Public managers serve many sovereigns, work within fiscal constraints, and face competing demands for finite resources. Our latest work in Public Administration Review applies a strategic management lens to local government sustainability capabilities to examine the conditions under which local governments diversify into new areas of service delivery and when they do not. Building on recent efforts to apply resource‐based theories to the public sector, we distinguish between more and less fungible capabilities and posit that local government officials make such commitments to enhance the competitiveness of their communities. Two surveys of U.S. cities provide evidence that governments that rely on tax incentive‐based development approaches may struggle to make sustainable development gains. Such cities are more likely to devote resources disproportionately to delivering benefits to firms at the risk of incurring increasing opportunity costs over time. Prior commitments to traditional, firm‐based economic development capabilities appear to inhibit their ability to pursue broader sustainability policies. However, economic development strategic planning can also positively influence some investments in greenhouse gas reduction efforts. Moreover, cities facing more competition for development are more likely to integrate planning and performance measurement to assess their sustainability commitments.
The key takeaways for sustainability practice:
- Local governments can make sustainability gains by identifying fungible organizational capabilities that can be more easily reassigned to similar functions.
- Strategic planning that involves both economic development and sustainability efforts can identify more avenues for leveraging existing capabilities.
- Cities located in more competitive markets for economic development should devote greater attention to performance measurement and management to justify investing resources in sustainable development efforts.
- Over-reliance on tax-incentive-based economic development strategies, which often drain communities of resources, can impair broader commitments to sustainable development.
I work as an Assistant Professor at the O'Neill School of Public and Environmental Affairs at Indiana University Bloomington. There, I direct the MGMT Lab.