Creating Entrepreneurial Government: The Franchising Movement (1996)

INTRODUCTION One of the strengths of the American public service system has been its ability and willingness experiment with different methods of providing services and accomplishing an array of missions. At the federal, state, and local levels, one finds extremely adaptable institutions using entirely different strategies deliver similar services. One of those strategies employs market mechanisms that create government entrepreneurs who have an additional set of incentives for providing cost effective and quality services within government bureaucracies. This entrepreneurial strategy is not new government but it obtained new interest as a result of successes at the local level following the 1992 publication of Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector by David Osborne and Ted Gaebler. Since the mid-80s, New Zealand and Great Britain have instituted comprehensive government reforms relying heavily on placing many government on an enterprise basis and requiring them to be self-supporting and operate fully in accord with business practices (Sherwood, 1992:16). By 1993 Vice President Gore's Report of the National Performance Review saw the creation of market dynamics as one means of reinventing government.1 In late 1994, as a partial response the Report, Congress passed the Government Management Reform Act, providing opportunities create a large number of entrepreneurial operations within the federal government. These operations will provide internal administrative services in situations resembling competitive market conditions. This article focuses on entrepreneurial government with special emphasis on the federal government's current experimentation with the use of market forces. It is clear that most levels of government are under tremendous pressures streamline and downsize and, at the same time, provide better quality services more cost effectively. Using a market strategy is only one of a number of alternatives. Many public managers opt for more traditional means of dealing with these pressures such as centralization and cutting costs across all program areas. Because entrepreneurial approaches are so counter the hierarchical and control culture of public bureaucracies, such approaches meet considerable resistance. During the last decade, proponents of entrepreneurial government have experienced an uphill battle for acceptance of an entrepreneurial approach providing internal administrative services within public bureaucracies. This approach is called franchising.2 Agencies typically have two options for providing internal administrative services. They can have their own employees provide the service or they can seek the service from an outside source. The majority of these services are provided in the traditional bureaucratic mode. An agency creates a staff provide a particular service management and the rest of its employees. As a result most agencies have servicing offices providing needs related personnel, finance, information management, procurement, etc. In larger organizations these offices can be found at different levels in the organization at headquarters and in the field. Over the years, these operations have grown in size and complexity as laws and regulations have increased. In many instances this growth has led many agencies view these offices as hindrances and not as partners in achieving agency missions. The franchising concept provides government managers the option of seeking internal administrative services from sources other than their own organization and the private sector. They may seek such services from servicing units in other government organizations. This internal, competitive option has many aspects but the basic tenet holds that such a serving unit will be reimbursed for the costs of providing a particular service one or more other government organizations. …