Public Management
Public and Private Distinction
Friday, March 18, 2016
Hun Myoung Park, Ph.D.
Public Management & Policy Analysis Program
Graduate School of International Relations
Essential Distinctions
•
•
•
The purpose of public organizations
Politics versus markets
Market failures or incapacities




•
Public goods and free riders
Individual incompetence; information
asymmetry
Externalities or spillovers
Natural monopoly
Political rationales for government
2
Public & Public Values
• Significant indirect consequence of an act;
“Those indirectly and seriously affected fro good
or for evil from a group…” Dewey (1927: 35)
• “the value of that enterprise must be judged
again citizens’ expectations for justice and
fairness as well as efficiency and effectiveness”
Moore (1995: 52)
• Bozeman (2007): Public values provide
normative consequences about rights, benefits
obligations of citizens, and principles of
government and its policies.
3
Public versus Private Goods
Excludable
Individual
Private goods
consumption (individual goods)
(rivalry)
Not excludable
Common-pool
resources (fish,
water, forest)
Jointly
Toll goods
Public goods
consumption (highway, cable TV, (collective
goods)
(non-rivalry) telephone)
4
Public vs. Private?
• The blurring of the sectors
–
–
–
–
–
Mixed, intermediate, and hybrid forms
Functional analogies—doing the same things
Complex interrelations
Analogies from social roles and contexts
Ownership and funding
• The importance of avoiding oversimplifications
• Agencies and enterprises as points on a
continuum
5
Classification of Public Services
Public
Government Public administration, USPS
Non-public
NA
For-profit
Railroad, Bus services, water
transportation, air
transportation,
communications, utility and
sanitary services,
noncommercial educational
and scientific research
Agriculture, mining,
construction, manufacturing,
wholesale, retail, finance,
business, taxicab, trucking
service, theaters and motion
pictures, bowling alleys,
billiard, etc.
Nonprofit
Social services (welfare),
health services, education
services, museums, art
galleries and zoos
Membership, religious
organizations
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Public and Private Ownership and Funding
Public Ownership
Public Funding
(taxes,
government
contracts)
Private Funding
(sales, private
donations)
Private Ownership
Department of Defense
Social Security
Administration
Police departments
Defense Contractors
Rand Corporation
Manpower Development
Research Corporation
Oak Ridge National
Laboratories
U.S. Postal Service
Government-owned utilities
Federal Home Loan Bank
Board
General Motors*
IBM
General Electric
Grocery store chains
YMCA
*These large corporations have large government contracts and sales, but attain most of
their revenues from private sales and have relative autonomy to withdraw from dealing
with government.
Source: Adapted and revised from Wamsley and Zald (1973).
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Typology of Organizations Created By Cross-Classifying Ownership, Funding, and Mode
Social Control
Ownership
Funding
Mode of
Social Control
Representative
Study
Example
Bureau
Public
Public
Polyarchy
Meier (1993)
Bureau of Labor Statistics
Government
corporation
Public
Private
Polyarchy
Walsh (1978)
Pension Benefit Guaranty
Corporation
Governmentsponsored enterprise
Private
Public
Polyarchy
Musolf and
Seidman (1980)
Corporation for Public
Broadcasting
Regulated enterprise
Private
Private
Polyarchy
Mitnick (1980)
Private electric utilities
Governmental
enterprise
Public
Public
Market
Barzelay (1992)
Government printing office
that must sell services to
government agencies
State-owned
enterprise
Public
Private
Market
Aharoni (1986)
Airbus
Government
contractor
Private
Public
Market
Bozeman (1987)
Grumann
Private enterprise
Private
Private
Market
Williamson (1975)
IBM
Source: Adapted and revised from Perry and Rainey (1988)
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Agencies, Enterprises, and Hybrid Organizations
The continuum between government ownership and private enterprise. Below the line are arrangements colloquially
referred to as public, government-owned, or nationalized. Above the line are organizational forms usually referred to
as private enterprise or free enterprise. On the line are arrangements popularly considered neither public nor private.
Private nonprofit
organizations totally
reliant on
government
contracts and grants
(Atomic Energy
Commission,
Manpower
Development
Research
Corporation).
Private
corporations
reliant on
government
contracts for most
revenues (some
defense
contractors, such
as General
Dynamics
Crummen).
Heavily regulated
private firms
(heavily regulated
privately owned
utilities).
Private
corporations with
significant
funding from
government
contracts but
majority of
revenues from
private sources.
Private corporations
subject to general
government
regulations such as
affirmative action,
Occupational Safety
and Health
Administration
regulations.
Private
Enterprise
Government ownership
of part of a private
corporation
Government
Agency
State-owned
enterprise or
public
corporation
(Postal Service,
TVA, Port
Authority of
NV).
Government
sponsored
enterprise,
established by
government but
with shares
traded on stock
market (Federal
National
Mortgage
Association).
Government
program or
agency
operated
largely through
purchase from
private vendors
or producers
(Medicare,
public
housing).
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“Publicness”: Political and Economic Authority
Economic
Authority
Private firm
managed by owner
Closely held private
firm, professionally
managed
Governmentindustry research
cooperative
Corporation with
shares traded publicly
on stock market
Corporation
heavily reliant on
government
contracts
Private
nonprofit
organization
Professional
association
Small
voluntary
association
Source: Adapted from Bozeman (1987)
Research
University
Governmentsponsored
enterprise
Government corporation
or government
organization funded
through user fees
Government
agency (funded
from taxes)
Political
Authority
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Factors To Be Controlled
• Size: Big versus small organizations
• Task (functions):
– simple vs. complex task
– specific functions (e.g. selling apples vs.
policing)
• Technology
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Problems in Comparison
• Difficulty in obtaining the very large samples
needed to represent the “sectors”
• Comparing incommensurable organizations
 Government is monopoly without competitors
 Government and Apple selling smartphones?
• Interviews with executives and managers who
have served in both public agencies and private
business firms
• Comparisons of public and private organizations
within functional categories (hospitals, schools,
refuse collection)
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I. Environmental factors
• I.1. Absence of economic markets for outputs;
reliance on governmental appropriations for
financial resources
– I.1.a Less incentive to achieve cost reduction,
operating efficiency, and effective performance
– I.1.b. Lower efficiency in allocating resources (weaker
reflection of consumer preferences, less proportioning
of supply to demand)
– I.1.c. Less availability of relatively clear market
indicators and information (prices, profits, market
share) for use in managerial decisions
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I. Environmental factors
• I.2. Presence of particularly elaborate and
intensive formal legal constraints as a result of
oversight by legislative branch, executive branch
hierarchy and oversight agencies, and courts
– 1.2.a.More constraints on domains of operation and
on procedures (less autonomy for managers in
making such choices)
– 1.2.b. Greater tendency for proliferation of formal
administrative controls
– 1.2.c. Larger number of external sources of formal
authority and influence, with greater fragmentation
among them
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I. Environmental factors
I.3. Presence of more intensive external political
influences
1.3.a. Greater diversity and intensity of external informal
political influences on decisions (political bargaining
and lobbying; public opinion; interest-group, client,
and constituent pressures)
1.3.b. Greater need for political support from client
groups, constituencies, and formal authorities in order
to obtain appropriations and authorization for actions
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II. Organization-Environment
Transactions
II.1. Public organizations and managers are often
involved in production of public goods or
handling of significant externalities. Outputs are
not readily transferable to economic markets at a
market price.
II.2 Government activities are often coercive,
monopolistic, or unavoidable. Government has
unique sanctioning and coercion power and is
often the sole provider. Participation in
consumption and financing of activities is often
mandatory.
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II. Organization-Environment
Transactions
II.3. Government activities often have a broader
impact and greater symbolic significance. There
is a broader scope of concern, such as for
general public interest criteria.
II.4. There is greater public scrutiny of public
managers.
II.5. There are unique expectations for fairness,
responsiveness, honesty, openness, and
accountability.
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III. Organizational roles, structures,
and processes
• III.1. Greater goal ambiguity, multiplicity, and conflict.
– II.1.a.Greater vagueness, intangibility, or difficulty in measuring
goals and performance criteria; the goals are more debatable
and value-laden (for example, defense readiness, public safety,
a clean environment, better living standards for the poor and
unemployed)
– II.1.b.Greater multiplicity of goals and criteria (efficiency, public
accountability and openness, political responsiveness, fairness
and due process, social equity and distributional criteria, moral
correctness of behavior)
– II.1.c. Greater tendency of the goals to be conflicting, to involve
more trade-offs (efficiency versus openness to public scrutiny,
efficiency versus due process and social equity, conflicting
demands of diverse constituencies and political authorities)
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III. Organizational roles, structures,
and processes
III.2. Distinctive features of general managerial
roles
III.2.a.Recent studies have found that public managers’
general roles involve many of the same functions and
role categories as those of managers in other settings
but with some distinctive features: a more political,
expository role, involving more meetings with and
interventions by external interest groups and political
authorities; more crisis management and “fire drills”;
greater challenge to balance external political
relations with internal management functions.
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III. Organizational roles, structures,
and processes
III.3. Administrative authority and leadership
practices
III.3.a. Public managers have less decision-making
autonomy and flexibility because of elaborate
institutional constraints and external political
influences. There are more external interventions,
interruptions, and constraints.
III.3.b. Public managers have weaker authority over
subordinates and lower levels as a result of
institutional constraints (for example, civil service
personnel systems, purchasing and procurement
systems) and external political alliances of subunits
and subordinates (with interest groups, legislators).
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III. Organizational roles, structures,
and processes
III.3.c. Higher-level public managers show greater
reluctance to delegate authority and a tendency to
establish more levels of review and approval and to
make greater use of formal regulations to control
lower levels.
III.3.d. More frequent turnover of top leaders due to
elections and political appointments causes more
difficulty in implementing plans and innovations.
III.3.e. Recent counterpoint studies describe
entrepreneurial behaviors and managerial excellence
by public managers.
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III. Organizational roles, structures,
and processes
III.4.Organizational structure
III.4.a.Numerous assertions that public organizations
are subject to more red tape, more elaborate
bureaucratic structures
II.4.b.Empirical studies report mixed results, some
supporting the assertions about red tape, some not
supporting them. Numerous studies find some
structural distinctions for public forms of
organizations, although not necessarily more
bureaucratic structuring.
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III. Organizational roles, structures,
and processes
III.5.Strategic decision-making processes
III.5.a.Recent studies show that strategic decisionmaking processes in public organizations can be
generally similar to those in other settings but are
more likely to be subject to interventions,
interruptions, and greater involvement of external
authorities and interest groups.
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III. Organizational roles, structures,
and processes
• III.6. Incentives and incentive structures
– III.6.a.Numerous studies show that public managers
and employees perceive greater administrative
constraints on the administration of extrinsic
incentives such as pay, promotion, and disciplinary
action than do their counterparts in private
organizations.
– III.6.b.Recent studies indicate that public managers
and employees perceive weaker relations between
performance and extrinsic rewards such as pay,
promotion, and job security. The studies indicate that
there may be some compensating effect of service
and other intrinsic incentives for public employees
and show no clear relationship between employee
performance and perceived differences in the
relationship between rewards and performance.
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III. Organizational roles, structures,
and processes
• III.7.Individual characteristics, work-related attitudes and
behaviors
– III.7.a.A number of studies have found different workrelated values on the part of public managers and
employees, such as lower valuation of monetary
incentives and higher levels of public service
motivation.
– III.7.b.Numerous highly diverse studies have found
lower levels of work satisfaction and organizational
commitment among public than among private
managers and employees. The level of satisfaction
among public sector samples is generally high but
tends consistently to be somewhat lower than that
among private comparison groups.
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III. Organizational roles, structures,
and processes
• III.8.Organizational and individual performance
– III.8.a.There are numerous assertions that public
organizations and employees are cautious and not
innovative. The evidence for this is mixed.
– III.8.b.Numerous studies indicate that public forms of
various types of organizations tend to be less efficient
in providing services than their private counterparts,
although results tend to be mixed for hospitals and
utilities. (Public utilities have been found to be efficient
somewhat more often.) Yet other authors strongly
defend the efficiency and general performance of
public organizations, citing various forms of evidence.
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