Putting the capability to satisfy citizens’ needs at the heart of public organizations, public value has been argued to be the ultimate goal of public sector programs and policies. However, the contemporary public sector’s complex and multilevel structures has led to limited information processing between the various levels within organizations. Such vertical fragmentation has created issues in vertical coordination, hampering the efficiency and effectiveness of the regional public sector. Addressing these issues, the aim of this thesis is twofold. First, this thesis aims to describe and explain public organizations’ coordination challenges. Second, this thesis aims to elaborate on the implications of this explanation to create a deeper understanding of how these challenges affect public organizations’ ability to perform public service that adds to public value. In order to reach the aim, quantitative and qualitative methods have been used. The empirical base consists of two questionnaire studies (930 public transport users in the first and 921 in the second), as well as a comprehensive interview and documentation study with 11 respondents representing 11 Regional Public Transport Authorities and their respective policy documents. In this thesis, I argue that vertical specialization has brought conditions where each level interprets the regulations and policy documents based on their own individual preconditions such as individual ideologies and self-interests, as well as attitudes and relationships between different divisions. As such, these preconditions influence the outcome of rules and regulations that were created with the purpose of reforming the public sector. Further, the thesis outlines how the same individual precondition may act as a structural filter on the flow of information about citizens’ needs, influencing the distribution of information upstream in the organization. If we neglect these conditions and focus only on the rules and regulations, we risk missing aspects that influence the organization and its coordination outcome and, in turn, the citizen. 

For long, private-sector managerial techniques of organizational resources have been applied to the public sector, with the assumption that the application of these techniques will improve the efficiency of public service. The use of these techniques has resulted in a “patchwork quilt” of various public and private actors acting on several territorial levels. Such structure has resulted in vertical specialization where tasks and responsibility are divided with narrow field of competencies creating a fragmented organization that is dependent on information processing and coordination.

This thesis elaborates on the coordination challenges brought by the devolution of functions and specialization in the vertical organization. It was found that despite the efforts to meet the recognized efficiency problems, public sector has created organizations that are dependent on information processing and coordination in order to function effectively, but with a structure and norms that struggles with such activities. The leviathan of the public sector is no longer constituted by a sovereign state but by the effect of the lack of communication between the various levels of a fragmented and complex public organization. Despite its normative flavor, this thesis elaborates on why it appears that the core solution of vertical coordination might be increased focus on interaction between individuals.