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

72 Pages Posted: 15 Apr 2022

See all articles by Thomaz Teodorovicz

Thomaz Teodorovicz

Harvard University - Laboratory for Innovation Science at Harvard

Sergio G. Lazzarini

Ivey Business School, Western University; Insper Institute of Education and Research

Sandro Cabral

Insper Institute of Education and Research; Federal University of Bahia (UFBA)

Leandro Nardi

HEC Paris - S&O Institute

Date Written: January 31, 2022

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.

Keywords: governance modes, resource-based view, structured practices, strategy in the public interest, education

Suggested Citation

Teodorovicz, Thomaz and Lazzarini, Sergio Giovanetti and Cabral, Sandro and Nardi, Leandro, Can Public Organizations Perform Like Private Firms? The Role of Heterogeneous Resources and Practices (January 31, 2022). Available at SSRN: https://ssrn.com/abstract=4074187 or http://dx.doi.org/10.2139/ssrn.4074187

Thomaz Teodorovicz (Contact Author)

Harvard University - Laboratory for Innovation Science at Harvard ( email )

William James Hall, Sixth Floor
33 Kirkland Street
Cambridge, MA 02138
United States

Sergio Giovanetti Lazzarini

Ivey Business School, Western University ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil
55-11-45042387 (Phone)

Sandro Cabral

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil

Federal University of Bahia (UFBA) ( email )

Av. Reitor Miguel Calmon, s/n
Vale do Canela
Salvador, Bahia
Brazil

Leandro Nardi

HEC Paris - S&O Institute ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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