What Drives the Institutionalization of Performance Measurement Systems in Indonesian Local Government?

Abstract

Objective - The objective of this paper is to explore and understand the motivators of institutionalization of Performance Measurement Systems (PMS) in the Indonesian Local Government (ILG), particularly in the Batu municipality presenting the performance paradoxes. Performance accountability issues have been encouraging the Batu municipality to implement PMS since the beginning of the 2000s. Methodology/Technique - The theoretical framework and interpretation of this study are adopted from the institutional theory (coercive, mimetic, normative, and allomorphism) which is used to analyze the phenomenon. The researchers employ a single case study to scrutinize the motivators of institutionalization by elaborating on document analysis conducted from the interviews of 10 employees in a different range of management levels (top, middle, and lower). Findings - The results of this study reveal that exogenous (coercive, mimetic and normative) and endogenous (allomorphism) drivers encourage the institutionalization of PMS in the Batu municipality with coercive pressure as a major driver and allomorphism as a mere ceremonial driver (rather than an instrument). Novelty - The practical implications of this study can be used to improve the PMS process and the quality of performance reporting in the Batu municipality and in other local governments. This paper is also expected to fill the gap in existing literature on the implementation of PMS within a developing country (in this case, Indonesia). Type of Paper: Empirical Paper. Keywords: Performance Measurement Systems; Institutional Theory; Indonesian Local Government; Batu Municipality. JEL Classification: P47, M48, P49. DOI: https://doi.org/10.35609/jber.2019.4.1(3)