The topic of public service improvement has received great attention all over the world in recent decades, in both private and public sectors. While there is a huge literature investigating components which are critical in formulating an organization strategy for achieving service quality improvement, in both public and private organizations, namely organizational variables affecting service quality (such as resources, organizational structure, performance management system), and contextual (internal and external) factors conditioning the achievement of higher performance, there are no studies analysing how the public sectors organizations reacts to the regulation imposing performance standards and how contextual factors may affect such organization response to new performance standards. In particular, many questions posed about regulation are concerned with the extent to which it assists with or damages attempts to maintain and raise the standards of public service performance. The aim of this paper is to contribute to the stream of public service performance (PSP) improvement by addressing the following research questions: How the organizations of public sector providers react to higher performance standards fixed by the regulators? How contextual factors affect such organization response? With this objective, after reviewing the literature dealing with the organizational variables that are believed to be linked to quality service and performance, the areas of service quality as well as the link contextual (internal and external) factors and performance, a reference framework is developed, which is used as a guide model for the empirical analysis which was carried out on 15 public service providers in Italian water and electricity sectors. The results of the empirical investigation indicate organizational variables mainly affected by higher performance standards imposed by the regulation are resources and performance management systems. They also reveal the existence of clusters of firms. This will provide an interesting practical implication, by making the regulator aware that the achievement of high performances in the public service in order to be compliant with the new standards entails a change in the organizations of service providers, not so much in terms of organizational structure as in terms of the required resources and the design of the PMS. On the other hand, the study gives a number of examples about how a sample of firms has responded to the introduction of the new standards and how such response is affected by contextual factors.