Comparing Public and Private Organizations

This article presents a number of propositions about differences in public and private organizations, which have implications for their management.1 The propositions extend and refine consideration of the question which was recently addressed by Michael A. Murray in this Review (36). Murray suggests that public and private organizations are converging and facing similar constraints and challenges, and that management in all types of organizations should be viewed as a generic process. Yet our inquiry into this comparative question points to the conclusion that it is premature to discount the significance of publicprivate differences and their implications for management training and practice. Numerous scholars and observers, of considerable reputation and experience, have addressed themselves to the comparative issue, and it is important that their observations be compiled and considered. Yet no systematic effort at integration has covered relatively recent contributions.2 In making such a review, we found consensus on a number of important distinctions, which are relevant to research, training, and practice. Moreover, in addition to these specific points of agreement, there are general reasons to approach the subject of public-private comparisons carefully, and to avoid premature dismissal of its significance: 1. Normative, Prescriptive Implications. There are widely discussed concerns over whether various aspects of the convergence of the two sectors are good or bad. Solutions are proposed and arguments made concerning the appropriate roles and functions of the organizations in the two sectors. A ready example is the concern over capture of the regulatory agencies, and the proposal that some activities be deregulated. Generally, then, which techniques and attributes of public and private organizations should be preserved or abolished, exchanged or kept separate? 2. Implications for Knowledge and Understanding. Prescriptions will be no better than our understanding of the phenomena. Deregulation proposals, for instance, will provide successful solutions only if their underlying assumptions about the effects of market competition are accurate. To the extent, then, that there is still a divergence between public and private organizations and their management, the divergence should be isolated and studied as a source of information