Administrative Innovations in Capital Budgeting at the State Level in the USA during the Great Recession

Natalia Ermasova
(Governors State University, College of Business and Public Administration, USA)

Abstract: In this investigation administrative innovations in capital planning and budgeting were considered to be responses to the environmental change (economic decline). Three sets of factors frequently used in studies of organizational innovation are considered: performance gap, necessity of adoption innovation, and environmental influences. Using information provided by a survey designed by the author entitled “The Variety of State Capital Budgeting Survey”, this study employs a Logit model to empirically examine how the impact of the scarcity of financial resources and the performance gap are related to the probability of the adoption of administration innovation in capital budgeting during or as a consequence of the economic downturn. States with shorter-term capital budgets exhibited a higher probability of adopting administration innovations in their capital budgeting processes in response to the economic downturn compared to states with longer-term budgets. The findings contribute to our understanding of ingested administrative innovations, indicating that performance gap relating to change influence the probability of adopting this administrative innovations in the capital budgeting processes.

Key words: administrative innovations; state budgeting; organizational change; diffusion of innovations

JEL codes: H72, G28