Week2 rainey chapter_3
- 1. Understanding and Managing Public Organizations Chapter 3 What Makes Public Organizations Distinctive
- 2. Public Versus Private: A Dangerous Distinction? • The generic tradition in organization theory • Findings from research • The blurring of the sectors – Mixed, intermediate, and hybrid forms – Functional analogies—doing the same things – Complex interrelations – Analogies from social roles and contexts • The importance of avoiding oversimplifications
- 3. Findings from Research • Many major studies sought to develop typologies and taxonomies. • These studies mostly failed to produce evidence of a strict division between public and private organizations. • Pugh, Hickson, and Hinings (1969)—classification of fifty-eight organizations into categories, only eight of which were government. • Predicted government was more bureaucratic—more rules and procedures—but the prediction was not confirmed. • They did find that government organizations had more outside influence. • Overall, studies are inconclusive.
- 4. Blurring of the Sectors • Mixed, Intermediate, and Hybrid Forms • Perform business functions but owned and operated by government • U.S. Postal Service • National Service • Government-Sponsored Enterprises • Fannie Mae • Freddie Mac
- 5. Functional Analogies • Hospital and schools can perform the same functions whether labeled private or public. • NPM calls for the use of business procedures in government.
- 6. Complex Interrelations • Government arranges for some services by private organizations – Vouchers – Franchises – Grants – Private corps that handle some aspects of Medicare
- 7. Analogies from Social Roles and Contexts • Governments use laws, regulations, and fiscal policies to influence private organizations. • At what point do private organizations become an extension of government?
- 8. The Importance of Avoiding Oversimplifications • If clear demarcations are impossible, what does that say of critics who claim public organizations are less efficient? • Be careful what you label – Reporting – Interest group access applies in different ways to the different labels
- 9. Public Organizations: An Essential Distinction • The purpose of public organizations • Market failures or incapacities • Public goods and free riders • Individual incompetence • Externalities or spillovers • Political rationales for government
- 10. Mixed Intermediate, Politics, and Markets • Dahl and Lindblom (1953) provide a useful analysis of the reason for public organizations. • There are two fundamental vehicles—political authority and economic markets. • All nations use a combination of both. • There are advantages and disadvantages to both.
- 11. Mixed Intermediate, Politics, and Markets Political Hierarchy • A complex array of contending groups and institutions • Produces a complex hydra-headed hierarchy—“a polyarchy” • Can direct economic activities Economic Markets • An alternative price system in free economic markets • Can control economic production and allocation decisions
- 12. Concept of Public Values • Parallel to market failures. • Focus on political and institutional processes by which public values are identified, and furthered or damaged. • Moore implicitly defined public values by discussing differences between production processes and circumstances justifying public production. • Public value consists of what governmental entities produce with due authorization form the public, considering efficiency and effectiveness.
- 13. Mark Moore and Public Values • Public managers “must produce something whose benefits to specific clients outweigh the costs of production.” • Moore envisions a proactive public manager. • It’s not all about efficiency. • The Accenture Public Sector Value Model builds on Moore • Cole and Parston (2006): value emerges from the production of governmental activities considered together with the cost- effectiveness of producing those outcomes.
- 14. Recent Models on Public Values • The Accenture Public Sector Value Model builds on Moore • Cole and Parston (2006): value emerges from the production of governmental activities considered together with the cost-effectiveness of producing those outcomes. • Bozeman—a society’s public values. There can’t be a disconnect between value as agency sees its mission and the public preferences. • Core public values can fail because of flaws in the policy making system. For example, core public values are skirted if the public favors gun control but no such policy is enacted.
- 15. The Meaning and Nature of Public Organizations and Public Management • Approaches to defining public organizations and public managers • Agencies and enterprises as points on a continuum • Ownership and funding • Economic authority, public authority, and “publicness”
- 16. 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 State-owned enterprise or public corporation (Postal Service, TVA, Port Authority of NV) Government agency 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)
- 17. Public and Private Ownership and Funding 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 Public Ownership Private Ownership Public Funding (taxes, government contracts) Private Funding (sales, private donations) *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).
- 18. “Publicness”: Political and Economic Authority Economic Authority Private firm managed by owner Closely held private firm, professionally managed Corporation heavily reliant on government contracts Government- sponsored enterprise Government corporation or government organization funded through user fees Government agency (funded from taxes) Political Authority Government- industry research cooperativeCorporation with shares traded publicly on stock market Research university Private nonprofit organization Professional association Small voluntary association Source: Adapted from Bozeman (1987).
- 19. Typology of Organizations Created By Cross-Classifying Ownership, Funding, and Mode of Social Control Bureau Government corporation Government-sponsored enterprise Regulated enterprise Governmental enterprise State-owned enterprise Government contractor Private enterprise Public Public Private Private Public Public Private Private Public Private Public Private Public Private Public Private Polyarchy Polyarchy Polyarchy Polyarchy Market Market Market Market Meier (1993) Walsh (1978) Musolf and Seidman (1980) Mitnick (1980) Barzelay (1992) Aharoni (1986) Bozeman (1987) Williamson (1975) Bureau of Labor Statistics Pension Benefit Guaranty Corporation Corporation for Public Broadcasting Private electric utilities Government printing office that must sell services to government agencies Airbus Grumann IBM Ownership Funding Mode of Social Control Representative Study Example Source: Adapted and revised from Perry and Rainey (1988).
- 20. Problems and Approaches in Public-Private Comparisons • Problems and challenges - Need to control for size, task, other factors - Difficulty in obtaining the very large samples needed to represent the “sectors” • Research approaches - Some theorize from assumptions, past literature, and their own experiences. - 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)
- 21. Problems and Approaches in Public-Private Comparisons • Comparisons of managers in small sets of government and business organizations • Comparisons of public and private samples from census data, large-scale social surveys, or national studies – The National Organizations Survey
- 22. Problems and Approaches in Public-Private Comparisons • Other issues • Accountability differs by labeled type. • Commercialization of nonprofits. • Is a defense contractor private if all revenues come from government? • Is a government enterprise “public” if you can buy stock in it? • Is an independent agency less governmental than a traditional agency?
- 23. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings 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 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
- 24. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings 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
- 25. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings 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. 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.
- 26. III. Organizational roles, structures, and processes III.1. Greater goal ambiguity, multiplicity, and conflict III.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) III.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) III.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) Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 27. 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 28. 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). 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 29. 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. III.5. Strategic decision-making processes III.5.a. Recent studies show that strategic decision-making 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 30. 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 31. III.7. Individual characteristics, work-related attitudes and behaviors III.7.a. A number of studies have found different work-related 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
- 32. 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. Distinctive Characteristics of Public Management and Public Organizations: A Summary of Common Assertions and Research Findings
Editor's Notes
- #2: So fundamental, yet so controversial What does the title of the book suggest? Assumption—you can tell the difference But as chapter makes clear, it’s not that easy. There are challenges in defining.
- #3: Generic tradition—an intellectual tradition that emphasizes similarities Most major contributions of the field fall into this category, as they conceive of organizations in a broad sense. Some have aggressively asserted there is no meaningful difference: Weber—applied to both Taylor—scientific management applied to both Same with the standard principles of “administrative management school”: principles of hierarchy, specialization applies to both Gulick- Notes on the theory of organization in 1937. Fundamental functions of all management division of work, coordination of work. POSDCORB Mooney—a supreme coordinating authority at the top must project through the entire scalar chain. Interesting that leading figures in admin management school also served on reform committees and Brownlow committee. And Hoover Commission Same with social/psychological factors associated with Hawthorne studies, McGregor Theories X and Y. Theses analyses, terms pervade public sector management. Simon—position that political context is important but there are more similarities than differences. Organizations are essentially identical on the most important dimension, the reward of employees. Echoed by James Thompson, leading contingency theorist.
- #4: Think about this for a moment. If you wanted to distinguish, how would you? Studies of variables such as task, technology, and size Findings show that these variables may influence public organizations more than anything related to their status as a governmental agency. Commonsense finding—an organization becomes bureaucratic because of its size, not its designation as public or private. Typology—the study or systematic classification of types that have characteristics or traits in common; a theory or doctrine of types, as in scriptural studies. Taxonomy—division of groups indicates relationships, hierarchical ordering.
- #5: Investors could buy collateralized debt obligations. Stock can be purchased.
- #10: A purely economic rationale ignores the political and social justifications for government. To maintain individual freedoms To ensure justice and rule of law To stabilize and keep secure
- #11: The advantage of the market—voluntary exchange, flexible. It takes care of itself in equilibrium. But markets have limited capacity to handle some types of problems. Public goods and free riders Monopolies Information asymmetries Externalities
- #12: Dahl and Lindblom (1953)—two fundamental vehicles—political authority; all nations use a combination of both . There are advantages and disadvantages to both. Polyarchy draws on political authority, which is an inexpensive means of control. For example, would you rather have people engage in debate and settle on some compensation system at stop lights? No. It’s easier to have a law. It’s based on the coercive authority of the state. However, political authority can be confining, difficult to change. The advantage of the market—voluntary exchange, flexible. It takes care of itself in equilibrium. But markets have limited capacity to handle some types of problems. Public goods and free riders Monopolies Information asymmetries Externalities
- #13: Mark Moore (1995) Public managers “must produce something whose benefits to specific clients outweigh the costs of production.”
- #14: Accenture model The model indicates that those applying the model will consider the agency’s purpose and mission. Bozeman—a society’s public values. There can’t be a disconnect between value as agency sees its mission and the public preferences. Core public values can fail because of flaws in the policymaking system. For example, core public values are skirted if the public favors gun control but no such policy is enacted.
- #17: Dahl and Lindblom’s complex continuum of agencies and enterprises
- #21: Defining a distinction does not prove one actually exists.