Comparing Public and Private Organizations: Empirical Research and the Power of the A Priori

Research comparing public and private organizations and examining the publicness of organizations represents a substantial and growing body of empirical evidence, relevant to many international issues in political economy and organization theory such as the privatization of public services. This article assesses several major streams in this research over the last two decades, which in some ways refute widely held a priori assumptions about similarities and differences between public and private organizations but which in some ways support such assumptions. The review covers research on goal complexity and ambiguity, organizational structure, personnel and purchasing processes, and work-related attitudes and values. The research results converge in important ways, but they also present anomalies. For example, in spite of virtually universal agreement among scholars that public organizations have more goal complexity and ambiguity, public managers do not differ from business managers in response to survey questions about such matters. Public managers do not differ from business managers on perceptions about organizational formalization, in spite of a chorus of assertions that government agencies have more red tape and rules than private firms have. Public managers do, however, show very sharp differences in response to questions about constraints under personnel and purchasing rules. The article concludes with an assessment of the credibility of these streams of research through consideration of alternative plausible hypotheses. No enemy of empiricism, Immanuel Kant simply insisted on empiricism's knowing its place. God, freedom, and immortality, Kant asserted, cannot be denied. Each is an a priori category of the mind and, as such, must necessarily be presupposed. One of J-PART 10(2000):2:447-469 modernity's strongest candidates for the a priori, and presumed 447/Journal of Public Administration Research and Theory at U niersity of G ergia on Feruary 9, 2012 http://jpaordjournals.org/ D ow naded rom Comparing Public and Private Organizations exemption from the hurly-burly world of empirical knowledge, is the public organization. Persons on the street and scholars in the academy will lecture at length on the character of public bureaucracies, blithely free of any concern over the need to show evidence for their assertions. Less confident of our own omniscience about this topic, we feel the need to look at evidence. Our article assesses nearly two decades of empirical research comparing public and private organizations with the following questions in mind: (1) What progress has come from the past twenty-five years or so of empirical research on differences between public and private organizations? (2) Why is there so often discrepancy between empirical research and a priori knowledge about public organizations? (3) Why has empirical research been so feckless in the face of well-established, but unproved, assumptions about public organizations? (4) Should this transcendence of the a priori over the empirical matter to anyone other than academic researchers? In this article we cannot resolve all these questions, but we make a start by reviewing several points in this comparative research where findings have converged on a particular conclusion. A second part of the article considers how much confidence we should place in this convergence, in view of various rival explanations that would suggest that the results are wrong. Before going on, we need to clarify what we mean by a priori views about the public-private distinction in organizational and managerial research. Here, a priori refers to untested assertions and foregone conclusions about this distinction. As we will elaborate below, two decades ago the literature on this topic was dominated by observations that had received scant empirical testing and confirmation. While empirical research has accumulated, these a priori views show remarkable staying power even though research has contradicted many of them. A striking aspect of the a priori views, one that made it necessary to test them empirically, is that there were—and still are—two general a priori positions on this topic, and they conflict with each other (see Rainey 1997, chap. 3). Many scholars in economics and political science have taken the position that public bureaucracies differ from private business firms in important ways (e.g., Barton 1980; Dahl and Lindblom 1953; Dixit 1997; Downs 1967). Their observations about the differences have coincided with the negative views of public bureaucracy in the popular culture, that Goodsell (1994) describes, coupled with the perception of business firms as inherently superior in efficiency and effectiveness. Fascinatingly, the people who specialized in analysis of 'Answers: (i) quite a bit, actually; (2) the organizations and management-organizational sociologists and unreliability of conventional wisdom; (3) psychologists, and researchers on business management—usually passive conveying of research; (4) yes! took a diametrically opposing position. They treated such UW-PART, April 2000 at U niersity of G ergia on Feruary 9, 2012 http://jpaordjournals.org/ D ow naded rom Comparing Public and Private Organizations distinctions as public vs. private and for-profit vs. nonprofit as crude stereotypes, taken seriously only by persons poorly educated in the field of organization theory. Prominent scholars denounced these distinctions as harmful and misleading oversimplifications that needed to be exorcised from the literature on organizations and management and replaced with typologies of organizations developed through sound empirical research. Some of the most eminent scholars in management and organization theory took pains to denounce the public-private distinction, or at least to point out that public and private organizations are more similar than they are different. This tradition continues and is manifest, among other ways, in a recent pronunciation by no less a social scientist than Herbert Simon (1995, 283, n. 3). Simon said that public, private, and nonprofit organizations are essentially identical on the dimension that receives more attention than virtually any other in discussions of the unique aspects of public organizations—the capacities of leaders to reward employees. The assumption that leaders in government organizations have less capacity to reward employees than do leaders in business firms, and that government needs to become more like business in this regard, has driven civil service reforms at all levels of government in the United States and in otheT nations. Yet a Nobel Laureate denies that such differences exist. Thus we have a strong a priori position among many economists and political scientists that treats a distinction between public and private organizations as a truism, while many organization theorists have treated this same distinction with contempt. This divergence among different fields complicates but also enhances the analysis of a priori assertions and of convergence in the research. When we refer to convergence of findings at various points in this article, we often are referring to convergence of findings that support one or the other of these two sides. Part of the value of the stream of research that we review is that it shows that both sides of this divergence were right in some ways 'Generalizations like these always involve and m c o m p i e te in other ways. The findings indicate definite coninjustices and oversimplifications them, • ^ . i_ i_ u » *: i -J cselves. Exceptions abound. Among mmy vergence on the point that we have substantial evidence of unporexampies are a typology developed by tant differences between public and private organizations. Yet organization theorists Peter Biau and they also indicate convergence on evidence that some of the freRichard Scott (1962) that included cate^ ^ y asserted differences receive little or no empirical confirgories for business firms and for public . , , , . agencies, along with additional categories. m&tion and that the pubhc-pnvate distinction may well mvolve and many other references to public oversimplifications and stereotypes in those cases. Happily, both organizations by organization dworists sides can take pride in being right in certain ways. (Perry and Rainey 1988). The Dahl and Lindblom analysis and the Downs anal, » : « . _ » »i_ • -i •»• ysis are actually much more balanced and W e n e e d however, to continue to sort out the similarities carefully reasoned than the phrasing here and differences, whether or not our results please one side of the might suggest. debate or the other. The analysis of this topic has important 449/J-PART, April 2000 at U niersity of G ergia on Feruary 9, 2012 http://jpaordjournals.org/ D ow naded rom Comparing PubUc and Private Organizations implications for major current theoretical and practical issues, including these: privatization of public services; allocation of functions and tasks among sectors; the nature of the sectors themselves; the dimensions that define the sectors, including their complex overlapping and blurring with the third and nonprofit sectors; administrative reforms and organizational change; and the theoretical and practical analysis of major administrative topics, such as organizational goals, structure, and individual motivation and work attitudes. EMPIRICAL RESULTS COMPARING PUBUC AND PRIVATE ORGANIZATIONS Research that compares public and private organizations and examines the publicness of organizations now represents a substantial body of empirical evidence. Twenty-five years ago, a systematic empirical research base had just begun to accumulate. In one comprehensive review of writings about public and private organizations (Rainey, Backoff, and Levine 1976), less than ten of the nearly one hundred papers and books cited provided propositions based on empirical research. By contrast,