Much of the literature on public policy with its institutional and legislative emphases conveys the view that organizational effectiveness is primarily dependent on actors external to the agency. That is, laws prescribe programs and operating procedures; overlapping jurisdictions restrict innovative behavior; and the politics o f fund budgeting encourage complacency and incrementalism. This article proposes an alternative set of propositions explaining policy outcomes and agency performance as a function of internal administrative considerations. The propositions are empirically evaluated using data from Pacific Coast port authorities during the “container revolution” and environmental movement. The results suggest that variance in strategic performance can be attributed to (1) perceptions about intergovernmental relations and performance gap, (2) an agency micro‐structure for strategic planning and policy analysis, and (3) a set of intervening administrative vari