Private Action in Public Interest: The Comparative Governance of Social Issues

Strategic Management Journal, Forthcoming

64 Pages Posted: 26 Apr 2016 Last revised: 29 Aug 2018

Jiao Luo

University of Minnesota - Twin Cities - Carlson School of Management

Aseem Kaul

University of Minnesota - Minneapolis

Date Written: August 25, 2018

Abstract

We develop a theoretical framework to define the comparatively efficient organizational form for dealing with a social issue, based on the market frictions associated with it. Specifically, we argue that for-profits have an advantage in undertaking innovation and coordinating production economies, non-profits in playing a fiduciary role given ex post information asymmetry, self governing collectives in dealing with bounded externalities through private ordering, and state bureaucracies in governing general externalities. We build on these arguments to develop a mapping between combinations of these market frictions and the comparatively efficient arrangements to govern them, including a variety of hybrid arrangements such as private-public partnerships, social enterprises, corporate social responsibility, etc. Our framework thus contributes to research in strategy, organizations, and public policy.

Keywords: market frictions; externalities; information asymmetry; collective action; transaction cost; institutional economics; non-market strategy; non-profit; public-private partnerships; hybrid organizations

JEL Classification: D23, D6, G3, H4, L21, L3, M14, P32

Suggested Citation

Luo, Jiao and Kaul, Aseem, Private Action in Public Interest: The Comparative Governance of Social Issues (August 25, 2018). Strategic Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2769368 or http://dx.doi.org/10.2139/ssrn.2769368

Jiao Luo (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Ave. S
CSOM 3-360
Minneapolis, MN 55455
United States
1-612-626-1907 (Phone)

Aseem Kaul

University of Minnesota - Minneapolis ( email )

321, 19th Avenue S
3-412 Carlson School of Management
Minneapolis, MN 55455
United States

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