In the contemporary public management literature, the creation of executive agencies inspired by the New Public Management (NPM) philosophy has become a global “fever”. The key element of an agencification is the structural disaggregation of traditional bureaucracies in tandem with increased managerial autonomy, strategies which are designed to ‘let managers manage’ and strengthen accountability for results. Although this contract-based reform has spread widely, there have been only a handful of empirical studies that attempt to investigate the consequences of agencification. Several scholars have pointed out that research on this topic is difficult because of the absence of conceptual criteria and insufficient empirical. In particular, no consensus has been reached as to whether more autonomous organizations have brought improvements in efficiency and quality of service. Furthermore, the contractual factors of performance evaluation and reward can be critical in the relationship between the parent ministry and the autonomous agency. However, these factors are less discussed in the empirical studies on executive agencies and evidence remains insufficient to draw conclusions.

Therefore, this study aims to explore the relationship between autonomy and performance and also to test the effect of performance management systems. Our study focuses on executive agencies in South Korea, where NPM-driven administrative reform has been imported and extensively implemented. In April 2000, the Korean government established executive agencies as legally separate bodies from the central ministry and this was the initial step for the government to move from a traditional arrangement in governing to a quasi-contractual one. Under the agencification movement in Korea, overall reform strategies for individual organizations are based on similar principles, but there are differences in how much autonomy is given and how the parent ministry monitors the results of their agent. These differences provide an interesting context in which to investigate the effects of agencification. In addition, the evidence this research provides in the case of Korea can also have practical implications for developing countries where similar reform measures continue to be adopted from the Western world.  

This article examines the effect of autonomy and result-control on the performance of executive agencies in Korea by using regression analysis with data from 44 executive agencies in Korea. In order to model relevant relationships, we conducted a series of in-depth interviews with civil servants in parent ministries, executive agencies, and central overseeing department.

Based on the literature and interviews, we measured and quantified the variables and then conducted multiple regression analysis. The independent variables of our study are autonomy and result-control. For the dependent variable, we used performance data produced by central overseeing department. Under the Executive Agency Act, each Korean executive agency’s performance has to be evaluated and reported annually.

The results of the analysis show that HRM autonomy has a statistically significant and negative relationship with performance, while financial autonomy does not show a significant association with performance. We also found that systems for performance evaluation and reward for result-control are significantly and positively related to the performance of the executive agencies in Korea.