.199 .230 2.686 −1.000 .820 1.794 −.280

Slope

2.06∗

−.53 −2.02∗ −1.38 .39 1.21 −1.33 3.99∗

1.43 2.07∗ .41 2.34∗ −1.23 1.05 1.82∗ −.36

z-score

Model 4

159.398 149.01∗ .56 .55

−.048 −.018 −.001 .497 1.088 −3.566 .325

.736 1.177 .090 2.417 −.955 .921 1.783 −.212 .656 .736

Slope

1.81∗

−.64 −1.79∗ −1.36 .42 1.30 −1.30 4.03∗

1.16 2.02∗ .16 1.93∗ −1.17 1.17 1.79∗ −.26 .47 1.16

z-score

Model 5

147.225 337.19∗ .58 .58

−.043 −.020 −.001 .233 .982 −3.822 .309

.313 1.251 .191 2.929 −1.216 .882 10.258 −4.903 −29.240 −34.622 3.635 −.4868 3.083 .602

Slope

1.38

−.56 −1.83∗ −1.39 .20 1.18 −1.43 3.59∗

.50 2.27∗ .33 2.33∗ −1.54 1.13 1.82∗ −.91 −2.16∗ −2.76∗ 4.19∗ −.50 2.85∗ .74

z-score

Notes ∗ p ≤ 0.05. One-tailed tests. Unstandardized coefficients reported. Dummy variables for individual years not reported. Before running the statistical models, skewness tests were carried out to establish whether each independent variable was distributed normally. High skew test results for population (1.75), population density (1.53) and financial slack (−5.15) indicated non-normal distributions. To correct for positive skew, logged versions of the population and population density variables were created, while a squared version of the slack measure was created to correct for negative skew.

Constant Wald Chi2 Between R2 Overall R2 N of observations = 178

SMT: Prospecting Defending Reacting MM: Prospecting Defending Reacting Prospecting alignment (PA) Defending alignment (DA) Centralization Environmental uncertainty Centralization × PA Centralization × DA Uncertainty × PA Uncertainty × DA Control variables Deprivation Age diversity Ethnic diversity Population (log) Population density (log) Financial slack2 Past performance

Independent variables

TABLE 2 Regression results for vertical strategic alignment, structure, environmental uncertainty and public service performance

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of Model 1. Model 2 shows that the coefficients for the SMT and MM prospecting are positive and statistically significant, suggesting that strategy matters at both organizational levels. However, the pattern of findings for a defending strategy varies by organizational level. The coefficient for SMT defending is positive and statistically significant, while that for MM defending is negative but insignificant. This implies that a focus on core business among the SMT may be beneficial for organizational performance, but that a similarly narrow focus among MM appears to be having neither positive nor negative consequences. The insignificant reacting coefficients indicate that (for this sample and time period) the adoption of this strategy has neither positive nor negative implications for performance. Model 3 presents the results of the inclusion of the measures of strategic alignment. We uncover partial support for our first hypothesis. F-tests revealed that inclusion of the prospecting alignment measure makes a statistically significant contribution to the explanatory power of Model 2, but that the inclusion of the defending alignment measure adds no further explanatory power. The findings suggest that organizations with similar levels of prospecting amongst the SMT and MM are likely to reap performance rewards over and above those gained from simply pursuing strategies of prospecting. Model 4 adds controls for centralization and environmental uncertainty; the coefficients for these variables are not statistically significant. To explore the potential influence of external political uncertainty further we included a dichotomous variable coded one for the occurrence of a local election and zero otherwise. However, the coefficient for this variable was not statistically significant, and it made no contribution to the explanatory power of the model. We also examined the potential effects of local political priorities by adding a dichotomous variable measuring Labour party control to the models. Again, inclusion of this variable did not alter the findings. The results of tests for the moderating effects of structure and environmental uncertainty on the alignment-performance relationship are shown in Model 5. F-tests revealed that inclusion of the interaction terms makes a statistically significant contribution to the explanatory power (F ratio = 32.84, p < .001). However, the statistical results provide only partial support for H2 and H3 as the prospecting alignment interactions alone are found to be statistically significant. It is conceivable that overly tight alignment between top and middle management can have harmful implications for organizational effectiveness. That is, if organizations think in only one way, they may be more likely to misread the organizational environment, its stakeholders, and strategies to improve performance because alternative courses of action are slow to emerge (Janis 1972). To assess whether the strategic alignment-performance relationship is curvilinear, deteriorating past the apex of an inverted-∪, we added quadratic terms for both prospecting and defending alignment. However, these tests did not result in any statistically significant findings (available from authors on request). DISCUSSION AND CONCLUSIONS Our study was motivated by the growing interest in questions of coordination, cooperation and alignment within organizations. Given this we launched a study to examine the effects of VSA on performance. We argued that vertical alignment on strategies of prospecting and defending would have positive effects on organizational performance, and that these relationships would be strengthened by centralized decision making and the presence of environmental uncertainty. Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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We found that prospecting amongst both SMT and MM is associated with better performance. While defending amongst SMT is also positively associated with performance, defending amongst MM is unrelated to performance. Turning to VSA we found that in organizations pursuing a prospecting strategy, alignment can enhance performance. However, the degree of defending alignment makes no difference to performance. It is possible that the characteristics of prospecting and defending offer some insight into these findings (Homburg et al. 1999). Conflict and competing perspectives are likely to be present in an organization with a strategy of prospecting because innovation in different sub-units may result in the need to manage alternative views that requires alignment across the organization. By contrast in a defender the additional control mechanisms associated with achieving alignment are not perhaps necessary. In a defender the focus is upon core business and efficiency. It is possible that clarity over the goal of core business efficiency obviates the need for VSA because, in part, processes such as budgeting are a substitute for alignment. Homburg et al. (1999) provide evidence on these propositions for horizontal alignment (agreement on strategies within echelons) across a number of performance indicators. These findings suggest that future research on VSA should develop hypotheses, and empirical tests thereof, on the proposition that alignment is contingent on organizational strategy. To fully operationalize this proposition it would be necessary to include additional variables that are able to capture characteristics of conflict and its resolution in prospectors, and budgeting and other control mechanisms used in defenders to alleviate the need for specific strategies to achieve VSA. One of the important contributions of our study is to show that the impact of vertical strategic alignment on organizational performance is moderated by other variables. The importance of internal and external contingent relationships for VSA has been subject to some empirical inquiry (Papke-Shields and Malhotra 2001; Joshi et al. 2003), but never before have both internal and external moderators been included together in a test of the vertical alignment-performance relationship (Kellermanns et al. 2005). Low levels of centralization negate the positive impact of alignment on organizational performance. These findings are in stark contrast to the prescriptions often offered on public management practices, which recommend moving decision making towards the front-line where it will be more responsive to the needs and requirements of users and citizens (OECD 2005). Our results, however, are in keeping with evidence from prior public management research (Meier et al. 2000; Smith and Larimer 2004). Principal-agent theory provides useful insights as to why the relationships we uncover might be anticipated. Centralization can lower the start-up transaction costs of securing agreement on strategy, thereby strengthening the advantages of alignment for organizational effectiveness. This may be especially so for a prospecting strategy, because central control over the relative priority accorded to innovation may enable top management to prevent excessive risk-taking amongst middle managers. Alignment on a prospecting strategy also offers organizations an advantage when environmental uncertainty is high. Principal-agent theory may similarly assist in the interpretation of these results – alignment may be beneficial to performance as uncertainty increases because it reduces the transaction costs associated with change management. Prospecting alignment, in particular, may be critical to ensure that neither the SMT nor middle management innovate too much or too little in response to ever more challenging circumstances. Although both of our hypotheses on contingent relationships with internal and external characteristics were supported for alignment on a prospecting strategy, the defending Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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alignment measure did not have statistically significant moderated effects on performance. In addition to the possible explanations advanced for the independent effects of VSA on performance, it is also conceivable that the problems of alignment for top managers seeking to implement a defending strategy are somewhat different. Again, principal-agent theory offers some insights. Since organizations reward individuals who perform well and who are advocates for the organization (Downs 1967), organizational subunits may have a built-in tendency to maximize whatever it is the subunit produces. These general principles again suggest that defending alignment is a redundant goal and that attempts on the part of top management to centralize decision-making may needlessly add transactions costs to the implementation of a defending strategy by middle managers, since subunits are likely to be predisposed towards defending in any case. To examine this possibility in more detail, we carried out additional sensitivity analysis on our data using two publicly available proxies for transactions costs as dependent variables in place of the CSP measure: total administrative overheads per capita; and administrative overheads as a percentage of the overall service expenditure (results available on request). In both cases, alignment on a defending strategy was associated with higher costs, as was environmental uncertainty. These findings offer some support for our contention that organizations seeking alignment on a defending strategy may generate unnecessary transaction costs. Likewise, in an uncertain environment it is possible that the costs associated with deliberate attempts to maintain alignment on a defending strategy will result in few gains since in difficult operating conditions the predisposition of subunits to focus closely on providing core services may inevitably intensify. Further research measuring transaction costs more precisely would assist in providing clearer evidence on these arguments. The main focus of this study has been to investigate the effects of strategic alignment on performance from a principal-agent perspective. Alternative explanations of alignment may be found in the resource-based view (RBV) of organizations. The RBV examines the heterogeneity of resources and competencies across the organization and points out the importance of rare, valuable, non-substitutable and inimitable organizational resources. It proposes that these can be marshalled to develop distinctive competencies which are very beneficial for organizational effectiveness (Barney 1991; Bryson et al. 2007). Competencies are the ability to shepherd actions, processes and technologies towards performance outcomes. In order for resources and competencies to be successfully aligned, shared goals up, down and across echelons are necessary (Floyd and Lane 2000; Kellermans et al. 2005). In this article we have shown that alignment matters for performance and as such the ability of an organization to achieve alignment across a complex management function such as strategy is a competence that is likely to be distinctive (that is, difficult to replicate and a source of enduring advantage). We suggest that this is a particularly promising line of enquiry for researchers exploring vertical strategic alignment. Similarly institutional theory may offer insights, particularly relating to questions of the temporal nature of alignment: when does alignment occur, and how does it evolve and change? Performance gaps – the difference between what an organization is actually accomplishing and what it can potentially accomplish – creates the need for change, and the search for alternative strategies to reduce the perceived gap. The perception of a performance gap can be within one organization or across a group of organizations. In groups of organizations forces such as the behaviour of neighbouring organizations, regulation, fashionable practice and mandate may produce isomorphic pressures for convergence. Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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For public sector organizations operating under a centralized performance management regime, such as was in place in England during the study period, convergence on strategic priorities might be the product of field-wide isomorphism (Ashworth et al. 2009). Thus, a competing hypothesis to that presented here is that institutional pressure within the field of local government towards alignment on prospecting resulted in a performance pay-off – members of the SMT together with MM who responded to these wider institutional pressures achieved greater legitimacy in the eyes of regulators. While we have drawn upon a multidimensional measure of organizational performance, that measure reflects the views of a single stakeholder. It is possible that the effects of VSA vary across separate dimensions of performance. To explore this issue, we used two further dependent variables as alternative measures of performance: an aggregated index of eight survey items that asked managers to rate the performance of their authority/service across multiple dimensions of performance (for example, quality, equity, effectiveness, value for money) drawn from the same survey as the independent and moderator variables; and a score for the consumer satisfaction with council services from a national survey of local residents carried out by local governments themselves and part of the BVPI dataset discussed above. For both these measures, our findings for the independent effects of strategy are replicated, but those for our measures of VSA are not (results available on request). This leads us to conclude that prospecting VSA may have particular benefits for regulators’ views of the service achievements of organizations. It seems that an integrated whole-authority approach to prospecting may bring a distinctive advantage in this respect. Thus, while it appears that VSA may have different implications for the performance judgements of different stakeholders, extended research is required before firmer conclusions about appropriate theoretical frameworks for studying VSA can be drawn. For instance, longitudinal qualitative research designs drawing upon institutional theory may reveal highly valuable insights about the antecedents and effects of VSA that quantitative research is simply unable to uncover (see, for example, Greenwood and Hinings 1993). In particular, such work could shed important light on the evolution of stakeholders’ views on the relationship between strategic alignment, other organizational characteristics and performance, especially if the views of all key stakeholders (for example, local authority officers, elected members, central government officials and local citizens) were incorporated. It was noted in the methods section that we have adopted an alternative way to operationalize the Miles and Snow framework. Prior studies have taken each strategic stance as a categorical organizational variable, while in this study they have been allowed to vary by echelon. The findings noted that there are correlations between SMT and MM prospecting, defending and reacting. The correlation for prospecting was quite high (r = .53), while it was lower for defending (r = .23) and reacting (r = .28). A further important finding of this study is to suggest that conceiving of Miles and Snow’s strategic stances as categorical variables is an oversimplification of organizational life – different strategies clearly co-exist in the same organization. To this end further methodological research is required to fine tune and hone methods to measure and operationalize strategy. However, this does not change our key finding that alignment on prospecting between SMT and MM matters. VSA research originates in the management literature. The majority of this research has focused upon alignment within echelons, for example amongst the SMT (Kellermanns et al. 2005) and only a handful of studies have examined alignment between levels in the hierarchy, all offering support to the central hypothesis in the literature. Despite the Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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unique institutional pressures faced by public organizations, our study offers further corroboration of the findings from the private sector. At the same time, we offer the first extension of existing empirical approaches to the study of VSA by heeding Kellermanns et al.’s (2005, p. 732) call for alignment research that considers ‘both the external and internal contexts of the organization as potential moderators’. Of course, further evidence from investigations in all types of organizations are required to add further weight to the findings presented here. We have been careful to achieve rigour in this study, but there remain several limitations that should be considered in the interpretation and implications of its findings, and these can also help inform further research. Our analysis has examined two key contingencies: organizational structure and perceived environmental uncertainty. It might be the case that other internal and external variables moderate the alignment-performance relationship, and other controls may possibly also have gone unmeasured. These may include activities associated with human resource management, distinctive public service organization practices such as performance measurement, and alternative environmental conditions, such as munificence or complexity, and objective measures of contextual variables. Single items were used to measure our independent and moderator variables; indices should be developed to offer a more robust operationalization of these concepts in future work. Similarly, alternative non-survey based measures of organization, management and environmental uncertainty, such as ‘unobtrusive’ censuses of information on organizational websites (Dunleavy 2010), could be sought to address potential respondent biases associated with self-reports. Unfortunately, on this occasion it is not possible to retrospectively fit such website data to the study period, but this represents fertile territory for exploration in future studies. We have extended current research by examining VSA in public organizations. Nevertheless, it is possible that the results of our study are peculiar to the nuances of English local governments, which operate within a highly regulated environment that constrains many aspects of their behaviour (Andrews et al. 2005), and are generally staffed by career civil servants. While cross-national comparisons would have to be undertaken to test the context-specific characteristics of our study, we are optimistic that VSA and variations in its impact on performance would resonate in other jurisdictions. One fruitful avenue for exploration would be comparisons across public and private organizations. Studies of private organization have also uncovered a positive relationship between alignment and internal organizational characteristics (Rapert et al. 2002; Joshi et al. 2003). Such studies would need to identify organizations with similar goals, for example hospitals, schools or universities. This would ensure that there would be comparability between organizational and management processes thereby allowing key concepts, such as environmental uncertainty, to be understood as conceptually and operationally the same across the publicness divide. Such studies could also move towards operationalizing alignment along more precise internal organizational characteristics and behaviours. Governments and oversight bodies promote policies to enhance the integration of services and departments within public agencies (OECD 2005; Improvement and Development Agency 2007a, b). These recommendations seek to assist public managers to deal with the complexities of goal ambiguity and policy topics that extend beyond the technical or professional expertise of their individual service. Our research findings, based in multipurpose public organizations, indicate that the complex task of managing and delivering services may be assisted by vertical strategic alignment. Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.


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Date received 6 June 2010. Date accepted 26 October 2010. APPENDIX The Comprehensive Performance Assessment was first carried out in 2002. It was, therefore, not possible to enter a score for core service performance in 2001 in our models. To create a proxy for core service performance in 2000 and 2001 based on the available statutory national performance indicators (BVPIs), we first ran a stepwise regression for the core service performance (excluding use of resources) measure in 2002 based on a sample of 24 key BVPIs that were available for each type of government in the same year. We found that seven performance indicators accounted for half the variance in the core service Public Administration Vol. 90, No. 1, 2012 (77–98) © 2011 The Authors. Public Administration © 2011 Blackwell Publishing Ltd.

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performance scores awarded by central government inspectors: (consumer satisfaction [in 2000]; the percentage of pupils aged 16 achieving 5 or more General Certificates in Secondary Education graded A*-C; the number of persons over 65 helped to live at home per 1000 population; social services user satisfaction; the number of visits to libraries per 1000 population; the score on the trading standards checklist of best practice; and the educational qualifications of looked after children). We then multiplied the score each local government achieved on these performance indicators in 2000 and 2001 by their respective coefficients in the stepwise regression model, summing the resulting scores together to give an overall measure of local government performance (Audit Commission 2003, 2004).


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