Performance measurement evolution and accountability in Indonesian regional governments
Creators: name: THAHAR, Muhammad
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350102
subject: Auditing and accountability
classificationCode: 350105
subject: Management accounting
classificationCode: 350199
subject: Accounting, auditing and accountability not elsewhere classified

description: This thesis explores the development and implementation of a performance measurement system in Indonesian regional governments. A field study approach is employed in which publicly available and internal documents, together with semi-structured interviews, are used as a comprehensive source of evidence. Public sector reforms were introduced with significant changes to the way performance was measured and managed in areas such as education, health, government planning and infrastructure, as well as financial management of budgets.<br><br>Drawing on the performance measurement literature and taking a New Institutional Sociology (NIS) approach, public sector governance and performance measurement system (PMS) change over 15 years (1999-2015) was conducted to provide insights into: a) regional governments’ underlying motivation for adapting to change; b) performance measurement system (PMS) introduction, development and implementation over time; c) whether there were any major impediments to the implementation of the national framework on performance measurement at a regional level; and d) the extent to which accountability has been impacted.<br><br>The findings of this study support NIS research, in that the main motivation of regional governments towards adopting the national framework was for meeting legitimacy needs as well as there being strong evidence of coercive isomorphism that results in compliance. In particular, a number of impediments were noted during these evolutionary stages. These include: low levels of top management commitment; passive attitude/apathetic behavior towards PMS among staff in accountability units; low institutional capacity; lack of coordination among policy setters in the central government; communication problems between policy setters in the central government and implementers at regional governments; conflicts of interest among stakeholders at regional level; and a high level of informality (in relation to PMS and administrative control), which influence decision making processes at both higher and lower levels management. Each of these has provided obstacles to the development and implementation of PMS. Furthermore, in response to the discharge of accountability, PMS has been largely implemented and used for accountability purposes; in particular, towards the central government, the major regional governments’ stakeholder. Regional governments’ response in meeting the need to fulfill accountability requirements to other stakeholders remains limited.<br><br>The research contributes to the literature in several ways. While reforms in industrial countries have been comprehensively studied, there has been less attention paid to public sector performance measurement reforms in developing countries such as Indonesia. The present research is intended to fill this gap by providing evidence of the evolution of performance measurement and the discharge of accountability in the Indonesian public sector. In addition, the present research contributes not only to management accounting literature by providing evidence from a developing country perspective, but also provides valuable insights into practical applications for policy makers and public sector accountants, for future policies and further designs and application of reliable PMS. It also offers an opportunity for other countries with similar socio-economic conditions to those of Indonesia to learn from the practices identified.