PERFORMANCE AND INNOVATION IN THE PUBLIC SECTOR OF THE EUROPEAN UNION COUNTRIES. AN ANALYSIS BASED ON THE DYNAMICS OF PERCEPTIONS, 2009-2016.

• Author: Tiganasu, Ramona

1. Introduction

   In recent years, innovation and technological development have dominated the European public discourse. The Europe 2020 strategy, with the inclusion of 'smart growth' as a strategic priority, has led to a complex set of re-orientations of EU and Member States policies for a stronger integration of innovation and R&D in policies. In the public sector, innovation could comprise a complex set of events, processes, outputs or innovation environments (Bekkers and Tummers, 2018; Castells, 1996). The ability to innovate depends essentially on the quality of formal institutions; the process of innovation is dynamic, progressive, moving from the creation of new systems ('green field innovation') to improving the present systems ('sustaining innovation') and finally to changing the systems ('disruptive innovation') (OECD, 2017). But beyond the different perspectives on the meaning of innovation itself, public sector innovation is clearly related to leadership (the capacity of the leaders to induce in the public sector a 'culture of innovation') and the ability to promote a collaborative approach (Lewis, Ricard and Klijn, 2017; de Vries, Bekkers and Tummers, 2016). Innovation should not only be linked to the effectiveness of the government system, but also to the extent of innovative behavior in society, thus creating an environment directed towards innovation--an 'architecture of innovation' (Arundel, Block and Ferguson, 2019), which may generate and intensify positive interactions between the public and private sectors and, also, to offer a transparency of the decision-making process (Savignon et al., 2018; Zolli and Healy, 2012; Bason, 2010). In this context, various barriers should be removed (e.g., legislative, technical, cultural), new laws and procedures adopted, human capital developed, the financial resources created, the institutional structure and the management system transformed. There is a need for a mix of formal and informal arrangements, depending on the decisions made, and these need to be guided by responsibility, strategic planning, multi-actor cooperation, dialogue with the civil society, adaptability to changes, compliance with rules, social justice (Sen, 2009). Last but not least, it is necessary to introduce a rapid adaptation to technological changes, so as to integrate the innovation in public services and to adopt a strategic vision (Funda, 2007). Do the governments of the EU member states have the capacity to respond effectively to societal challenges by opening up to innovation, adapting to newness, overcoming barriers, contributing to the promotion of optimal conditions for stimulating economic performance and for increasing well-being?

   The paper proposes a new approach in governments performance assessment, based on a new database created through an in-depth analysis of a survey addressed to experts from the Ministries of Economy and Finance and development agencies from 144 countries (in 2016) by Agence Frangaise de Developpement (AFD). The analysis was carried out for 3 years (2009, 2012 and 2016), in order to highlight the dynamics of the government performance capacity and the convergence/divergence trends between EU Member States, as a result from the perceptions of experts.

   The evaluation of the performance of the public sector through perceptions is a widely accepted approach, often used by various international organizations and by expert groups for its high relevance for an in-depth evaluation of the impact of governance on the performance of economic systems and of individual welfare as final objectives of the government. What the present research brings as a new approach is, on the one hand, the use of a new database and, on the other, the integration of some variables that allow the assessment of the public sector's capacity in EU Member States (28) in order to provide strategies according to the needs of society, integrating competences, resources (human, financial, informational), structures and processes, so that they facilitate and contribute to the increase of the quality of public services. We are specifically interested in highlighting the ability of governments to adopt a strategic vision on innovation, including a collaborative approach; in other words, to evaluate the capacity of governments in promoting an institutional architecture that is favorable to innovation and the way this correlates with the effectiveness of public policies and the quality of public services. We consider that such an analysis can contribute to the development of an analytical framework for identifying the particular combinations of institutional features and functions that define the public sector of EU countries, which may lead to the outline of more effective public policies, noting that there is no institutional model to be followed, but only elements that can be associated with good governance.

   The next section of the paper details the specific aspects of innovation in the public sector, from the perspective of the role of innovation in enhancing government performance and the methods for assessing innovation capacity. Section 3 largely explains the advantages and limitations of a perception-based analysis, the research methods applied and the way the database was built. In Section 4 the results are interpreted from the point of view of interdependencies between government performance indicators, highlighting the importance of adopting a strategic vision and creating a favorable framework for innovation in increasing government performance. The concluding section summarizes the main findings of our research, with an emphasis on their relevance to European public policies.

2. Government performance and innovation: interdependencies and assessment

   The performance of the public sector can be assessed, in the simplest way, through the ability of the government to achieve its goals in an efficient manner. However, government performance assessment, especially in relation to innovation, is extremely difficult, the general view being that a basic theory is missing (Arundel, Block and Ferguson, 2019; Andrews, 2008). Some authors propose an evaluation through output and outcome indicators in the standard areas of government policies, such as education, health, quality of administration, economic affairs, security and social welfare (Adam, Delis and Kammas, 2011; Angelopoulos, Philippopoulos and Tsionas, 2008). But, the quantification cannot always be done accurately (especially in countries with institutional weaknesses), and in many areas there is no valid comparative data on all countries for a systematic assessment of government performance, which in practice involves more than just a simple aggregation of indicators. Other authors prefer the use of secondary data (Kaufmann, Kraay and Mastruzzi, 2010) by aggregating the results of surveys applied to citizens, companies and/or experts, the most known method, based on 6 indexes, being the one applied for calculating the Worldwide Governance Indicators (WGI).

   The assessment based on the perceptions, although subjective and quite limited, is considered relevant, because perceptions have an essential role in the decisions of the economic actors and they reflect government performance de facto and not de jure, the distance between them being quite significant, especially in countries with poor institutions. In addition, some key aspects of a good governance cannot be assessed by quantitative indicators (e.g., corruption, freedom of expression, free media). Furthermore, the public sector mainly incorporates social goods and takes into account specific/cultural values, which implies a use of indicators derived from qualitative assessments, which involve subjectivity and can only be evaluated by perceptions.

   A specific challenge over the past years results from the need to integrate innovation in the evaluation of government performance, both as a determinant of effectiveness's enhancing and as goal of an effective governance. Do we rely in this case on subjective perception indicators or do we use objective performance indicators?

   An assessment of what innovation means in the public sector is difficult to establish, as there is a lack of clarity on what innovation in the public sector entails compared to the private domain. Innovation can be related to products, processes, or institutional architecture. For example, many of the activities included in the Oslo Manual (R&D, acquiring external knowledge, design, testing and evaluation) are rarely used in public sector innovation assessment, whereas other activities (training and procurement of equipment, ICT, etc.) are regularly taken into account (OECD and European Commission, 2005). Studies regarding the EU (Gault, 2018; Sandor, 2018; European Commission, 2016; European Commission, 2014; Biagi and Loi, 2013; Hartley, Sorensen and Torfing, 2013; Halvorsen et al., 2005; Bartlett and Dibben, 2002) refer to indicators such as: the number of employees with higher education, e-government, e-public procurement, e-health, research and development expenses (as % of GDP), public-private partnership agreements, number of patents, share of scientists, papers, research projects, export of creative goods (as % of total exports), percentage of creative jobs, access to internet, etc., in order to assess the innovation in both public and private sectors at national level.

   Innovation in the public sector can also be a new way of acting or introducing new methods, tools or new institutions adopted by governments to achieve their goals (Brown and Osborne, 2013; Hughes, Moore and Kataria, 2011; Hartley, 2005); consequently, it is necessary to identify and asses the factors and synergies that determine a culture of innovation and the creation of an institutional architecture favorable to innovation in the public sector (OECD and European Commission, 2018 and 2005; OECD, 2015). A useful tool is...