According to recent "black box" models of public management, managerial capacity is a critical component for achieving service delivery improvement. In particular, such 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 variables, including organizational size, resources, external constraints, and past performance. The empirical results show that capacity is positively associated with local government performance and that leadership may enhance the impact of effective management systems. [PUBLICATION ABSTRACT]