Charismatic State Building: The Reform of SUNAT in the Early 1990s

Abstract This article explores the mechanics of institution building through a case study of Peru’s tax authority reform in the early 1990s. An agency riddled with corruption and despondency became a model bureaucracy oriented toward public service under the leadership of a career civil servant with a religious background. The explanation combines systemic factors associated with institutional change with other, less well-known forces. The profound socioeconomic crisis that had struck Peru at the time opened a window for reform. More significantly, the analysis focuses on the struggle to supplant old and enforce new institutional values. Management policy played a role by fostering a predisposed workforce. However, it was the charismatic performance of the reform leader and his task force, articulated around a nation-saving narrative, that instilled the belief that change was possible, encouraged employees to embrace new values, and paradoxically enabled the creation of an agency with a Weberian ethos. Subsequent developments hint at the limits of charismatic state building.