External Pressures and Internal Dynamics in the Institutionalization of Performance-Based Budgeting: An Endless Process?

The well-known practice of performance-based budgeting (PBB) is a relevant component of the New Public Management (NPM) reform agenda and has become widespread, with varying approaches and results across countries. However, its variation within specific countries has remained largely unexplored. This study analyzes three organizations operating within the same context—three ministries in Italy—to contribute to a new understanding of PBB variation by illustrating why the same PBB practice can or cannot be implemented and internalized similarly across these organizations and thus become (or not) fully institutionalized. The study adopts and enriches the institutional approach by extending beyond isomorphic convergence toward PBB and explaining practice variation, linking the interactions between external pressures and internal dynamics at the organizational level to PBB institutionalization. The empirical analysis shows how a lack of alignment between external pressures and internal dynamics contributes to an unfinished and apparently endless process of institutionalization.