What We Know and Don’t Know About Public Management Practices and Financial Performance: A Systematic Literature Review

Over recent decades, significant attention has been given to understanding the ways to improve performance in the public sector. However, persistent challenges in defining and measuring public sector financial performance have made it difficult to assess the effects of diverse management practices on financial outcomes. This study addresses this critical issue through a systematic literature review of studies examining the relationship between public management practices and financial performance. To guide this synthesis, we propose a conceptual framework that categorizes financial performance into capacities, constraints, and net financial condition, along with solvency classification. We also use two approaches, including Waldo (1948)’s conceptual framework and causal theories, to classify management practices used in public organizations. Our findings reveal that while many management practices are associated with improvements in certain financial dimensions, the results are often mixed and context dependent. We urge more attention to dynamic interactions between administrative efficiency and democratic governance to improve financial performance, as well as more consistent and explicit use of financial performance measures, to advance both research and practice in public management.