Organizational Publicness And Its Implications For Strategic Management

This article addresses differences between the public sector, the third sector (private, nonprofit), and the private sectors and how these differences influence the content and process of strategic management. These differences make approaches to strategic management developed for private organizations somewhat incomplete and potentially misleading when applied in public settings. Practices that can be useful for organizations with significant amounts of publicness are offered, providing a basis for prescriptive and descriptive research into strategic management. The significance of public-private distinctions in the development of management theory has been recognized for some time. The failure to account for these differences creates inaccurate generalizations and loses sight of important distinctions, according to Perry and Rainey (1988), Blumenthal (1983), Murray (1983), Rainey et al. (1976), Dahl and Lindblom (1953), and others. These distinctions seem particularly important to strategic management. Nevertheless, it is common practice to export to strategic management those private sector approaches that assume clear goals; profit or economic purposes; unlimited authority to act; secret development; limited responsibility for actions; and oversight through market mechanisms that signal financial results. In public organizations--or, more accurately, organizations with significant amounts of publicness--many of these assumptions are not valid. To cope with characteristics that stem from publicness (Bozeman 1984; 1987), new approaches are needed that interpret strategic management ideas and go beyond those ideas to deal with issues posed by publicness. This article lays out a framework that identifies the features of publicness and shows how these features relate to strategic management. The framework offers a theory of publicness applied to strategic management that specifies I-PART, 3(1993):2:209-231 209/Journal of Public Administration Research and Theory This content downloaded from 157.55.39.212 on Sun, 09 Oct 2016 04:22:27 UTC All use subject to http://about.jstor.org/terms Organizational Publicness factors for arraying organizations along a continuum of publicness and linking the degree of publicness to strategic management. The theory can be applied prescriptively, offering guidelines to build strategic management procedures for organizations with significant degrees of publicness, or descriptively, suggesting exploratory variables that qualify or predict the likelihood of a successful outcome in strategy making. PUBLICNESS AND STRATEGIC MANAGEMENT According to Bozeman (1987), all organizations are public. "Publicness" is the key to understanding an organization. Bozeman's notion is useful because it draws attention to the degree to which public authority affects how organizations act. Because all organizations are influenced to one degree or another by public authority, all organizations can be seen as public. The publicness notion leads to considerable blurring between sectors. Public organizations are no longer synonymous with governmental agencies but include for-profit service organizations as well as the third sector, which is made up of private, nonprofit organizations (Nutt and Backoff 1987). Calling all organizations public is perhaps a bit extreme, but it does illustrate the need to consider the public aspects of organizational life. We believe that the constraints and empowerments that stem from public authority are crucial considerations often overlooked in strategic management. "Public" and "private" are taken from the Latin: The word "public" means "of the people," as contrasted with "private," which means "set apart." A variety of classifications have been used to distinguish between these meanings as they apply to public and private organizations. Perry and Rainey (1988) identify differences in environments, constraints, incentives, and cultures. Their review found that the unique needs of public sector organizations limit the portability of many ideas derived for the private sector, particularly approaches that deal with mission and strategic direction. Allison (1984), Neustadt (1979), and others have identified factors that capture public sector distinctiveness, but they all seem to draw on the ideas suggested by Rainey et al. (1976) and updated by Rainey (1989). This classification uses environmental, transactional, and process distinctions that elaborate and highlight publicprivate differences. We have extended this list to include factors with particular significance for strategic management. Also, third-sector organizations have been added to identify an organizational type with an intermediate level of publicness (see Exhibit 1). Third-sector organizations typically provide services, while public organizations engage in information processing and contracting for service provision. 210/J-PART, April 1993 This content downloaded from 157.55.39.212 on Sun, 09 Oct 2016 04:22:27 UTC All use subject to http://about.jstor.org/terms Organizational Publicness Exhibit 1 Factors That Capture Public-Private Differences FACTORS SECTOR Public Third Sector Private