Slack in the Public Sector: A comparative analysis of a private and a public enterprise for refuse collection

Abstract

There are currently strong external pressures in place to increase efficiency in the public sector. The reason for these pressures is an assumption that due to agency problems and opportunism, public enterprises have a tendency to accumulate slack, i.e. to develop lower efficiency compared to what might be achievable in the private sector. Private enterprises form the basis for comparison, and new management techniques are often transferred from the private to the public sector. This article is based on a case study involving two refuse collection enterprises: one public and one from the private sector. Both work in the same market and apply the same technology. The purpose is to investigate whether there are indications of slack in the public refuse collection enterprise, and whether the management control systems applied are suitable for controlling the level of slack. Moreover, additional focus is placed on the differences in management between the two enterprises, representing the public and private sector, respectively. The results indicate that the public refuse collection enterprise had a higher level of slack than the private enterprise, and that the management control systems were not suitable for reducing the level of slack to any significant extent. In the private enterprise, there was a higher degree of budgetary emphasis, the owners made greater demands, employees were more closely supervised and there was a greater degree of participation. In this article, we discuss whether these results may contribute towards explaining any differences in efficiency that may occur between private and public enterprises.

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