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According to recent “black box” models of public management, managerial capacity is a critical component for achieving service delivery improvement. In particular, black box models assume that the impact of management systems is maximized through integration with effective leadership. This assumption is tested by analyzing the effects of managerial capacity and organizational leadership on the performance of English local governments, while controlling for a range of other variables, including organizational size, resources, external constraints, and past performance. Empirical results show that capacity possesses a positive statistical association with local government performance and that leadership can enhance the impact of effective management systems.