Management knowledge, publicness fit and financial performance: A comparison of internal and external management consulting

New public management reforms worldwide have encouraged the transfer of management knowledge from the private to the public sector. However, we know surprisingly little about the impact of such transfer on the performance of public sector organizations. We explore this concern, drawing on debates about publicness fit and focusing on the use of management consultancy knowledge in English public hospitals as a specific case. Our analysis of longitudinal data suggests that investments in internal consultancy, with its knowledge situated in the public sector, have a positive impact on financial performance, whereas a high reliance on external consultants has the opposite effect. We also find evidence of nonlinear effects of both internal and external consultancy on financial performance, suggesting that some use of external consulting may be beneficial - especially in lower performing organizations. We conclude by arguing that while publicness fit is a very important consideration, combinations of both public and private sector management knowledge sources are likely to deliver the most positive financial outcomes.