Chapter 031: "A CASE STUDY ON THE APPLICATION OF BUSINESS MANAGEMENT  CONCEPTS IN LOCAL GOVERNANCE" by Prof. Toti Dulay

Dulay, S.                                                                                                                                                                                                                                                      Business Concepts in Governance

A CASE STUDY ON THE APPLICATION OF BUSINESS MANAGEMENT

CONCEPTS IN LOCAL GOVERNANCE

Sofronio Dulay

Institute of Accounts, Business and Finance

Far Eastern University

Abstract

This study was conducted to determine if business management concepts can be a good tool in local governance. There have been debates from among the public administration academicians and practitioners about this and this debate was shown in the review of the related literatures of this study. It is also shown in the review that there is indeed a public administration theory that incorporates business concepts in governance, the Theories of Public Management. This theory, together with the System Theories’ concept of interrelatedness of parts to make up a different whole became the theoretical anchor of this study. The central problem of this study is to answer the question: What are the perceptions and acceptance of selected sectors of Marikina on the businesslike governance approach of the Fernando Administration (1992-2010)? , thereby making this a qualitative case study. Surveys, interviews with key informants and focus group discussions, with its classic procedures, are the main method of this study, together with the experiential knowledge of the author, being a resident of Marikina City. The results and discussions were handled together for brevity. They basically say that, 1) Based on the interview with key informant former Mayor Marides Fernando, their administration used business concepts in running the city government almost as a matter of necessity, 2) A public approval on the use of business management concepts of an administration does not necessarily mean an endorsement for the continuation of the Fernando Administration on the office in the future, 3) The priorities of the Fernando Administration as expounded by former Mayor Marides Fernando were comparatively highly rated by the respondents of the survey although they do not know that these were the priorities of the administration, and lastly, 4) People felt  that their quality of life during the Fernando Administration did not improve, yet they said that they are satisfied with the Administration, but they are reluctant on the idea of the  administration  coming back..

Key words: business management concepts, public administration, local governance

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The application of business management concepts in local governance as a strategy to improve the services of a local government units not only implies a piece by piece use of some business management concepts into local governance but a complete embrace of business management principles, and a belief that these principles can improve the delivery of services and enhance constituents’ satisfaction.

The question, however, remains to be “is the application of business management concepts to local governance” good to the constituents? How about its effect to the city government itself and to the elected local government officials?

Academicians and practitioners often ask these questions because the use of business concepts in local governance has increasingly supplanted and supplemented other forms of governance, such as command - and – control approach and classical bureaucratic governance.

The use of business concepts in local governance is within the conceptual framework of the Theories of Public Management (Frederickson and Smith 2003) and what some other public administration literatures call as managerialism (Reyes 2001), and therefore, is within the ambit of public administration as an academic discipline. Yet, debates continues whether the application of business management concepts in local governance is just a passing fad or if it really improves the service delivery of the local government units, improve the socio – economic situation of their constituencies or increase their satisfaction.

Critics counter that the use of business management concepts may not be necessary because “it is entirely possible to also have a good government simply by doing things better and more efficiently and making use, or improving upon existing policies and procedures (Brillantes 2001; 88)”. Some critics further pointed out the applying business concepts in governance may not work at all because of the difference between the business firm and the government. “Clients affect a business firm by the level of their effective demand, that is, their ability to buy the goods and services it offers. With that mechanism absent, government can provide services independent of demand, such that expected beneficiaries are passive recipients and the target of do - gooding efforts (Carino 1997; 310)”.

The debates however are highly theoretical and rhetorical, because there are still little empirical evidences to suggest whether the application of business concepts in local governance has a positive or negative impact on the constituencies, the local governments and the elected leaders. This paper put forward a case of a local government unit in a third world country applying business management concepts in governance by way of answering a generally - stated question: What are the perceptions and acceptance of selected sectors of Marikina on the businesslike governance approach of the Fernando Administration (1992-2010)?  Specifically, the paper tried to answer the following questions: What are the internal operations, functions, vision/mission and structure of the Marikina City Government during the Fernando Administration? What are the businesslike innovations, projects, and approaches initiated by the Fernando Administration? How do the people of Marikina accept these innovations, projects and approaches? Are they satisfied with them? What are the awards and recognitions the Marikina City government received from different awarding bodies because of those innovations, projects and approaches and how are they related to the satisfactions and acceptance of the Marikina people on them? What are the important lessons and insights that can be deduced from the responses of the various individuals participating in the study?

The Marikina City in the eastern part of Metro Manila in the Philippines under the Fernando Administration (1992-2010) was selected as the subject of the research on the application of business concepts in local governance because in this city, there was a continuous of six terms of 18 years in local governance under one political family, three terms as mayor for Bayani Fernando (BF) and another three terms for his wife, Marides Carlos Fernando (MCF). This continuity might be good enough to detect a certain pattern of governance. There are also relatively lots of successful programs, principles and innovations by the Marikina City government as seen in the awards and recognitions it garnered. This study may provide some insights for other local leaders who are looking for a local government unit to benchmark on. In those 18 years of continuous governance, there was a transformation of Marikina from a municipality to a highly urbanized city.

The era of 1992 to 2010 was chosen for this study because that era in Philippines is under three Philippine presidents: Fidel V. Ramos, Joseph Ejercito Estrada and Gloria Macapagal Arroyo,  and that same era in Marikina City was the start and the end of the Fernando Administration, with exactly no overlapping. This will simplify the context of the research. This might also show some patterns of governance. Since this could be the golden era in the history of Marikina City and may not happen again, it will be for the sake of posterity to document this through a research like this.

The Theories of Public Management incorporates the use of scientific and operations research is half engineering and half business administration. Includes concepts like total quality management, one best way, problem solving and decision making, management by objectives, leadership theories, organization theory, role theory, communication theory, management by contract and some other business management and engineering concepts. On the other hand, the System Theory’s concept of interrelatedness of its part that influence each other to come out with a whole which is different from the individual parts, is very much similar to a local government that has to contend with other components of the whole, which includes its internal and external environments, as well as the process and the output. The two theories served as the anchor of this research.

This study attempted to show a specific case of a local government of a third world country where the Mayors applied business concepts in local governance. This will also give the readers insights as to its effect on the constituents and on the political leaders.

A review of some related literatures show the effect of the Local Government Code of the country is on the side of providing local government units more autonomy and elbow room to run their own affairs. “Despite this relative de-emphasis of the Code, many local areas now enjoy the birth or renaissance of democracy (Carino and Guiza 2001; 244)”, which spark creativity on management and governance approaches.  This opens the door for the probable use of business concepts in local governance. A case in point is the Marikina City Government from 1992 to 2010 which heavily used the business concepts in local governance. “The corporate approach of the City Hall makes sense in its goal of turning Marikina into an investment hub. Under this approach, City Hall treats its clients as customers it has to satisfy and delights (Gonzalez 2009).” Customer satisfaction is the core of business concept Total Quality Management (TQM). TQM is “an integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high – quality goods and services (Bateman and Snell 2008)”

Antonio G.M. La Vina, JSD, the Dean of the Ateneo School of Government said that Marikina under the Fernando Administration has shown a “flow of change from a decaying municipality to a flourishing city. We see how the political will to resurrect the Marikina River; for instance, changed the perspective of the populace to the possibility of having a clean and green city, a locale that is thriving in the pink of health.”(Gonzalez, 2009:7).

The official website of the Marikina City Government which has a website address of http://www.marikina.gov.ph  dated August 20, 2010 is complete with history of Marikina City, vision/mission, structure, offices, key personnel, and functions – which are all important components of the internal and the external environment of the city government, the way a private company usually does.

An article that will give insights about the characters of the people of Marikina is entitled “Taga – Marikina Ka Ba?” (Are you From Marikina?), written by a local intellectual of his time Rodolfo S. de la Paz, originally published in River City Gazette Volume 11, Number 1 in Marikina City on February 20, 2000. The article seems to capture the traits, character and idiosyncrasies of Marikenos (people o Marikina), one of which is their strong sense of community.

Another related reading that could provide some insights to the intricate internal workings of the city government is the “Marikina Citizens’ Factbook, 2nd Edition” published in 2007 by the City Government and edited by Carmelita Lorenzo. The book has the complete list of offices of the Marikina City Government including their functions, programs and structures.

The book that could provide the difference between the administration of Mayor Bayani Fernando (1992-2001) and the administration of Mayor Marides Fernando (2001-2010) is the “Marikina City: the Past 15 Years” published by the City Government and again edited by Carmelita Lorenzo. The book touches on the idea, philosophies and projects of the two Mayors – with their similarities and contrast. The book suggested that Bayani Fernando basically started the foundations for change and his wife Marides Fernando just continued them with her own touch.

Another publication that could provide a very detailed description of a certain department of the Marikina City Government is the “Information Handbook on the Community policing and Police Procedures” published by the City Government in 2003 and edited by Melvin Cruz. The handbook is so detailed that it shows some hint of the inner workings of the different offices in the city hall including an attempt to put together the policemen, emergency response units and the firemen in one cluster, with several of these clustered offices positioned strategically in several parts of the city and nearer to where the actions are.

This research also encountered “Disiplina sa Bangketa” (Discipline in the Sidewalks) published by the Metro Manila Development Authority (MMDA) in 2006 and authored by no less than former Mayor of Marikina City and was appointed as the MMDA Chairman Bayani Fernando. The booklet is all about MMDA but it shows the inner thinking and management philosophy of MMDA Chairman Bayani Fernando which was first applied in Marikina City and then later, in the whole Metro Manila. The booklet was being distributed during the campaign of the MMDA Chairman when he run as Vice President of the Philippines last 2010, with Sen. Dick Gordon as his running mate, and therefore, should be taken with a grain of salt.

The book written George H. Frederickson and Kevin B. Smith entitled The Pubic Administration Theory Primer proceeded by laying down the eight public administration theories as follows: Theories of Political Control of Bureaucracy, Theories of Bureaucratic Politics, Public Institutional Theory, Theories of Public Management, Post Modern Theory, Decision Theory, Rational Choice Theory, and the Theories of Governance. “There is a little doubt that the Theories of Public Management has reconnected the theory to practice. At all levels of government, public managers are reinventing the government, reengineering government, attempting to be entrepreneurial, attempting to better serve their customers, attempting to be  more innovative, attempting to take the risk, and attempting to add value(Frederickson and Smith 2003).”

Several articles written by some authors pointed out some attempts to improve the efficiency of public service. In fact as early as 1950, there was already a recommendation from the economic survey mission in the Philippines for “public administration to be improved and reorganized so as to insure honesty and efficiency in government (Tadena 1970)”.There are some indications, as early as 1971 that Philippine public administration seems to be barrowing concepts and techniques from the private sector. “Philippine public administration availed itself of certain management techniques to accelerate development. The range of such techniques employed includes PERT/CPM, operations research, data processing, sensitivity training and other forms of group dynamics, cost accounting, performance budgeting and so on (Ramos 1970)”. There were even some moves to set a standard for local government. “In one of his public pronouncement before the local governments of the Philippines, the Secretary of the Interior and Local Government and former Governor of Laguna Province near Manila, Secretary Jose D. Lina advocates the possibility of developing some kind of performance standards for local government that would serve as some kind, of what he called, an “ISO” for Local Government Units (LGUs) (Brillantes 2001).”  There are also those who think that public administration should adjust to the emerging globalization of the world’s economic and political scene. “Globalization has served to reshape the topography of public administration dynamics, particularly in policymaking and service delivery systems. It has rendered public administration sensitive to the formation of public administrative systems compatible with the demands and pressure of transnational interplay (Reyes 2000)” The book entitled “Islamic Terror, Conscious and Unconscious Motives”, authored by Avner Falk, a Jewish scholar and author, somehow describes the deeper movements in the global scene in the era described on the study. One important discussion of the book is about globalization and terrorism which become the dominant part of the era. The author said that a “proactive form of globalization is emerging, spawned by international corporations that aims to loosen trade restrictions. It is the global financial firms that have been the eager proponents of this expansion. A group of advocates from the different parts of the world had been pushing for an integrated global society as envisioned by The Globalist Manifesto which is the foundation of the globalism ideology.”

Method

This research is qualitative and we used purposive sampling, meaning, samples are selected because they are information rich and illuminative. Sampling is aimed at insights about the Marikina City government and the Fernando Administration, and not empirical generalizations from a sample of population. We did surveys, focus group discussion and individual interviews. For the surveys, we selected 50 respondents, we have eight for the focus group discussion and six key informants were interviewed. We selected them according to sectors. The participants of the survey where screened according to sectors, political leanings  making sure that there is  mix of pro, anti and non aligned , and their ability to articulate and answer the survey form intelligently. The survey results were later trimmed down to 33, removing the extremes and those that seem to be unable to reply intelligently. Same criteria were used for the focused group discussion participants but we limit them to less than 10 participants only. For the key informant’s interview, we interviewed former Mayor Marides Fernando, a youth leader, a barangay (village) leader, a city hall employee, a businessman and a former city administrator who also consider himself coming from the religious sector. The interviews which lasted for around one hour were tape recorded and were properly transcribed.

There are some numeric and string portions of the survey so we use the IBM SPSS Statistics 18 and the survey questions were designed considering the system. Survey questions were pre tested among the survey staff before they were finalized. Surveys, interviews and the focus group discussion were done in one week, according to the plan. The surveys were done by a professional survey team and the interview and the focus group discussion were conducted personally by the author. Confidentiality was assured among the respondents and the key informants. Neutrality was also secured by emphasizing that this is just an academic exercise, with the covering letter using the name of the Far Eastern University (FEU). The setting of the survey is right on the natural habitat of the respondents while the interview were done mostly in a quiet restaurant for neutrality. All the expenses of the study are finance jointly by the FEU and the author.

What are the history, internal operations, functions, vision/mission and structure of the Marikina City Government during the Fernando Administration?

According to local historian Servando de los Angeles, Marikina is a part of the kingdom of Lakan Dula and the firsts settlers of Marikina are the descendants of Lakan Dula, the pre – hispanic King of Manila based in Intramuros and Tondo, Manila. In the height of the Spanish prosecution of the native aristocracy, Lakan Dula sent his descendants to far away land within the sea and river routes. One of the lands where the descendants settled is in Jesus de la Pena at the bank of Marikina River. This was corroborated by other articles in the web. In 1630, the Jesuits came to Marikina and by 1687, the pueblo became a parish known as Mariquina (Americans change it to its present name Marikina). The Marikina Valley became well known for agricultural products. Later, it became the country’s leading hacienda at that time owned by the Jesuits and later bought by a Tuason in a public auction when the Jesuit were expelled in the Philippines by the crown in 1768. Christianity in Marikina took root at the very place were the Lakan Dula descendants settled where the very first chapel of the city was built in 1630 by the Jesuit Missionaries. Today, several clans of Marikina are trying to reconnect to their Lakan Dula roots. Marikina therefore seems to have enjoyed a long peace and prosperity which dates back from the pre – Hispanic era, courtesy of fertile valley cut across by a well endowed river. This continuous prosperity might have contributed to the present characteristics of Marikenos – confident, easy, enterprising and politically conservative.

            Marikina City government is led by a Mayor and Vice Mayor elected to three-year terms as mandated in the Local Government Code. The Mayor is the chief executive and administers the city's departments on day to day basis in executing the city programs, ordinances and activities that are basically aim in improving public services. The Vice Mayor heads the legislative council composed of different councilors from both districts, including that of Sangguniang Kabataan President and the President of the Association of Barangay Captains. The Marikina City is divided into 2 congressional districts, Districts 1 and 2, where each districts is represented by a duly elected congressman in the House of Representatives of the Philippines

Marikina City is now divided into 16 barangays headed by a duly elected Barangay Chairmen and his Council, together with the Chairman of the Sangguniang Kabataan and his Council.

Marikina’s vision is to be “A Little Singapore”, bustling in holistic progress, a vibrant community where the citizens have pride of place, pride of self and mutual concern for the common good. Marikina has chosen Singapore as its benchmark for a variety of reasons, foremost of which are its noteworthy attributes of:  discipline, self – sufficiency, effective governance, work ethics, environmental soundness, economic dynamism and corrupt – free governance (Official Website of Marikina City. 2010)

Marikina City today is a first class highly urbanized city. Being so, it basically follows the staffing pattern, as prescribed in the Local Government Code of 1991.However, the Marikina City Government came out with a lightly modified organizational set up in accordance with its vision –mission.  

Results and Discussion

1. Based on the interview with key informant former Mayor Marides Fernando, their administration used business concepts in running the city government almost as a matter of necessity  because according to her, running a city with  half a million people needs business management concepts. It needs organization and institution that must be managed and strengthened.  It is the organization who will deliver the service to the people. The constituents of Marikina seem to notice that the Fernando Administration is indeed using business concepts in local governance. In a question that asked if they are aware of their city government’s  used of business concepts in running the city, 30.9% of them said Yes, while only 16. 4% of them said No, almost half. In an interview with a key informant from the private sector, he said that he observed the Fernandos used business management concepts, like time frames and deadlines. Pag mahirap ang implementation nangunguna sya  (if the implementation is hard, Bayani Fernando leads the way). Visibility of top man shows his sincerity and determination in the private companies. The people of Marikina seem to like that their leaders are using business management concepts. In a question asking their opinions if the used of business management concepts can be a good governance approach in running the Marikina City Hall, 34.5% of them said Yes, while only 14.5% of them said No, again, almost half.

Table 1:  Respondents Comments that Shows Awareness on Marikina under the Fernando’s Used of Business Management Concepts

Experiential                 We did computerizations, on the job training, volunteer’s utilization; I have no attachment with them so I am not aware if they are using business management concepts; There are overtime pay in business sector, but in the city hall there is no overtime pay, so they are not using business concepts on this area; I am not aware if they used business management concept in other departments in city hall, but in our department, we are using; projects are finished early because of business management concepts; I worked in their company and under them in the city hall so I know that they are using business management concepts in the city hall

Witnessed                   I have seen them provide good service to the people/clients/stakeholders same as in business sector; Shoe Mart (SM) City is now in Marikina

Heard                          Business management concepts help update volume of work; I heard that in SM, the Fernando’s money were involved; they did not talk about it, so, I did not hear it

Although, there are more respondents who are aware of the Fernando Administrations’s use of business concepts than those who are not aware of them, it can be seen through their quality of comments the lack of modal perceptions on the concept. The most dominant comments are from those who actually had the first hand experience of actually applying business concepts with the Fernandos.   

Table 2: Respondents Personal Opinion on the Applicability of Business Concepts in Local Governance

Applicable                   leadership in private is less corrupt; shoe industry has recovered; big help to improve government Service; Business and government have both stakeholders; business approach is focused;  business concepts are good strategies for governance; a business concept promotes fairness; business sector concepts are suitable to use in government; some concepts are applicable at once with few adjustments;

Not Applicable            more for the Fernandos gain than for public service; magiging sobra sa tax ; (will  lead to extremely high tax); magiging masyado mahigpit (might led to overly strict government); political system is traditional;                                       

There are more respondents that think that business management concepts are applicable in local governance in both surveys and in write - in comments but those who think that they are not applicable express some uncertainty on the political and governance system itself rather than on the use of business management concepts.

1. A public approval on the use of business management concepts of an administration does not necessarily mean an endorsement for the continuation of the Fernando Administration on the office someday. In a question that asked the respondents if they want the Fernando Administration to continue someday, 29.1 % said No while only 27.3 % said Yes. This pattern of public behavior was shown earlier during the 2010 Philippine local and national elections where the local candidates handpicked or identified with the Fernando Administration lost to the opposition. One of the key informants of the survey said that had it been Bayani Fernando himself who ran for Mayor again against the winning Mayor Del de Guzman, Bayani Fernando would still have won as seen by the small margin of respondent who are for or against the continuation of the Fernando Administration someday. Also, out of the five key informants the author interviewed, all of them are in favor of the return of the Fernando Administration, mostly for other reasons and not categorically because of their use of business management concepts in local governance. The focus group discussion also floated the idea of the Fernando Administration’s style of governance can come back not because of their use business management concepts but of specific reasons like, only those “magagandang nagawa” (good projects) should be implemented back. And the harsh policies should be tempered. Underlying in the discussion is the fear on harsh policies and the bad projects which shows that the application or the non application of business management concepts are perceived to be unrelated to the harshness, badness or goodness of the certain project concept  that influence the voting behavior of the constituents.

2. The priorities of the Fernando Administration as expounded by former Mayor Marides Fernando were comparatively highly rated by the respondents of the survey although they do not know that these are the priorities of the administration. In an interview with the former Mayor, she said that the Fernando Administration would like to be remembered as the builders of characters and not of infrastructures. This is ironic because former Mayor Bayani Fernando is a well known engineer whose construction company built tall buildings in the commercial districts of the banking center of the country, Makati City. One of the buildings he built was even consider one of the tallest buildings in the country. She also said that they emphasize education and peace and order. During the time of her husband as the Mayor they were able to do something on the shortage of the class rooms in the elementary schools and on her time, from three high schools all over Marikina, she was able to add around six more. Peace and order is also their priority since peace leads to good business climate. According to the former Mayor, the health of the constituency is their primary concern. This is the reason why they worked hard to have a clean public market where they even built roofs on the road going to the market to precisely protect the citizens from the rain. The bicycle lane is also intended to promote health and save gasoline.

Legend: 1- strongly dissatisfied, 2 – dissatisfied, 3 – unsure, 4 – satisfied, 5- strongly satisfied

The table shows that 27.3% of the respondents said that their quality of life did not improve during the Fernando Administration and only 182% said that was improvement. This is somewhat connects with the focus group discussion where they are complaining of high tax which to them is not business friendly anymore. Two o the key informant said that the relatively high taxes and its too strict implementation of compliance forced some small local shoe maker to close shop. Some of them relocated their operation to nearby Pasig, Cainta and Antipolo. This affects lots of families who work in the shoe industry as well as in the related businesses like in the carinderias (small eateries) and sari sari stores (small variety store). Our key informant said that the Fernando Administration neglected the shoe industry (Marikina is known as the Shoe Capital of the Philippines even up to now) because they feel that there is no future in the industry since it will be clobbered by cheap imported footwears from China and Vietnam due to globalization. The Fernandos are partly correct in their assessment. When the Philippine Government lowered the tariff on imported shoes, their prices went down that even some local manufacturers of shoes just do importations rather than manufacture them. This leads to the gloomier quality of life to a lot of affected Marikenos.  Yet, they are satisfied with the Fernando Administration. A 32.8% of the respondents said that they are satisfied, with only 10.9% dissatisfied. In both focus group discussion and the interviews, the participants are overwhelming in saying that they are proud of Marikina during the Fernando Administration.  One of them is even saying that from a sleepy municipality in Rizal Province, Marikina became the center of excellence with busloads of local leaders from other places visiting the city just to study their system of governance. Is this a case of an empty stomach and full of spirit?  This study seems to lead to a political concept that it is possible to satisfy people even if their quality of life is not improving. However, the part of the survey which shows that the people seem to be inclined of not wanting to have the Fernando Administration back somewhat completed the story of the survey – people give the leaders credits where the credits are due but decide eventually based on the total effect of the leadership on their lives. End.           

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