Does Chief Executive’s Experience Moderate Consolidation’s Impact on Municipal Performance

Abstract

A profound structural change is municipal merger. This come about through absorption of small units or merge of units to create a new entity. Both are intended to improve efficiency by taking advantage of economies of scale and scope. However, consolidation may temporarily and negative-ly affect other dimensions of performance. Nevertheless, experienced chief executives should miti-gate the transitional challenges. This study tests the moderating effect of chief executive’s public experience on the consolidation-performance relationship. This proposition is tested using data for all the 807 city-level Japanese municipalities for the 2006-2010 period. Two dimensions of perfor-mance are studied: efficiency in operational costs, and effectiveness in revenue collection. Findings reveal that merger through municipal absorption increases efficiency in operational costs but reduc-es revenue expansion. Merger through creation of a new municipality reduces municipal own reve-nue collection. Chief executive’s past experience neither mitigate nor accelerate the effects of mu-nicipal consolidation on performance.