top of page
  • Writer's pictureStratPlanTeam

If digital New Public Management (NPM) is the future - what can be learned from NPM?

New Zealand parliament

Digital New Public Management is the application of digital technologies and strategies within the framework of New Public Management (NPM) principles. It involves leveraging digital tools and platforms to enhance the efficiency, transparency, and responsiveness of public administration.

Key components of digital New Public Management include the use of information and communication technologies to streamline government processes, improve service delivery, increase citizen engagement, and facilitate data-driven decision-making. The integration of digital technologies in NPM aims to transform traditional bureaucratic structures into more agile, user-focused, and technologically advanced systems, ultimately improving the overall effectiveness of public services.

Understanding New Public Management (NPM)

It is important to understand New Public Management in order to appreciate how many of its concepts retain their usefulness.

NPM is an approach to public administration that emerged in the late 20th century, emphasizing management principles from the private sector to enhance the efficiency and effectiveness of public services. It advocates for market-oriented reforms, such as decentralization, performance measurement, privatization, and the introduction of competition, with the goal of making public organizations more results-oriented and customer-focused.

Challenges with New Public Management

While New Public Management aimed to bring about positive changes in public administration, it has faced several criticisms and challenges over time. One significant problem lies in the overreliance on market mechanisms and business-oriented practices, which may not always align with the complex and diverse nature of public services. Critics argue that the emphasis on efficiency and cost-cutting measures can lead to a neglect of social goals and the underserving of marginalized populations.

Further, the application of performance measurement metrics has been criticized for fostering a culture of "gaming the system" rather than genuine improvements in service quality. The privatization of certain public services has raised concerns about accountability and the potential prioritization of profit over public welfare. Additionally, the one-size-fits-all approach of NPM may not be suitable for all public services, as some functions, particularly those related to social welfare, may require a more nuanced and flexible approach.

In essence, the problems associated with NPM stem from its rigid application of market-driven principles to the public sector, often overlooking the unique characteristics and social objectives inherent in public service delivery. The challenges highlight the need for a balanced and context-aware approach to public administration that considers both efficiency goals and the diverse needs of the community.

There are many concepts within the broad umbrella of NPM that are worth considering in their own right. Some of these concepts could be re-visited as part of Digital NPM and/or as means to improve public service delivery. These concepts can be broken up into:


Purchaser-provider separation In New Public Management, purchaser-provider separation refers to the division of responsibilities between the entity purchasing public services and the one delivering them, introducing market-like dynamics to enhance efficiency and effectiveness.


Agencification involves transforming government functions into separate agencies, aiming to increase flexibility, responsiveness, and efficiency by mimicking private sector organizational structures.

Decoupling policy systems

Decoupling policy systems involves separating policy formulation from service delivery to foster specialization and effectiveness in each area.

Growth of quasi-government agencies

The growth of quasi-government agencies denotes the expansion of organizations that, while not entirely private, operate with a degree of autonomy and flexibility similar to private entities.

Separation out of micro-local agencies

Separation out of micro-local agencies involves breaking down smaller, localized government entities to enhance efficiency and standardize service delivery across a broader scale.

Chunking up privatized industries

Chunking up privatized industries entails dividing large government-controlled sectors into smaller, more manageable units for privatization, fostering competition and efficiency.

Corporatization and strong single organization management

Corporatization involves adopting corporate management practices in public entities, emphasizing a single, strong organizational leadership for efficiency and accountability.


De-professionalization refers to the reduction of professional discretion and autonomy in public service delivery, often through standardized procedures and performance metrics.

Competition by comparison

Competition by comparison involves fostering competition among public service providers by comparing and publicizing their performance metrics, encouraging improvement and efficiency.

Improved performance measurement

Improved performance measurement focuses on developing more accurate and comprehensive metrics to assess the effectiveness and efficiency of public services.

League tables of agency performance

League tables of agency performance involve ranking and publicly presenting the performance of different public agencies, encouraging competition and transparency in service delivery.


Quasi-markets involve introducing market-like mechanisms within the public sector to enhance efficiency by creating competition among service providers.

Voucher schemes

Voucher schemes allocate public funds directly to individuals, allowing them to choose and pay for services, introducing a market element into public service provision.


Outsourcing entails contracting private organizations to provide public services, aiming to achieve cost efficiency and leverage specialized expertise.

Compulsory market testing

Compulsory market testing involves subjecting public services to competitive assessments to determine whether they can be provided more efficiently by external entities.

Intragovernment contracting 

Intragovernment contracting refers to government agencies outsourcing services to each other, promoting internal efficiency and specialization.

Public/private sectoral polarization

Public/private sectoral polarization involves clearly distinguishing and separating public and private sector roles and functions to enhance accountability and efficiency.

Product market liberalization

Product market liberalization involves removing restrictions on entry and competition in public service markets to encourage efficiency and innovation.


Deregulation is the reduction or elimination of government rules and regulations to promote a more flexible and market-oriented environment.

Consumer-tagged financing

Consumer-tagged financing allocates funds directly to individual users, giving them control over financial resources tied to specific services or programs.

User control

User control emphasizes giving service users greater influence and decision-making power over the design and delivery of public services to better meet their needs and preferences.

Respecifying property rights

Respecifying property rights involves clarifying and assigning ownership and usage rights to enhance accountability and efficiency in public service delivery.

Light touch regulation

Light touch regulation advocates for minimal governmental intervention, allowing for more flexibility and autonomy in the management of public services.

Capital market involvement in projects

Capital market involvement in projects entails attracting private investment for public initiatives, leveraging financial expertise from the capital market to fund and manage projects.

Privatizing asset ownership

Privatizing asset ownership involves transferring public assets into private hands to promote efficiency, innovation, and cost-effectiveness in their management.

Anti-rent-seeking measures

Anti-rent-seeking measures aim to prevent the abuse of power for personal gain in public service delivery, fostering fairness and efficiency.

De-privileging professions

De-privileging professions seeks to reduce professional privileges and increase competition to enhance efficiency and responsiveness in public service provision.

Performance-related pay

Performance-related pay ties remuneration to individual or organizational performance, incentivizing higher efficiency and effectiveness in the public sector.

PFI (private finance initiative)

PFI involves private sector financing and management of public infrastructure projects, transferring some of the financial risks to the private sector.

Public-private partnerships

Public-private partnerships entail collaboration between public and private sectors to jointly deliver and manage public services, combining resources and expertise.

Unified rate of return and discounting

Unified rate of return and discounting involves using a standardized approach for calculating returns and discounts in public projects to ensure consistency and fairness.

Development of charging technologies

The development of charging technologies focuses on implementing efficient and technologically advanced systems for cost recovery in public services.

Valuing public sector equity

Valuing public sector equity involves assessing the worth and impact of public sector involvement, considering both financial and social value.

Mandatory efficiency dividends

Mandatory efficiency dividends require public agencies to achieve predetermined efficiency gains, fostering a culture of continuous improvement and cost-effectiveness.


The value of specific New Public Management (NPM) ideas varies depending on the context and the nature of public services it is underpinning. Some NPM ideas may still have value for governments seeking to improve the efficiency and effectiveness of public services. Here are ten worth considering:

  1. Purchaser-provider separation: This concept can still be valuable for creating a clear distinction between those responsible for funding and those responsible for delivering public services, fostering accountability and competition.

  2. Improved performance measurement: Implementing effective performance measurement systems remains crucial for evaluating the success of public services and identifying areas for improvement.

  3. Quasi-markets: Introducing market-like mechanisms can promote competition and efficiency, especially in sectors where competition is feasible without compromising public welfare.

  4. Outsourcing: Outsourcing certain services to the private sector can still be a viable strategy to leverage specialized expertise and improve efficiency.

  5. Public-private partnerships (PPPs): Collaborative efforts between the public and private sectors can be beneficial for funding and managing large-scale projects, combining resources and expertise.

  6. Intra-government contracting: Utilizing internal contracting between government agencies can enhance specialization and efficiency within the public sector.

  7. Light touch regulation: While not universally applicable, a balanced approach to regulation that avoids unnecessary bureaucratic burden can foster innovation and efficiency.

  8. Performance-related pay: Tying remuneration to performance can incentivize higher efficiency and effectiveness in the public sector.

  9. Development of charging technologies: Implementing advanced technologies for cost recovery in public services can enhance financial sustainability.

  10. Valuing public sector equity: Assessing the social and economic value of public sector involvement is crucial for making informed decisions about service delivery and resource allocation.

The successful application of these ideas depends on careful consideration of the specific context, the nature of the services involved, and the potential impact on equity and public welfare. Additionally, public administrations should be mindful of potential drawbacks and unintended consequences associated with each NPM idea.


Dunleavy, P., Margetts, H., Bastow, S., & Tinkler, J. (2006). New public management is dead—long live digital-era governance. Journal of public administration research and theory, 16(3), 467-494.

Gil-Garcia, J. R., Dawes, S. S., & Pardo, T. A. (2018). Digital government and public management research: finding the crossroads. Public Management Review, 20(5), 633-646.

Margetts, H., & Dunleavy, P. (2013). The second wave of digital-era governance: a quasi-paradigm for government on the Web. Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, 371(1987), 20120382.

Margetts, H. (2008). Public management change and e-government: The emergence of digital-era governance. In Routledge handbook of Internet politics (pp. 114-127). Routledge.


bottom of page