Can Public Organizations Perform Like Private Firms? The Role of Heterogeneous Resources and Practices

Abstract

Despite the well-known governance problems in public (state-owned) organizations, research has shown that there is substantial performance heterogeneity across organizations and that in some cases public and private firms achieve similar outcomes. We argue that the interplay of practices and resources may explain differences in the performance of organizations even within the same governance form. We theorize that while private organizations exhibit organizational traits that foster superior practices when compared to their public counterparts, resource endowments attenuate the inherent governance constraints that preclude the use of superior practices in public organizations. We test our hypotheses in the context of over 9,000 public and private schools in Brazil. We find that private organizations are more likely to use internal operational practices and practices of engaging with external stakeholders which are associated to superior performance. Furthermore, human capital attenuates the negative association of public ownership and the use of superior practices, which suggests that the presence of skilled personnel facilitates practice-enhancing organizational interactions and potentially supplants the lack of explicit incentives in public organizations. Therefore, our findings reveal that superior resource endowments reduce the governance constraints of public organizations by fostering the use of superior management practices, and that heterogeneous practices and resources jointly create performance heterogeneity even across organizations with similar governance forms.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 18 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.