The move to apply the method of business management to the operations of local governments dates back to the late 1970s, when such attempts were hailed under the name of “New Public Management” (NPM) from the 1980s through the 2000s. Thus, various theories were put into practice, especially in OECD countries. Although NPM was developed to overcome several problems inherent in modern bureaucracies, those that Max Weber classed as “rational,” whereas Robert Merton pointed out as “dysfunctional,” we believe the activities associated with NPM can be classified into four main categories: (1) Taking advantage of an incentive system aimed at performance improvement; (2) Optimizing organizational structure; (3) Introducing the principle of competition; and (4) Shifting attitudes towards customer orientation.
In this paper, we focus on the Hiroshima Prefectural Government as a case study of NPM to analyze the activities that were actually conducted by one of the authors. Hiroshima Prefectural Government, while focusing on the transformation from budget-oriented principles to performance-oriented principles, has been sharing the Philosophy of Action among all staff members, clarifying administrative systems with the Philosophy of Action at the top, formulating management policy for each fiscal year in collaboration with independent experts from the private sector, and introducing the PDCA (Plan-Do-Check-Act) cycle to assess management on a quarterly basis. These activities are unique to Hiroshima Prefectural Government, and unparalleled in any other prefecture.