This dissertation explores the socio-cultural and institutional environment of the public sector organizations of Mongolia that have strong influence on current public administration reform results. This study applies the Cultural theory and Value theory. The strong hierarchy favoring rule-bounded behavior and collectivism, fatalism accepting an authority as inevitable and uncontrollable, and individualism wishing to have control over own actions are the types of culture common in Mongolian public sector organizations. Accordingly, Mongolian public sector employees transcending their selfish interests, emphasize the well-being of others, protection of order, harmony in relations, life safety and stability. Then self-direction values with emphases on independent thought and action, and creativity are important for them. This socio-cultural context has great implication for work behavior of public employees, for their action to implement the reform policies in government organizations. Thus, the institutional leadership, which produces and protects values, becomes essential for introducing changes in the existing intuitional environment.