THE UNIVERSITY OF HULL Strategic Management in the Public Sector: An Interpretive Study of the Application of Strategic Management Practices In the Local Authorities in Malaysia being a thesis submitted for the degree of Doctor of Philosophy in The University of Hull By Mazlan Yusoff B.A. Hons. (History), University of Malaya, Malaysia 1985 Diploma in Public Management, National Institute of Public Administration (INTAN), Malaysia 1987 Master of Art (Public Policy), Saitama University, Japan, 1998 July 2008 ABSTRACT This research examines strategic management practices in local government in Malaysia. It offers an understanding of how actors construe and enact principles of strategic management in their organisations. Taking a qualitative and interpretive approach, and as part of the ‘micro-turn’ in the study of strategy, this thesis presents empirical insights into three important areas in the field of strategic management, namely, strategic positioning; approaches to strategy development; and the nature of organisational strategy in the Local Authorities (LAs) in Malaysia. Its contribution is to illuminate key aspects of local practice within this important part of the Malaysian public sector. An interpretive approach is employed in an attempt to uncover the dynamics of strategy processes in the LAs, by engaging with the discourses of senior managers to grasp the beliefs, intuitions, assumptions and preferences which shape their approaches to strategic management in their organisations and their wider contexts. This research takes LAs in Malaysia as the setting. Effective strategic management in local government organisations is vital, not least given their significant roles in dealing directly with the public at the frontline. Efforts to strengthen the LAs have been placed centre stage by the Malaysian government, manifested by recurring calls to revisit and reexamine various aspects of their management to meet their objectives and fulfil stakeholders’ needs. However, to date, little research has been undertaken on how important elements of strategic management unfold and develop within these institutions. This research seeks to bridge this gap. Part of the originality of this research has been its attempt to conduct enquiry at the intersection of political science and organisation studies, and thus, to advance the interpretive framework in the field of strategic management. This is done by reflecting on and analysing a mélange of complex and diverse actor narratives that give insights into how people understand their organisations, based on their webs of beliefs, signified i through their expressions and discourses. This study’s critical engagement with structure- agency debates means that it includes analytical attention to the importance of the wider context in which state organisations are situated. The key argument of the thesis is that strategy making in the LAs in Malaysia is fundamentally a political and contested process. This research provides empirical insights into the practices of public sector strategy, which move away from ‘mechanistic’ and ‘rationalist’ models of strategy making, which dominate much of the literature on strategic management. This study suggests that dilemmas and conflicts – two important constructs illuminating cultures and traditions in the LAs – have a strong link to the contested and political nature of the strategy making process. Looking from an interpretive lens, this research contends that LAs in Malaysia possess different characters; exist in different contexts; deal with different internal and external environments; are made up of different structures, skills and resources; and are run by different styles of leadership. As such, each of the LAs examined is imbued with different traditions; has inherited different legacies; is bestowed with different capacities; and embraces different sets of values and cultures. This research argues that it is from such a complex, intricate and dynamic context that strategic management emerges in these institutions. ii In the memory of My mum, Allahyarhamah Hjh Chombi Hj Hussain, who departed peacefully on the eve of Eid’-ul-Adha (Thursday, 9 Dzulhijjah 1418 / 17 April 1997), and My dad, Allahyarham Yusoff Saad, who passed away on one fine morning of the blessed month of Ramadhan (Friday 12 Ramadhan 1421 / 8 December 2000), Thanks for all your love and sacrifices for us. Your deep love of your children imbued in us a strong sense of intimacy and brotherhood. May Allah have mercy on you and place your souls among those of the believers. iii Acknowledgements Alhamdulillah, praise be to Allah, the Most Compassionate and the Most Merciful, for giving me the blessings, strength and courage to bring to the end, the interesting journey of my Ph.D. Indeed, I did not travel alone on this journey. Its completion has been made possible with the help and support from a number of individuals and institutions. At the outset, I thank the Government of Malaysia, in particular, the Public Service Department, for granting me study leave and scholarship to pursue this research. I wish to record my deep and sincere gratitude to my supervisor, Dr Kevin Orr, for his invaluable guidance and support during the course of this study. His constant words of wisdom and encouragement have always been my source of inspiration and self-confidence. It has been an honour to work with him. I am also indebted to Dr Richard Common, for his positive comments on my work during the earlier stage of my research. I am grateful to all the Local Authorities that have participated in my research, for their willingness to share the thoughts and experiences. Special thanks also go to the Secretary General of MHLG, the State Secretaries and colleagues in MAMPU, for their cooperation. I also wish to express my warm appreciation to the examiners, Professor Joyce Liddle, from the University of Nottingham, and Professor Brent Davies from the University of Hull, for their constructive feedback on my dissertation and, thanks to their professionalism and friendliness, the viva was a joyful and a memorable one. Special thanks also go to the staff of the Postgraduate Office at the Business School, especially to Becky and Andrea, as well as to Susie and Kathy at the Graduate School, for untiringly lending a hand whenever needed. Last but not least, I am particularly grateful to my wife, Nafisah, for her prayers, love and sacrifices, and to my children Farahin, Izzati, Naqiyuddin and Ihsan, for their understanding and support. Without them around, life itself would be bereft of joy and happiness. Thanks to my brothers and sisters, for their prayers and support, and to my friends and colleagues, for their help and the sharing of thoughts and laughter. You will always be in my mind, and may Allah reward you for your generosity and kindness. iv TABLE OF CONTENTS Abstract i Acknowledgement iv Table of Contents v List of Tables and List of Figures xvi PART I: SETTING THE CONTEXT _________________________________________________________________ Chapter 1: Research Overview: Justifying the Need for the Study 1 1.1 Problem Statement: 1 1.1.1 Debate on Paradigmatic Stance in the Study of 1 Organisational Strategy 1.1.2 Local Authorities in Malaysia: The Importance of the Setting 5 1.2 Research Objectives 7 1.3 Research Questions 8 1.4 Significance of the Study 9 1.5 Scope, Limitations and the Organisation of the Thesis 10 1.6 Conclusion 11 PART II: REVIEW OF THE LITERATURE _________________________________________________________________ Chapter 2: Strategic Positioning: Concept, Principles and 14 its Application to the Public Sector 2.1 Introduction 14 2.2 Public and Private Sector – How Do They Differ? 15 2.2.1 Public and Private: The Fundamentals 15 2.2.2 Public and Private: The Nature of Services 16 2.2.3 Public and Private: Structural, Environmental and Managerial 17 2.2.4 Public and Private: The Levels of Political Influence 20 2.2.5 Public and Private Organisations: The Moment of Truth 21 2.2.6 Public and Private Organisations: Conclusion 22 v 2.3 Strategic Management in Public Organisations 22 2.3.1 Understanding Strategy: Concept and Principles 23 2.3.2 Strategic Management: A Combination of Content and Process 24 2.4 Applying Strategic Management Principles to 26 Public Organisations 2.4.1 Strategy Positioning: Ensuring ‘Fit’ between Organisations 26 and their Environment 2.4.2 Strategy Positioning: Understanding the External Environment 29 in Public Organisations 2.4.2.1 PESTEL Framework as a Guiding Principle 29 in Understanding the Environment 2.4.2.2 PESTEL: The Importance of Interpreting the 31 Environment 2.4.3 Strategic Positioning: Organisational Realignment to the 33 Needs of Stakeholders 2.4.3.1 Organisational Stakeholders: A Critical Review 33 2.4.3.2 Stakeholders in Public Organisations: Managing their 35 Multiplicity and Conflicting Nature 2.4.3.3 The Importance of Understanding the Stakeholders 37 from Managers’ Perspectives 2.4.4 Strategic Positioning: Assessing Internal Strengths 39 and Weaknesses 2.4.4.1 Resource-based View of Firms and Internal Analysis 39 2.4.4.2 The Importance of People and Leaders as Organisational 41 Resources 2.4.4.3 Organisation Culture and Structure as Internal Resources 42 2.4.4.4 Interpreting Organisation Internal Strengths and 44 Weaknesses 2.5 Conclusion 45 vi Chapter 3: Understanding the Dynamics of Strategy Development and the Different Nature of Organisational Strategies 3.1 Introduction 46 3.2 Examining Strategy Development in Organisations 47 3.2.1