Comparing Public and Private Organizations: Empirical ... · PDF fileComparing Public and...

Comparing Public and Private Organizations:Empirical Research and the Power of the A Priori

Hal G. RaineyUniversity of GeorgiaBarry Bozeman

Georgia Tech

ABSTRACT

Research comparing public and private organizations andexamining the publicness of organizations represents a substantialand growing body of empirical evidence, relevant to many inter-national issues in political economy and organization theory suchas the privatization of public services. This article assessesseveral major streams in this research over the last two decades,which in some ways refute widely held a priori assumptions aboutsimilarities and differences between public and private organiza-tions but which in some ways support such assumptions. Thereview covers research on goal complexity and ambiguity, organ-izational structure, personnel and purchasing processes, andwork-related attitudes and values. The research results convergein important ways, but they also present anomalies. For example,in spite of virtually universal agreement among scholars thatpublic organizations have more goal complexity and ambiguity,public managers do not differ from business managers inresponse to survey questions about such matters. Public mana-gers do not differ from business managers on perceptions aboutorganizational formalization, in spite of a chorus of assertionsthat government agencies have more red tape and rules than pri-vate firms have. Public managers do, however, show very sharpdifferences in response to questions about constraints underpersonnel and purchasing rules. The article concludes with anassessment of the credibility of these streams of research throughconsideration of alternative plausible hypotheses.

No enemy of empiricism, Immanuel Kant simply insisted onempiricism's knowing its place. God, freedom, and immortality,Kant asserted, cannot be denied. Each is an a priori category ofthe mind and, as such, must necessarily be presupposed. One of

J-PART 10(2000):2:447-469 modernity's strongest candidates for the a priori, and presumed

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exemption from the hurly-burly world of empirical knowledge, isthe public organization. Persons on the street and scholars in theacademy will lecture at length on the character of public bureau-cracies, blithely free of any concern over the need to show evi-dence for their assertions. Less confident of our own omniscienceabout this topic, we feel the need to look at evidence. Our articleassesses nearly two decades of empirical research comparingpublic and private organizations with the following questions inmind: (1) What progress has come from the past twenty-fiveyears or so of empirical research on differences between publicand private organizations? (2) Why is there so often discrepancybetween empirical research and a priori knowledge about publicorganizations? (3) Why has empirical research been so feckless inthe face of well-established, but unproved, assumptions aboutpublic organizations? (4) Should this transcendence of the a prioriover the empirical matter to anyone other than academicresearchers?1 In this article we cannot resolve all these questions,but we make a start by reviewing several points in this compara-tive research where findings have converged on a particular con-clusion. A second part of the article considers how much confi-dence we should place in this convergence, in view of variousrival explanations that would suggest that the results are wrong.

Before going on, we need to clarify what we mean bya priori views about the public-private distinction in organiza-tional and managerial research. Here, a priori refers to untestedassertions and foregone conclusions about this distinction. As wewill elaborate below, two decades ago the literature on this topicwas dominated by observations that had received scant empiricaltesting and confirmation. While empirical research has accumu-lated, these a priori views show remarkable staying power eventhough research has contradicted many of them. A striking aspectof the a priori views, one that made it necessary to test themempirically, is that there were—and still are—two general a prioripositions on this topic, and they conflict with each other (seeRainey 1997, chap. 3). Many scholars in economics and politicalscience have taken the position that public bureaucracies differfrom private business firms in important ways (e.g., Barton1980; Dahl and Lindblom 1953; Dixit 1997; Downs 1967). Theirobservations about the differences have coincided with the nega-tive views of public bureaucracy in the popular culture, thatGoodsell (1994) describes, coupled with the perception of busi-ness firms as inherently superior in efficiency and effectiveness.

Fascinatingly, the people who specialized in analysis of'Answers: (i) quite a bit, actually; (2) the organizations and management-organizational sociologists andunreliability of conventional wisdom; (3) psychologists, and researchers on business management—usuallypassive conveying of research; (4) yes! took a diametrically opposing position. They treated such

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distinctions as public vs. private and for-profit vs. nonprofit ascrude stereotypes, taken seriously only by persons poorly edu-cated in the field of organization theory. Prominent scholarsdenounced these distinctions as harmful and misleading oversim-plifications that needed to be exorcised from the literature onorganizations and management and replaced with typologies oforganizations developed through sound empirical research. Someof the most eminent scholars in management and organizationtheory took pains to denounce the public-private distinction, or atleast to point out that public and private organizations are moresimilar than they are different. This tradition continues and ismanifest, among other ways, in a recent pronunciation by no lessa social scientist than Herbert Simon (1995, 283, n. 3). Simonsaid that public, private, and nonprofit organizations are essen-tially identical on the dimension that receives more attention thanvirtually any other in discussions of the unique aspects of publicorganizations—the capacities of leaders to reward employees.

The assumption that leaders in government organizationshave less capacity to reward employees than do leaders in busi-ness firms, and that government needs to become more like busi-ness in this regard, has driven civil service reforms at all levelsof government in the United States and in otheT nations. Yet aNobel Laureate denies that such differences exist. Thus we havea strong a priori position among many economists and politicalscientists that treats a distinction between public and privateorganizations as a truism, while many organization theorists havetreated this same distinction with contempt.2

This divergence among different fields complicates but alsoenhances the analysis of a priori assertions and of convergence inthe research. When we refer to convergence of findings at vari-ous points in this article, we often are referring to convergenceof findings that support one or the other of these two sides. Partof the value of the stream of research that we review is that itshows that both sides of this divergence were right in some ways

'Generalizations like these always involve and m c o m p i e te in other ways. The findings indicate definite con-injustices and oversimplifications them- , • ^ .i_ i_ u » *: i -J c-selves. Exceptions abound. Among mmy vergence on the point that we have substantial evidence of unpor-exampies are a typology developed by tant differences between public and private organizations. Yetorganization theorists Peter Biau and they also indicate convergence on evidence that some of the fre-Richard Scott (1962) that included cate- ^ ^ y asserted differences receive little or no empirical confir-gories for business firms and for public . , , , . . . . . . . . .. . .agencies, along with additional categories. m&tion and that the pubhc-pnvate distinction may well mvolveand many other references to public oversimplifications and stereotypes in those cases. Happily, bothorganizations by organization dworists sides can take pride in being right in certain ways.(Perry and Rainey 1988). The Dahl andLindblom analysis and the Downs anal- , » : « . _ » »i_ • -i •»•ysis are actually much more balanced and W e n e e d - however, to continue to sort out the similaritiescarefully reasoned than the phrasing here and differences, whether or not our results please one side of themight suggest. debate or the other. The analysis of this topic has important

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implications for major current theoretical and practical issues,including these: privatization of public services; allocation offunctions and tasks among sectors; the nature of the sectorsthemselves; the dimensions that define the sectors, including theircomplex overlapping and blurring with the third and nonprofitsectors; administrative reforms and organizational change; andthe theoretical and practical analysis of major administrativetopics, such as organizational goals, structure, and individualmotivation and work attitudes.

EMPIRICAL RESULTS COMPARINGPUBUC AND PRIVATE ORGANIZATIONS

Research that compares public and private organizations andexamines the publicness of organizations now represents a sub-stantial body of empirical evidence. Twenty-five years ago, asystematic empirical research base had just begun to accumulate.In one comprehensive review of writings about public and privateorganizations (Rainey, Backoff, and Levine 1976), less than tenof the nearly one hundred papers and books cited providedpropositions based on empirical research. By contrast, nearly halfthe studies cited in a later assessment (Perry and Rainey 1988)presented some empirical evidence. The continuation of this trendhas by now resulted in scores of studies that, although widelyvaried in method, quality, and influence, have presented researchevidence pertaining to differences between public and privateorganizations. The stream of research also appears to be accel-erating (e.g., Dixit 1997; Crewson 1997; Gabris and Simo 1995;Gore 1998; Jurkiewicz, Massey, and Brown 1998; Kurland andEgan 1999; Nutt 1999; Posner and Schmidt 1996). Clearly, too,the issue has international relevance and attracts attention fromscholars in many nations (e.g., Antonsen and Beck Jorgensen1997; Beck Jorgensen 1996; Dunsire, Hartley, Parker, and Dimi-triou 1988; Ferlie, Pettigrew, Ashburner, and Fitzgerald 1996,241-42; Kickert 1997; Pollitt 1990; Ranson and Stewart 1994;Rhodes 1994).

By many of the standards that have prevailed in the socialsciences, research on public and private organizations can beconsidered a success story. Not only are the topics covered inthese studies of great theoretical and practical importance, manyof the studies have had a result rare in the social sciences—theyhave converged in their findings. Despite use of multiple meth-ods, infusion of few resources, limited institutional support, andlittle or no coordination among many of the researchers andresearch programs, these studies have in many instances pro-vided a remarkable convergence of findings, perhaps made moreremarkable by the extent to which they sometimes challenge

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fundamental, deeply held assumptions about the nature of publicand private organizations.

This article examines several major streams in the researchliterature comparing public and private organizations, but lesswith a view to articulating results than to pondering a cumulativeresult. We do assess research progress and gaps, but chiefly todetermine possible next steps. The summary provides a basis forfairing stock of progress or lack thereof in this body of researchand for planning where research and theory should go now. Mostimportant, now that there is a formidable research literature onthis topic, what should one make of it?

One way to proceed is to follow the patterns of convergencein the research. Organizations are made up of a complex ofimportant dimensions and issues; researchers have developedbodies of research on these dimensions, which include those men-tioned above—goals, structure, motivation, and many others. Thecomparisons of public and private organizations have been influ-enced by these patterns, drawing on conceptual and methodo-logical developments in these areas. For example, researchershave compared business firms to public agencies on measures ofwork satisfaction among members of the organization and ontheir perceptions of organizational structure, using concepts andempirical measures that organization theorists had developed tomeasure satisfaction and structure. Researchers who have com-pared public and private organizations often have extended themore basic organizational research with additional methods, suchas measures of perceptions of personnel rules (Rainey 1983) ormeasures of organizational red tape based on reports of delays ortime required to complete an administrative function (Bozemanand Bretschneider 1994). Even these extensions, however, tendto fall into the framework of dimensions and topics from organi-zation theory. Following this general pattern, the empiricalresearch on public vs. private organizations has tended to concen-trate on certain organizational dimensions. There is a great dealof relevant research and theory, but here we will concentrate onsummarizing developments in research on dimensions where thestudies have produced some of the most convincing findings orthe most interesting anomalies.

Goal Complexity and Goal Ambiguity

One of the more interesting anomalies concerns the compari-son of public and private organizations on goal complexity andambiguity. Briefly put, everyone says that public agencies havegreater goal complexity and ambiguity than business firms—

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everyone, that is, except the public managers who haveresponded to surveys in which they were asked about this.

The assertions that public agencies have particularly vague,hard-to-measure, multiple, and conflicting goals are so nearlyuniversal among scholars and observers that they need nodescription here. The assertions typically refer to the lack ofsales and profit indicators and incentives for public agencies;complications due to political oversight and interventions bymultiple authorities and interest groups; and value-laden andsharply conflicting mandates (for example, simultaneous demandsfor efficiency and equity or for conservation and development). Itis difficult to locate observations about the distinctive aspects ofpublic organizations and public policies, including those of themost prominent scholars, that do not refer to these goal charac-teristics (see Rainey 1993).

Questionnaire surveys, however, have produced an anomaly.We now have several surveys—spanning about fifteen years—with respondents from all levels of government, for many typesof government agencies and business firms, from different areasof the United States, and from different levels of their organiza-tions that ask government and business managers about the clarityand measurability of their organizations' goals (Rainey 1983; Lanand Rainey 1992; Rainey, Pandey, and Bozeman 1995). The gov-ernment managers tend to give high ratings to the clarity andmeasurability of the goals of their organizations, and on averagethey differ little from the private-sector managers on theseratings. Everyone appears to agree that public managers facemore complex, hard-to-measure, ambiguous goals—everyoneexcept the public managers themselves.

Maybe the questionnaire items asking for simple, directresponses about the clarity and measurability of organizationalgoals are too simple to assess this dimension. Perhaps the publicmanagers defensively claim that their organizations' goals areclear, in a social desirability response, because they believe thatto say otherwise is to report poor management of the organiza-tion. Many interpretations are possible. This conflict, however,between the observations of an army of expert observers and thetestimony of the observed (who have apparently failed to read orheed the experts' pronunciations) raises many interesting chal-lenges for theory and research. If these questionnaire measuresare inadequate, why? What do we actually mean by the observa-tions about ambiguous, hard-to-measure, complex goals? How dowe better analyze these characteristics of goals and gather evi-dence of the actual influences of such goal characteristics onother variables? How do public agencies, private firms, and other


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organizations vary among themselves on such dimensions (Leroerand Wanat 1983)? This situation raises some intriguing issuesabout the relations between issues in political economy and issuesin organizational behavior. For example, if one advantage ofeconomic markets for the output of an organization is that theyclarify goals and incentives for the managers of those organiza-tions, and hence the absence of economic markets denies suchgoal clarity (Barton 1980; Dahl and Lindblom 1953; Downs1967), then why will public managers not cooperate and reportthat their goals are vague?

Organizational Structure

A number of empirical studies have compared structuralcharacteristics of public and private organizations. These studieshave examined a variety of structural dimensions, but one of themost interesting issues has concerned formalization (the exten-siveness of rules and formal procedures and their enforcement)and red tape. The issue concerns whether, in accordance withstereotypes and endless commentary on the topic, public agencieshave particularly high levels of rules and red tape. The issue issurprisingly controversial, as it turns out. Although the contro-versy is quiet and implicit, since some of the researchers haveoften worked without knowledge of the others, in many casesthey were simply more inclined to try to resolve the issue thanengage in controversy.

Some researchers have found little evidence that publicagencies show higher levels of formalization, or related dimen-sions such as red tape, than do private firms. For example, Pugh,Hickson, and Hinings (1969), in .what became known at theAston studies, conducted an elaborate research project on organi-zations in Great Britain; the study was very prominent at the timeas an effort to develop an empirical taxonomy of organizations.Pugh et al. predicted that'government organizations in theirsample would show higher levels of formalization, but found thatthey did not. Over the years, additional studies concurred.Buchanan (1975) also sought to test the proverbial red-tapedifferences by comparing federal managers to business managerson a structure salience scale. Unexpectedly, the public managersreported lower perceived salience of structure. Bozeman andLoveless (1987) found that public-sector research and develop-ment units differed only slightly from private-sector units on ameasure of red tape. Rainey, Pandey, and Bozeman (1995) foundlittle difference between public and private managers in theirperceptions about rule enforcement in their organizations. Kur-land and Egan (1999) recently reported findings that respondentsin public agencies perceived less formalization of their jobs and


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of communications with their supervisors than did respondents inprivate firms.

These findings conflict sharply, not just with generalstereotypes about rules and red tape in government agencies (seeGoodsell 1994 on the history and prevalence of such stereotypes).Commissions and professional associations have for yearslamented the excessive rules and constraints in governmentagencies (National Academy of Public Administration 1986;F.J. Thompson 1993).

Bolstering these observations, moreover, are some empiricalfindings that suggest that public agencies do indeed have highlevels of formalization and red tape, and the levels are higherthan the levels in business firms. Rainey (1983) reported such adifference, although not a particularly sharp difference. Warwick(1975) concluded from his case study of the U.S. State Depart-ment that public bureaucracies inherently incline toward elaboratehierarchy and rules, implicitly concluding that they exceedbusiness firms on these dimensions. Holdaway, Newberry, Hick-son, and Heron (1975) found higher levels of formalization inCanadian public universities than in Canadian private universi-ties, and Chubb and Moe (1990) reported a similar finding forpublic schools in the United States, compared to private schools.

Bozeman and Bretschneider (1994) asked public and privatemanagers to estimate the time required to complete importantadministrative functions like hiring and purchasing equipment andfound that public managers reported much longer times to com-plete some of the important functions. In summarizing eightstudies that used the same red-tape measures in a wide variety ofpublic and private organizations, Bozeman (2000) observed thatthe relative degree of red tape varied between sectors accordingto type of organizational activity. In some activities, such asstarting a new project, levels of red tape were quite similar. Butany activity related to personnel administration (hiring and firing,for example) typically faced much longer delays and expandedtime horizons in government organizations.

An important contribution to this discussion comes from theNational Organizations Study (NOS), a study of a nationallyrepresentative probability sample of organizations, that theresearchers presented as the first ever such national probabilitysample of organizations (since almost all organizational researchhas used samples of opportunity or judgmental samples). TheNOS researchers found that public organizations show higherlevels of formalization and centralization than private organiza-tions show (Marsden, Cook, and Knoke 1994). These researchers


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were organizational sociologists who had no particular motivationto find that public organizations show differences from privateones; they focused instead on more general analysis of organiza-tional structures. From their data, however, emerged the evi-dence that a public vs. private vs. nonprofit distinction providedone of the strongest predictors of organizational structuralcharacteristics.

Given this stream of evidence, one wonders what is goingon. Why do we have the studies we have mentioned that reversethe stereotypes—that find no difference between public and pri-vate organizations in formalization—but then the additional find-ings that tend to support the typical assertion that public organi-zations have more rules and red tape? Also, where amid theseconflicting results does one find the convergence ballyhooed inthe earlier part of this article? These questions have some reason-able answers, but we need first to describe some evidence on aparticular type of formalization and red tape—that which governspersonnel administration and purchasing and procurement.

Formalization of Personnel and Purchasing Processes

One possible interpretation of the variations in findingsfocuses on the particular type of formalization. Public and privateorganizations differ more strongly on formalization of personnelprocedures, purchasing processes, and other administrative pro-cedures that are regulated or overseen by central administrativeagencies and mandated by system-wide mandates.

Although Pugh, Hickson, and Hinings (1969) did not findgreater structuring of activities in government organizations,those organizations had more concentration of authority at the topof the organization or with external authorities, especially author-ity over personnel procedures. The researchers concluded thatsize and technological development act as the main determinantsof formalization and rules (they called it structuring of activities).Government ownership, they said, exerts an influence indepen-dent of size and technology, causing concentration of authority atthe top of the organization or with external authorities, especiallyauthority over personnel procedures. Tolbert and Zucker (1983),who also indicated the effects of government auspices on person-nel procedures, showed how federal pressures influenced the dif-fusion of civil service personnel systems across governments inthe United States. Very large surveys of federal employees findthat a high percentage of the managers and executives say thatthey do not have enough authority to remove, hire, promote, anddetermine the pay of their employees. Most respondents alsothink that personnel and budgeting rules create obstacles to


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productivity (U.S. Office of Personnel Management 1979; 1980;1983).

These studies provide increasing evidence that governmentauspices influence structure in a number of ways, particularlyregarding rules and structural arrangements over which externaloversight agencies have authority, such as personnel and pur-chasing regulations. Bozeman and Bretschneider (1994) provideexplicit evidence of these patterns. They analyzed research anddevelopment laboratories on the basis of public and privateownership and the amount of government funding. The govern-ment labs had highly structured personnel rules. The private labsdid not, even when they received high levels of governmentfunding. They did, however, receive more contacts and com-munications from government officials when they received morepublic funding. This suggests that governmental funding bringswith it a different pattern of governmental influence than doesgovernmental ownership. Government ownership brings with itthe formal authority of oversight agencies to impose the rules ofthe jurisdiction, usually governing personnel, purchasing, andaccounting and budgeting. Bretschneider (1990) provided moreevidence in an analysis of decisions about computer systems inpublic and private organizations. Managers in the public organi-zations experienced longer delays in getting approval to purchasecomputer equipment and in the processing of those purchases.The delays apparently reflect the procurement rules supervised bycentral procurement agencies such as the General ServicesAdministration. In sum, these studies provide evidence, con-sistent with the pattern that began to emerge with the Pugh,Hickson, and Hinings (1969) study, that government ownershipoften subjects organizations to central oversight rules over suchmatters as personnel, purchasing, and budgeting and accounting.

Recent survey evidence supports this observation morestrongly than ever (Lan and Rainey 1992; Rainey, Pandey, andBozeman 1995). Rainey, Facer, and Bozeman (1995), forexample, reported results of surveys in several states, involvingall levels of government and many organizations, at differentpoints across a fifteen-year period, comparing responses of publicand private managers to numerous questions about constraintsunder personnel rules. The questions asked whether the rulesmade it hard to fire a poor manager in their organization or hardto reward a good manager with higher pay, and similar matters.The differences between the responses of the public and privatemanagers were huge, by the standards of survey research.Roughly 90 percent of the public managers would agree withstatements about constraints under their organizations' personnelrules—that they made it hard to fire and to reward with higher


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pay—while 90 percent of the business managers would disagree.This provided striking evidence of sharp differences in the waypublic and private managers perceive the personnel rule struc-tures of their organizations, evidently reflecting the effects of thegovernment personnel systems on the rules of the public organi-zations.

This strong evidence brings us to answers to the questionswe asked earlier. We get conflicting findings on formalizationbecause they refer to different types of formalization, that is, todifferent types of rules. A careful look at the set of studies wehave cited suggests that the evidence is converging, but in twoopposing directions. When researchers have asked about or mea-sured general formalization—the intensity of rules in general andof their enforcement—they have found either small differencesbetween public and private organizations or no differences at all.Public organizations have somewhat greater levels of this, but notstrikingly higher levels. When research has focused on formaliza-tion of personnel and purchasing rules, public agencies haveconsistently shown much higher levels. When researchers havesimply asked about the level of red tape, they have often foundthat public managers report higher levels of it than managers inprivate firms report, but this could be because in referring gen-erally to red tape the public managers are influenced by the highlevels of red tape in personnel and purchasing. Alternatively,public managers may in some instances be acquiescing to theirsocially ascribed role. Moreover, the relationship between per-ceptions and the objective measures of red tape is almost alwaysquite complicated. For example, respondents in public and pri-vate research laboratories tend to report high levels of perceivedred tape, but by objective indicators these laboratories have lowerlevels of red tape than any of several other types of organizationsexamined (Crow and Bozeman 1998). One explanation is thatlaboratory managers have less tolerance for red tape, and thuseven relatively small amounts seem to them to be oppressive.

One of the most interesting indications of support for theidea that public-sector red tape and formalism relate chiefly topersonnel issues comes from the National Organization Survey(NOS), mentioned previously, a historically unprecedented pro-ject that aimed for a nationally representative sample of organi-zations. Out popped the evidence that public organizations showhigher levels of formalization and centralization than privateorganizations show. If one examines the measure of formalizationused in the NOS, however, one finds that it refers almost entirelyto formalization of personnel rules. The measure consists of aseries of questions, posed to a representative of the organization,about whether or not the organization has formal rules and

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procedure manuals to cover various processes in the organization.Six of the seven questions used refer to some aspect of personneladministration—personnel evaluations, fringe benefits, jobdescriptions, hiring and firing, performance records, safety, andhygiene. Thus, the measure of formalization in this major studyappears to amount to a measure of formalization of personnelprocedures.

This pattern represents convergence on the point that publicorganizations differ sharply from private organizations onformalization and red tape in processes subject to jurisdictionalrules and the authority of oversight agencies that come withgovernmental ownership, such as personnel and purchasing.More general formalization—the general extensiveness of rulesand their enforcement—appears not to differ between the twocategories as consistently and strongly. The more general patternof rules, as suggested by Pugh et al. years ago (1969), appears tobe more subject to influences of organizational size, technologyand work processes, and other factors. Thus, the findings con-verge on the confirmation of sharp differences often cited in theliterature and in popular discourse—red tape in personnel admin-istration in the public sector. Yet they also converge on evidencethat scholarly assertions and popular stereotypes about moregeneral formalization in public agencies appear invalid or over-stated. This, then, is one of those happy circumstances mentionedearlier, where both sides can claim that they were right in certainways.

As usual in the social sciences, the research we have citedprovides abundant ammunition for scholarly squabbles overwhether the interpretation just advanced is correct. Whether ornot it is correct—and it has much support—it raises challenges fortheory and research. For example, various prominent theories ordepictions of public organizations assert that their managers tendto create a lot of the rules and red tape in the agencies because ofthe pressures to avoid political controversy and the absence ofclear performance and outcome measures (e.g., Barton 1980;Downs 1967; Warwick 1975). This stream of evidence suggeststhat this is not the case, since if it were, public organizationswould show higher levels of general formalization. Instead, theyshow higher levels of formalization of processes subject to juris-diction-wide rules, and these rules come from outside die agency,not from inside as creations of the agency managers. Moreover,Bozeman and Rainey (1998) report evidence that managers ingovernment agencies do not express strong preferences for morerules; in fact they express lower levels of such preferences thando managers in business firms. People who theorize about publicbureaucracy now must confront a body of evidence that makes it

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hard to support the claim that public-sector bureaucrats aggres-sively create red tape, more so than do their counterparts inprivate firms. Rather, it seems that public managers more oftenreceive red tape that is created for them by legislative andpolitical superiors.

Work-Related Attitudes and Values—Work Satisfaction,Motivation, Valuation of Rewards, and Work Outcomes

In public vs. private comparisons, there is now a tradition ofanalyzing differences between employees and managers in publicagencies and private firms on work-related attitudes and values.Many of the studies have focused on work satisfaction, and mostof these studies have reported lower work satisfaction on the partof people in public agencies, especially at managerial levels(Buchanan 1974; Hayward 1978; Khojasteh 1993; Kovach andPatrick 1989; Lachman 1985; Paine, Carroll, and Leete 1966;Rainey 1983; Rhinehart and others 1969; Solomon 1986). Theseresults appear to support general stereotypes, as well as morescholarly analyses, that depict the public bureaucracy as a drearyplace to work.

More recently, however, Steel and Warner (1990) andDeSantis and Durst (1996) report that in the National Longitud-inal Youth Survey, a very carefully designed survey of younglabor force participants, public-sector respondents actually reportsomewhat higher levels of general work satisfaction than doprivate-sector respondents. The apparent conflict in the findingscan be explained. On questions about general work satisfactionsuch as, Do you like your job? public-sector respondents haveconsistently shown high levels of satisfaction, levels comparableto private-sector respondents (e.g., Kilpatrick, Cummings, andJennings 1964; Gore 1998). The studies cited above that foundlower work satisfaction among public-sector respondents usedmeasures of work satisfaction that refer to specific facets ofwork, such as promotion prospects, autonomy in the job, paylevels, coworkers, supervisors, and many others. These some-what lower ratings of satisfaction by public-sector respondents,particularly managers, tend to be concentrated on facets of theirwork that appear to present particular frustrations in the publicsector, such as lack of autonomy in some work settings due torules and political interventions and frustration with promotionpolicies for career civil servants who have reached high levels incivil service positions and cannot go higher without a politicalappointment. This suggests that the consistent findings of lowersatisfaction in the public sector are more indicative of particularfrustrations than of a general crisis in work satisfaction in thepublic sector (e.g., Lewis 1991). Further analysis of these


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particular patterns in the public sector is producing evidence ofdifferent patterns of work satisfaction there, as compared to theprivate sector (DeSantis and Durst 1996).

In addition to the stream of research on work satisfaction,there are now many studies that compare the work values andmotives of public and private employees. These studies haveconsistently found that public-sector respondents, particularlythose at higher professional and managerial levels, place highervalue than do their private-sector counterparts on the rewards andmotives that one would predict they would emphasize. Publicmanagers place higher value on public service; on work that isbeneficial to others and to society; on involvement with importantpublic policies; and on self-sacrifice, responsibility, and integrity.Especially at the upper management and professional levels,public-sector respondents place lower value on money and highincome as ultimate ends in work and in life (Crewson 1995b;Hartman and Weber 1980; Khojesteh 1993; Kilpatrick, Cum-mings, and Jennings 1964; Jurkiewicz et al. 1998; Lawler 1971;Rawls, Ullrich, and Nelson 1975; Rainey 1983; Siegel 1983;Sikula 1973a and 1973b; Wittmer 1991).

Conclusions from these studies are probabilistic generaliza-tions, such that there is overlap between respondents in the twosectors. Not all public- and private-sector respondents differ inthese ways (e.g., many people in private business place a highvalue on public and community service), and the differencesbetween the two sectors are not always large. For example,Jurkiewicz et al. (1998) found that respondents from two largeprivate firms placed a higher value on the opportunity to beuseful to society than did respondents from a variety of localgovernment agencies in a metropolitan area. Gabris and Simo(1995) found that public-sector respondents were no differentfrom private-sector respondents in preferences for monetaryrewards or for opportunities to help others.

Of course, such mixed findings are fairly typical in thesocial sciences, especially where findings come from studies thatemploy different opportunity samples and where respondentsdiffer by organizational level, occupation and profession, organi-zational function or mission, and other important variables. Inthat context, one can justifiably look at the preponderance offindings and other evidence. For example, Crewson (1995b)reports differences between public and private respondents on theGeneral Social Survey (GSS), a survey based on a nationalprobability sample. On thirteen of the fourteen repetitions of theGSS between 1973 and 1993, private-sector respondents weremore likely than were public-sector respondents to choose "high


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income" as the most important aspect of their jobs, usually byabout a 10 percent margin. Private-sector respondents were alsoconsistently less likely to choose "a feeling of accomplishment"as the most important aspect of a job by substantial margins—thatwere usually statistically significant—in every one of the fourteenrenditions of the GSS between 1973 and 1993. Given that suchpublic vs. private differences have tended to be sharper at thehigher professional and managerial levels, and that the GSSmixes all levels, these findings appear quite convincing about thedifferences in spite of some reversals of the findings in smallerstudies. Taking such considerations into account, one can arguethat the conclusions about public vs. private differences we havementioned are generally consistent.

These indications of a distinct set of values among manypublic-sector employees have been much discussed, and research-ers often point out that they suggest the need for alternativemotivational mechanisms in public organizations. Because organi-zational psychologists never have been able to develop a satis-factory way to measure work motivation, there have been fewdirect comparisons of work motivation in the public and privatesectors. The few studies that have used questionnaire measures ofwork motivation have found no differences in reported motivationand effort among public and private-sector respondents (e.g.,Rainey 1983). Surveys of very large samples of federal employ-ees have found that they give high ratings to their own effortsand to the importance of their own work and the work of theirorganizations, as well as other expressions of high levels ofmotivation and effort (U.S. Office of Personnel Management1979; 1980; 1983). Obviously, social desirability responses mayaccount for some of these results, but the upshot is that we haveno clear evidence of lower motivation and effort in the publicsector than in the private sector.

One interpretation of this evidence is that public-sectoremployees and managers encounter some particular frustrationsand disappointments in the public sector that show up in some ofthe findings on work satisfaction that we have cited. Since theyare influenced by a different pattern of motives and rewards,however, they cope with those frustrations and maintain levels ofmotivation and effort that are at least comparable to those in theprivate sector. The recent attacks on government and publicbureaucracy in the United States and some other countries maycause us to overlook the considerable problems of private-sectormanagers and employees and assume that things are better intheir setting. They certainly may not be, as suggested byCrewson's (1993a) recent finding that early labor force entrants

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into the public sector rate higher on quality measures than youngentrants into the private sector.

Again, these studies of work satisfaction and work-relatedvalues bring up the issues of convergence and impact on a prioriideas. Given the bleak reputation of public bureaucracy, onemight expect lower work satisfaction there, and public servantsare supposed to value public service more than money. As wehave noted, however, the findings on work satisfaction are morecomplex than that, suggesting equal or slightly higher generalsatisfaction in the public sector, coupled with patterns of frustra-tion with specific facets of the work in that setting. Together withother findings on self-reported motivation and effort, the evi-dence suggests that things are not necessarily so bleak in thepublic bureaucracy. In addition, while one might expect civilservants to place less value on money and more on public serv-ice, the dominant tendency in civil service reform and personnelreforms have emphasized precisely the opposite priorities. Civilservice and personnel reforms in the United States and othernations often have emphasized pay-for-performance programs andstreamlining of the procedures for firing employees. Theseemphases have spread through governments at all levels in theUnited States in spite of very little success and in spite of theirrunning contrary to much of contemporary thinking in the litera-ture on management and organizations about how one truly moti-vates employees (Ingraham 1993; Kellough and Lu 1993). Theyhave spread in spite of the studies we have cited that show noclear evidence of a problem with motivation and effort amongpublic employees (or at least one that would be improved bymimicking the private sector), especially a problem that resultsfrom constraints on firing employees or on connecting their payto performance ratings. Thus, in governmental policy makingabout public personnel administration, a priori assumptions onceagain seem to have defeated accumulated evidence.

The National Performance Review in the United Statesrecently has taken some initiatives that depart from historicalpersonnel trends. These trends include the effort to involveemployees in the reforms and to remove red tape that frustratesemployees, as well as less emphasis on standardized pay-for-performance schemes. The results of the NPR are still in doubt,and only time will tell us whether NPR reforms will be signifi-cantly different from previous efforts. In all likelihood, impactswill be attenuated because the NPR is chock full of contradictorypriorities, such as reductions of the federal workforce concomi-tant with the rhetoric about employee involvement. It will beinteresting in the long run to see if this and other initiativesincreasingly reflect the body of research that is reviewed here.


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ALTERNATIVE PLAUSIBLE HYPOTHESES:HOW MUCH CREDENCE?

We now turn to the question of how much confidence weplace in the patterns of convergence we have described. Inassessing empirical research findings about differences betweenpublic and private organizations, one has at least three choices.First, one can simply ignore empirical research and cling to thea priori. This is not a common approach, as exemplified in thepreceding section and in the obduracy of public managementscholars who assert that public organizations have more complexand ambiguous goals. Second, one can accept the findings of theresearch or consider these findings in connection with othersources of knowledge and opinion. Third, one can evaluate notonly the research but the research tradition and ask what set ofbizarre events (other than empirical veracity) might lead to suchconsistency of findings? We begin with the third approach.

Campbell and Stanley (1963) developed an approach to con-sidering "alternative plausible hypotheses," an approach thatfocuses on threats to the internal validity of empirically basedpropositions. But the approach has since been expanded wellbeyond the eight primary validity threats posed by Campbell andStanley. For example, Huck and Sandier (1979) compiled a muchmore detailed list to evaluate rival hypotheses in research find-ings. More recently, practitioners of metanalysis evaluation(e.g., Spector and Levine 1987; Cook and Leviton 1983; Bryantand Wortman 1985) have explored rival hypotheses in sets ofinterrelated studies.

Given the primary objectives of this study, we provide nometanalysis or formal analysis of rival hypotheses. Instead ofexamining the rival hypotheses for particular studies and sets ofstudies, we consider rival hypotheses to the core hypothesis thatwe have implicitly applied in our review of research:

If a number of empirical studies of public and private organizationsconverge in their findings about differences between those organizations,then those studies provide a valid explanation of differences (even whenthose explanations diverge from strongly held views of scholars andpractitioners).

The question, then, is what conjunction of errors, misunder-standings, or methodological artifacts might have led to empiricalfindings so often at odds with our a priori knowledge aboutpublic and private organizations? What are some of the rivalhypotheses to the one above that would lead us to lose confidence


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in the patterns of convergence? We consider some of the mostchallenging of these alternatives in the following sections.

Limitations of Questionnaires. Almost all the studies wehave discussed above are based on questionnaires. While ques-tionnaires are the predominant source of data in a wide variety oforganizational studies, questionnaire methods, as do all methods,present certain validity threats. Possible limitations include socialdesirability responses (and other such reflexivity problems),response bias, poor instrumentation, and weak construct validityof items.

Certainly social desirability responses are possibile whereone is studying such issues as organizational red tape, perform-ance, or goal ambiguity. Socially desirable responses may inter-act with sector or publicness; for example, persons working inthe public sector may feel a stronger pressure to report morenoble work motivations. There are, however, some argumentsagainst socially desirable responses as an explanation of dif-ferences in questionnaire responses from persons working inpublic versus private organizations. In the first place, some databases (e.g., Bozeman and Bretschneider 1994) and studies (e.g.,Pandey 1995) have included items to test for social desirabilityresponses and found no reason to be alarmed. Moreover, as ourreview has shown, public-sector respondents often respondunfavorably about their work, their organizations, and othermatters. Why should they take pains to make socially desirableresponses for some matters and not for other matters that appearequal in the degree to which they are sensitive or controversial?

Representativeness. Some early studies comparing publicand private organizations could be characterized, with onlymodest overstatement, as comparisons of banks and welfare agen-cies in one city or state. That is, some studies had samplesinadequate for valid inference about sector-related organizationaldifferences. Even so, such studies accumulated, and they beganto raise an interesting and potentially controversial issue inrelation to representativeness. Does an accumulation of studies,each of which has a limited sample, enhance validity and general-izability of a cumulative result? There can be plenty of argumentabout this, but it is interesting that on some of the points wediscussed earlier—such as, for example, repeated findings oflower satisfaction with some facets of work on the part of public-sector managers—no one reported a reversal of that finding? Ifthe results of the studies arc untrustworthy due to sampling error,why are the conclusions not more randomly distributed?


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Moreover, while representativeness remains a concern, morerecent studies have looked at a broad cross section of organiza-tions, often drawn from multiple geographic locations, oftenmatching public and private organizations according to their"core technology" (Thompson 1967), and controlling statisticallyfor important variables such as organizational size. Also, as wenoted earlier, we now have results from carefully designednational surveys such as the NOS and the NYLS that contributeto the patterns of convergence we have described. These and theother studies support the claim that the public-private distinctionhas received a more rigorous testing as to the representativenessand generalizability of findings than most concepts in organiza-tion theory.

Low Response Rates, Response Bias, and Selection Effects.Many of the studies that compare public and private organiza-tions are based on relatively low response rates (in the range of35-45 percent). This is not in itself troubling so long as care istaken to assess response bias and, especially, selection effects.The fact that much of published organization research, perhapsthe majority, is based on response rates of similar magnitudeshould not reduce our anxiety about possible bias. While there is,ultimately, no perfect means to determine whether the pool ofrespondents is significantly different from the pool of nonrespon-dents, a variety of statistical and methodological procedures areavailable to help make such assessments. Some of the researchcomparing public and private organizations have used theseapproaches, others have not.

In Sum. One general argument against the veracity of theempirical findings about differences between public and privateorganizations is that the methods and techniques employed areflawed and the data are unsatisfactory; thus, inferences inspirelittle confidence.

On Rejecting The Null Hypothesis. Certainly, there are sig-nificant limitations in the body of empirical research comparingpublic and private organizations. Most of the studies we havecited depend on questionnaires. Much of the research has beenperformed with limited resources and thus is based on relativelysmall samples, often samples of opportunity. Some studies arerife with post hoc explanation. Despite these important limita-tions, empirical findings on differences between public andprivate organizations cannot be dismissed out of hand. Through-out the social sciences, one criterion for findings is survivingpeer review processes (though there is some evidence that, as aguarantor of knowledge, peer review has a different and aweaker role in the social sciences). Ultimately, the most


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important reason is one that was not relevant two decades ago—the convergence of research findings.

In all sciences, convergence of research findings is one ofthe most crucial criteria for certification of research (e.g.,Hempel 1967). Among the social sciences, the problem with thisstandard is simply that few bodies of work meet this standard.While there are a few cases where organizational research hasshown reasonably convergent findings, the lack of convergentfindings is notorious. For example, studies of organizational size,seemingly one of the research topics where organizational mea-surement would pose little difficulty, have produced disparatefindings. Kimberly's (1976) review of more than seventy studiesdemonstrated that virtually every finding about the relationship ofsize to performance that could be obtained has been obtained.Nor is the scarcity of convergent findings confined to the softerof the social sciences. Economists have had no more success thanhave sociologists and political scientists in developing convergentfindings with respect to such straightforward questions as effectsof organizational size.

The consistency and convergence in findings of studies thatcompare public and private organizations are noteworthy and, atleast in a few cases, remarkable for the social sciences. Unlessthere is reason to believe that problems of measurement, logic, orbias are systematic across a wide range of studies (a possible, butnot very probable, proposition), the convergence of findingslends strong support to the conclusion that the results are true.Research on the public-private distinction is establishing thisdistinction as a well-founded concept in administrative researchand theory, showing a rare combination of rigorous examination,convergent results, and both theoretical and practical signifi-cance.

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