How do the more demanding public services quality standards impact on the organization of service providers?

The comprehensive process of change in public sector organizations, called New Public Management (NPM), which is intended to improve performance, has fostered the spread of new regulations “imposing” minimum levels of... [ view full abstract ]

The comprehensive process of change in public sector organizations, called New Public Management (NPM), which is intended to improve performance, has fostered the spread of new regulations “imposing” minimum levels of public service performance through the formulation of public service quality standards. These more demanding quality standards imposed by the regulations require public service providers to pay greater attention to service quality and customer relations than in the past, but without the possibility of linking each specific standard to a particular action. Meeting these more demanding service standards depends, therefore, on a series of organizational factors or actions that may, in fact, alter the value of the standards, rather than any single individual actions.
This means that once such standards have been fixed by the regulations, service providers have to operate in such a way as to meet them and to avoid huge penalties if they fail to do so. How the organization reacts to this kind of regulation has not been investigated in the literature.
This research aims to investigate the effects that the implementation of new quality standards regulations and their improvements on performance have on the organization of public service providers. A hypothetical research model to show the relationship between the quality of public service and the organization of the public service providers was thus developed. This was then tested through a survey presented to managers of some of the most important public or semi-public water companies located in Italy, where the Authority that regulates the electrical, gas and water service in Italy (AEGSI) has recently defined new and more demanding water quality standards. Results show that the new regulations impact on the organization in terms of resources and the performance management system, while the degree of centralization (i.e., the hierarchy of authority and degree of participation in decision-making) is not significantly related to the more demanding quality standards. The findings can be considered relevant for both the academic and business communities. As for the theoretical contributions, this research reduces the gaps in the literature concerning the relationship between regulation and its requirements in terms of public service quality and the organization of public service providers. It shows that the more demanding quality standards imposed by law are likely to impact on the organization of public service providers, specifically influencing the resources and performance management system. The paper contributes to research streams focusing specifically on the relationship between public service performance and specific organizational variables such as resources, level of centralization, and the adoption of performance management systems. As for the practical contributions, the results support public managers’ decision-making processes concerning the reorganization of the agency in order to cope with the more demanding quality standards imposed by the regulation. The results are also useful for the legislator since they provide insights into what is required of public organizations in order to cope with the regulation requirements in terms of public service quality.