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What exactly is New Public Management and has it delivered?

April 10th, 2008

New Public Management or NPM, is the transfer of business and market principles and management techniques from the private into the public sector. In the view of Wolfgang Drechsler, Professor in the Technology Governance Program at Tallinn University in Estonia, it is the most important reform movement within the public sphere over the last quarter of a century. The goal of NPM is, in Dreschler’s words, “a slim, reduced, minimal state in which any public activity is decreased and, if at all, exercised according to business principles of efficiency. NPM is based on the belief that all human behavior is motivated by self-interest and, specifically, profit maximization.”

Wikipedia describes NPM as “a broad and very complex term used to describe the wave of public sector reforms throughout the world since the 1980s. [NPM is] based on public choice and managerial schools of thought [which] seek to enhance the efficiency of the public sector and the control that government has over it. The main hypothesis … is that more market orientation in the public sector will lead to greater cost-efficiency for governments, without having negative side effects on other objectives and considerations.”

The application of NPM has had a great effect on governments in many countries and continues to do so in several countries including Australia and Canada. There is every reason why Boards and Directors of museums should be aware of these matters and doing their best to minimize the application of market economics and its outgrowths like NPM and Public Choice Theory.

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