Public entrepreneurship as innovative management strategy in the public sector: a public choice-approach

Abstract

Paper Originally Presented at the 65th Annual Conference of the Southern Economic Association , Fairmont Hotel, New Orleans, Louisiana, United States of America, November 18-20, 1995. Bureaucratic service organisations in the public sector are increasingly loosing their previous comfortable monopoly positions in providing services to the public, due to radical structural changes in modern society. The public finance of their services by politicians ordering public services as elected representatives of the citizens-consumers is not longer guaranteed, and neither is the consumption of their services by the public. Government bureaucracy is forced to produce services under (quasi) competitive market conditions. In a competitive system of public service provision, government bureaucracies have to conquer new markets with new services (new product/market combinations). External management of their relations with funding politicians and with the service consumers is becoming vital for their survival. ''Public Entrepreneurship'' is an important element of the necessary innovation of strategic management of government bureaucracies. In this paper, the concept of public entrepreneurship is elaborated. Public entrepreneurship originally is constructed by Osborne and Gaebler as a device to ''reinvent government''. The consequences of public entrepreneurship for their relations with political superiors and sponsors on the one hand, and their contacts with consumer-clients and interest groups on the other hand, are explored from the institutional perspective of public management reform in Western Europe. Public entrepreneurship combines elements of classical market entrepreneurship and elements of modern social entrepreneurship of institutions of private initiative. Public entrepreneurship imposes new challenges for bureaucrats operating between the political leadership of their bureau and the clients of the services provided by their bureau. Public entrepreneurship also causes new problems of political-democratic control. These challenges and problems are explored and some solutions are formulated.

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