Public Versus Private Initiative in Arctic Exploration: The Effects of Incentives and Organizational Structure
Jonathan M. Karpoff
University of Washington - Michael G. Foster School of Business
Journal of Political Economy, 2005
From 1818 to 1909, 35 government and 57 privately-funded expeditions sought to locate and navigate a Northwest Passage, discover the North Pole, and make other significant discoveries in arctic regions. Most major arctic discoveries were made by private expeditions. Most tragedies were publicly funded. By other measures as well, publicly-funded expeditions performed poorly. On average, 5.9 (8.9%) of their crew members died per outing, compared to 0.9 (6.0%) for private expeditions. Among expeditions based on ships, those that were publicly funded used an average of 1.63 ships and lost 0.53 of them. Private ship-based expeditions, in contrast, used 1.15 ships and lost 0.24 of them. Of public expeditions that lasted longer than one year, 47% were debilitated by scurvy, compared to 13% for private expeditions. Although public expeditions made some significant discoveries, they did so at substantially higher cost (as measured by crew size or vessel tonnage) than private discoveries.
Multivariate tests indicate that these differences are not due to differences in the exploratory objectives sought, country of origin, the number of previous expeditions on which the leader served, or the decade in which the expedition occurred. Rather, they are due to systematic differences in the ways public and private expeditions were organized. Historical accounts indicate that, compared to private expeditions, public expeditions: (1) employed leaders that were relatively unmotivated and unprepared for arctic exploration; (2) separated the initiation and implementation functions of executive leadership; and (3) adapted slowly to new information about clothing, diet, shelter, modes of arctic travel, organizational structure, and optimal party size. These shortcomings resulted from, and contributed to, poorly aligned incentives among key contributors.
Number of Pages in PDF File: 41
JEL Classification: D73, L33, G38, H11, L22, N40
Date posted: May 9, 2000