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

Thomaz Teodorovicz (), Sérgio Lazzarini (), Sandro Cabral () and Leandro Nardi ()
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Thomaz Teodorovicz: Department of Strategy and Innovation, Copenhagen Business School, 2000 Frederiksberg, Denmark
Sérgio Lazzarini: Sustainability Group, with Cross-Appointment in the Strategy Group, Ivey Business School, Western University London, Ontario N6G 0N1, Canada
Leandro Nardi: HEC Paris, Society & Organizations Institute, 78351 Jouy-en-Josas, France

Organization Science, 2023, vol. 34, issue 4, 1527-1553

Abstract: Despite the well-known governance problems in public (state-owned) organizations, such as process rigidity, limited autonomy, and weak incentives, public organizations exhibit substantial performance heterogeneity, with some performing similarly to their private counterparts. In this paper, we scrutinize those sources of heterogeneous performance based on the interplay of management practices and resources. We argue that the governance constraints in public organizations inhibit the adoption of performance-enhancing practices. However, this negative effect is attenuated by the presence of distinct resources, such as human capital. We examine these effects in the context of over 9,000 public and private schools in Brazil. We find that private schools are more likely to use internal operational practices, such as planning and human resource management, as well as practices of engaging with external stakeholders. Differential adoption of these practices partially explains why private schools outperform their public counterparts in terms of student learning. Yet, access to highly educated teachers in public schools attenuates the negative association between public governance and the adoption of superior practices. In other words, schools with skilled teachers are more likely to adopt superior practices, thus reducing their performance gap compared with private schools. This result suggests that heterogeneous resource endowments—in our context, human capital—can soften governance constraints that inhibit performance-enhancing practices in public organizations. We thus show that heterogeneous practices and resources jointly explain not only performance differences across public and private organizations but also variations in the performance of organizations with the same governance form.

Keywords: governance modes; resource-based view; structured practices; strategy in the public interest; human capital (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:34:y:2023:i:4:p:1527-1553

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