The Theory and Practice of New Public Management in the Context of Institutional Transformations

Žilvinas Židonis


This paper discusses the doctrinal content of the New Public Management (NPM): contractual state; the theories of public choice, transaction costs and agency theory. Secondly, the role of formal and informal institutions is explored. Also the article argues that the practical implementation of NPM is subject to institutional arrangement of the country’s administrative system. From the point of view of informal institutions, Lithuania represents a mix of “Germanic-French” and “soviet-nomenclature” traditions of public administration. Having in mind soviet heritage, the contemporary bureaucratic system in Lithuania should be defined as patrimonial administration, rather than rationalistic bureaucracy. NPM is an effective tool when it is applied in the systems of rational-legalistic type of public administration. However, in the case of patrimonial bureaucracies NPM enhances the concentration of power in the arms of patrimonial rulers (managers). The gap between existing informal institutions and NPM practices acts as a hindrance to the development of modern public administration system in Lithuania.


new public management; institutional change; administrative culture; rational-legalistic bureaucracy; patrimonial bureaucracy

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"Public Policy and Administration" ISSN online 2029-2872 / ISSN print 1648-2603