Purpose - The purpose of this multi-voiced paper is to propose a prosocial paradigm for the field of performance management and management control systems. This new paradigm suggests cultivating prosocial behaviour and prosocial groups in organizations to simultaneously achieve the objectives of economic performance and sustainability. Design/methodology/approach - The authors share a common concern about the future of humanity and nature. The authors challenge the influential assumption of economic man from neoclassical economic theory and build on evolutionary science and the core design principles of prosocial groups to develop a prosocial paradigm. Findings - Findings are based on the premise of the prosocial paradigm that self-interested behaviour may outperform prosocial behaviour within a group but that prosocial groups outperform groups dominated by self-interest. The authors explore various dimensions of performance management from the prosocial perspective in the private and public sectors. Research limitations/implications - The authors call for theoretical, conceptual and empirical research that explores the prosocial paradigm. They invite any approach, including positivist, interpretive and critical research, as well as those using qualitative, quantitative and interventionist methods. Practical implications - This paper offers implications from the prosocial paradigm for practitioners, particularly for executives and managers, policymakers and educators. Originality/valueAdoption of the prosocial paradigm in research and practice shapes what the authors call the prosocial market economy. This is an aspired cultural evolution that functions with market competition yet systematically strengthens prosociality as a cultural norm in organizations, markets and society at large.

This article reflects on relatively substantial military support delivered from the Baltic states to Ukraine. The observed patterns of government behaviour inform practitioners about the feasibility of a focused assistance approach from small countries with limited budgetary resources. The findings outline the relative importance of beliefs and clear budget priorities for making agile support decisions in times of high/deep uncertainty. Estonia, Latvia and Lithuania are among the smallest countries in the EU and NATO. The war in Ukraine has impacted their economies severely, yet these Baltic countries have been the most generous donors of bilateral aid to Ukraine when considering the size of their economy. In this new development article, the author sheds light on the behaviour of Baltic governments, highlighting the role of small countries in broader co-operation networks when faced with human-made catastrophes such as war. This overview contributes to the debate on reasons behind different support strategies and budget choices of national governments in times of high uncertainty.

Purpose The purpose of this paper is to reflect on how to apply the abductive research process for developing a theoretical explanation in studies on performance management and management control systems. This is important because theoretically ambitious research tends to require explanatory study outcomes, but prior research frameworks provide little guidance in this regard, potentially facilitating ill-defined research designs and a lack of common vocabulary and criteria for evaluating studies. Design/methodology/approach The authors introduce a methodological framework that distinguishes three interwoven theoretical abstraction levels: descriptive, analytical and explanatory. They use a recently published qualitative field study to illustrate an application of the framework. Findings The framework and its illustrated application make the systematic logic of the abductive research process visible and accessible to researchers. The authors explain how the framework supports moving from empirical description to theoretical explanation during the research process and where the three levels might open spaces for the positioning of novel practices and conceptual and theoretical innovations. Originality/value The framework provides guidance for an explanatory research design and theory-building purpose and has been developed in response to recent criticism in the field that highlights the wide gap between leading-edge practice and the lagging state of theory. It offers interdisciplinary vocabulary and evaluation criteria that can be applied by any accounting and management researcher regardless of whether they pursue critical, interpretive or positivist research and whether they primarily use qualitative or quantitative research methods.

PurposeUncertainty, a state of unknowing linked to threats and opportunities, is a key characteristic of megaprojects, making it challenging for government officials and politicians to decide on their initiation. For them, implementation by the private sector adds an extra layer of complexity and uncertainty to megaproject planning. In this context, only a few studies have focussed on governing and the mobilization of uncertainty arguments in communication between government actors and private developers either in favour of or against megaprojects. The purpose of this article is to shed light on how private megaproject proposals progress towards political acceptance or rejection in public decision-making.Design/methodology/approachThis process of public decision-making on private megaproject proposals is examined in the case of the Helsinki–Tallinn undersea rail tunnel. In line with the interpretive research tradition, the authors’ study draws on a qualitative methodology underpinned by social constructionism. The research process can be characterized as abductive.FindingsThe authors’ findings suggest that while public decision-making on megaprojects is a conflictual and dynamic process, some types of uncertainty are relatively more important in affecting the perceived feasibility of the projects in the eyes of public sector decision-makers.Originality/valueThis study contributes to the debate on uncertainty management in megaprojects, proposing a new type of uncertainty – uncertainty about privateness – which has not been explicitly visible thus far.

Public-private partnerships are a topic of continuing interest for accounting researchers. However, as yet there are only a few studies focusing on the post-implementation phase of PPPs. In particular, even though scholars have criticized PPPs for inflating the profits of private partners at the expense of the public sector and citizens, they have rarely scrutinized the public debates whereby the legitimacy of PPP organizations’ profits are societally contested and debated. The purpose of this article is to shed light on the processes of profit (de)legitimation by examining the construction of senses of (il)legitimacy in public-private service delivery. These processes are examined in the case of Tallinn Water, an Estonian public-private water company. Our findings suggest that the main themes debated revolved around the following questions: What is a normal profit for a public-private monopoly? Who or what is the ultimate authority in such matters? What is morally appropriate behaviour for such a company? Our findings also indicate that even relatively affordable prices and high performance levels do not suffice to create legitimacy for an organization that tries to make excessive gains from the provision of something that is generally regarded as a human right.

In the light of neoinstitutional theory and by adopting case study research methodology, this article explains the adoption of International Public Sector Accounting Standards for modernizing public sector accounting in Estonia. This article reveals that the smoothyet gradualadoption of International Public Sector Accounting Standards-compliant accounting systems was enabled by the involvement of powerful actors (i.e., institutional entrepreneurs) with foreign and/or business backgrounds. In addition, the change in public sector accounting in Estonia was facilitated by the developments in its international positioning, characterized by the transition from a Soviet communist to a market economy and subsequent European Union membership and by the absence of past accounting practices, which could potentially hinder the change.

The relationship between trust and contract within externalized public service provision : how does closeness matter?

Purpose - The purpose of this paper is to explore the relationship between trust and contract in the context of externalized local public services provision.Design/methodology/approach - A multi-theoretical framework is used to analyse different combinations of control mechanisms (i.e. trust and contract) with reference to three cases of externalized water service provision in Estonia consisting of inter-organizational relationships between local governments and water companies with different ownership structures (public, private and mixed public-private).Findings - The relationship between trust and contract, which can either be substitutes or complements, or eventually erode each other, is contingent upon the capacity of interacting individuals (and related organizations) to keep interests aligned in water services provision.Originality/value - The relationship between trust and contract is analysed by considering the interactions between key actors within the underlying governance setting.

International harmonisation as a stimulus to change public sector accounting : evidence from the Estonian central government

Local governments are increasingly entering into partnerships with the private sector in the “externalization” of public service delivery. While the financial and non-financial interests of the partners involved may appear to be in opposition and potentially un-reconcilable, this is not always the case, especially where governance arrangements exist to align and balance the requirements of financial and non-financial performance. Such arrangements are analysed here with reference to Estonia’s largest water company with mixed public-private ownership. It has a business-like management that facilitates a combination of good non-financial performance (quality and affordability) and considerable financial performance (profitability).

Concerns regarding rising water and sewerage prices have generated a renewed interest in measuring and assessing water utility performance. An efficiency analysis can serve as a basis for price setting decisions. This article examines the influence of ownership structure and corporate size on the efficiency of Estonian water companies, and assesses the empirical efficiency gaps through the lens of corporate governance and natural monopoly theories. To assess efficiency and the influence of ownership and corporate size on efficiency, we use a Data Envelopment Analysis and truncated regression with maximum likelihood estimation as well as an ANOVA test. The study sample consists of 43 water utilities, serving more than 68% of the Estonian population. One main finding of the study reveals that ownership structure does not affect the efficiency of Estonian water utilities, while efficiency does increase with corporate size: large water utilities outperform small utilities. An additional conclusion is that the Estonian water sector is too fragmented.

SUMMARY Resulting from the global economic crisis, high budget deficits and debt burden characterise many economies looking for an exit strategy from current fiscal unbalances. The government of Estonia, having pursued a conservative fiscal policy for over a decade, reacted to the economic recession with radical budget adjustments, the latter constituting approximately 9% of gross domestic product in 2009. Consequently, Estonia took its chance and qualified for the euro in 2011. This study examines the behaviour of the Estonian central government and the basis of its budget decisions when planning drastic cost reductions through the theoretical lens of cutback management. The foremost results reveal that the crisis pushed the government to establish a different institutional framework that facilitated fast and effective decision‐making during the budget process. The savings proposals came from the Ministry of Finance; however, running a cash‐basis line‐item budgeting system in practice, the centre possessed only limited performance data for developing the proposals. Consequently, the long‐term impacts of the budget adjustments had not been assessed and are as yet unknown. A further conclusion is that the current budgeting framework should be revised and replaced step by step with a more advanced approach. Copyright © 2012 John Wiley & Sons, Ltd.

The relationship between trust and control within externalized public service provision : insights from the Estonian water sector