Linking Organizational Capacity and Performance:The Case of Probation and Medicaid Reform in California Counties

Abstract

This article examines whether and how the capacity of a street-level organization moderates its ability to perform effectively in the context of a public program reform. We use the case of California probation departments during the phased implementation of the state’s Low-Income Health Program, a major Medicaid reform that offered critical new services for many probation citizens/clients, namely, mental health and substance abuse treatment. We exploit six years of monthly California county-level probation department data to conduct quasi-experimental difference-in-differences analyses. Results indicate that in those counties that had activated the reform, probation departments with greater capacity achieved higher rates of probation completion success when compared to departments with lower capacity. The analysis implies that organizations improved most when departments benefitted from a combination of reform-generated resources and more robust organizational capacity.