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A major problem in assessing bureaucratic performance is the difficulty in judging the final social outcomes stemming from the work of public agencies. As a result, public agencies are frequently evaluated based on the outputs they produce. Agency outputs (such as, criminal cases solved, inspections) are easier to measure than the actual contributions agencies make to social outcomes (such as, preventing workplace discrimination, protecting the environment). When agency performance is evaluated in terms of numerical outputs, bureaucrats have an incentive to maximize outputs, regardless of whether maximizing outputs is the preferred strategy for achieving desired social outcomes (a form of goal displacement). This incentive to maximize outputs may lead to organizational cheating, in which public agencies purposely manipulate output levels to portray their work in the best light possible.* This study examines the problems of goal displacement and organizational cheating in Texas public schools. Specifically, we examine the degree to which school districts cheat to manipulate student pass rates on standardized exams. School districts "cheat" by liberally exempting certain students from these exams in hopes of raising overall district pass rates. Scarce institutional resources and extreme task demands are associated with cheating. From a management perspective, this study demonstrates the problems in implementing performance standards. From an academic perspective, it provides the first theory about when and why organizations cheat.Policy making at all levels of government has become much more complex over the past three decades. Governments are responsible for maintaining economic stability, combating racial discrimination, providing a safety net for the poor, educating citizens, and protecting consumers from unfair business practices. Political actors identify problems and create public policies to address them, but lack the time and expertise to become day-to-day implementers of policy. Rather than implement programs themselves, political actors rely on bureaucracies to translate abstract public policies into functioning programs.While time constraints and lack of expertise in particular policy areas cause political actors to give bureaucratic organizations the authority to translate public policies into functioning programs, the involvement of political actors in the policy-making process does not stop once this discretionary authority has been granted. With grants of authority comes the expectation that public agencies will perform well in translating public policies into working programs. Concern over bureaucratic performance has spawned various tools for monitoring the work of public agencies. Legislatures often scrutinize the performance of agencies through oversight hearings and review of agency

We propose a political transaction cost theory of the politics of administrative design and then evaluate the theory using data on the initial design attributes of 141 federal administrative agencies created legislatively between 1879 and 1988. The theory posits that the enacting coalition attempts to strategically manipulate administrative design attributes and therefore political transaction costs for future coalitions seeking to affect agency policy. Based on perceptions of the probability of political holdup and resulting losses, the enacting coalition alters political transaction costs to optimize expected benefits. We gauge the perceived probability of political holdup using measures of executive‐legislative conflict, coalitional conflict, electoral turnover, and party hegemony. Using structural probit analysis, the results show that these factors significantly affect agency design attributes involving structure, process, and monitoring. Thus, the statistical analysis is consistent with the theory that the enacting coalition manipulates political transaction costs in designing U.S. administrative agencies.

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s classic essay "Notes on the Theory of Organization," he argued that span of control structures relationships between leaders and subordinates in organizations. Commenting on the state of knowledge about span of control, Gulick lamented the lack of systematic research on what he viewed as three key determinants of span of control: diversification of function, time, and space. This study adopts Gulick's approach to studying span of control by examining the effects of diversity of function, time, and space in structuring relationships among personnel in a sample of 678 Texas public school districts. We then investigate Joan Woodward's link between span of control and organizational performance. Our results reveal that although Gulick was correct in asserting that diversity of function, time, and space play a role in determining how spans of control are structured, these variables have different meanings that depend on the level of organizational hierarchy analyzed."Span of control" refers to the way relations are structured between leaders and subordinates in an organization. A wide span of control exists when a manager oversees many subordinates; a narrow span of control exists when a manager oversees few subordinates. Although it is a simple concept, span of control has widespread implications for the study of organizations. For example, span of control is at the foundation of two different approaches to studying organizations. The concept is a key element in economic theories of organization that focus on hierarchical design (Alchian and Demsetz 1972;Fama 1980;Williamson 1975) because spans of control ultimately determine the number of levels-and thus transaction costs-in an organization (Perrow 1986, 30). The concept is also relevant to the human relations approach to organizations (McGregor 1960;Tannenbaum 1968;Worthy 1950) because span of control is a tool that orders relationships between leaders and subordinates in organizations and influences management styles. Thus, span of control not only has implications for *Financial support for this project was provided by the Department of Political Science at Texas A&M University. All data and documentation necessary to replicate this analysis are available from the senior author. understanding organizational design, but also for understanding behavior within organizations.Although span of control has virtually disappeared from academic work, it remains an interest among practical managers who must establish reporting relationships. President Nixon's proposal to create a set of supercabinet administrators, for example, was grounded in the notion that a limited span of control was a positive feature. The National Performance Review includes limiting spans as one aspect of its efforts (Kettl and DiIulio 1995). Our examination of span of control proceeds in four steps: First, a brief review of the literature will show that almost no re-