Comparison of Characteristics of Private Product Producing Organizations and Public Service Organizations

Abstract

This analysis explores whether propositions and empirical findings of contemporary theories of organizations directly apply to both private product producing organizations (PPOs) and public human service organizations (PSOs). Eight central characteristics are compared: organizational values and goals, incentives, organizational structure, raw materials, power‐dependency relationships, technology, revenues and accountability, and environmental constraints. Major differences between PPOs and PSOs suggest that organization theories developed from findings about PPOs inadequately describe PSOs. Comparative research would demonstrate the need for new models of these organizational types. Since these types derive from contradictory assumptions and have differing characteristics, each should be sampled to the other's exclusion and generalizations made only to that type. The findings refute the popular assumption that all PSOs can privatize with equal success This is not a failure by PSOs to achieve PPOs' standards; rather the types pursue different values and accomplish different goals.

Prison privatization: An environmental catch-22

“…They seem to conclude that some government tasks simply should not be privatized because of their ideological significance. Schiflett and Zey (1990) reached a similar conclusion based on their organizational comparison of private product producing companies and public service organizations. Public service orga~iza-tions are environmentally constrained by many different legal, social, and political means, as well as some secondary economic factors.…”

“…In this environment, efficiency and effectiveness become undefinable and unmeasurable; thus organizational survival is more dependent on legitimacy than direct outcomes (Garland 1990;Hasenfeld and English 1974;Ogle 1998;Schiflett and Zey 1990). Ultimately these types of environmental differences were the major variables leading Schiflett and Zey (1990) to conclude that some public service organizations do not lend themselves well to privatization. 1 Private correctional service organizations face all of these environmental constraints.…”

“…Private companies have the freedom to adjust their goals and technologies as necessary to ensure efficiency and profitability, whereas most public organizations were created to serve specific existing institutionalized goals and technologies (Ogle 1998). Private companies' revenues are not generally subject to severe fluctuations based solely on ideological variation or political whim (Meyer and Scott 1983;Schiflett and Zey 1990;Wamsley and Zald 1973). Conversely, public organizations are subject to significant and varying legal and political mandates on their domain, goals, technology, and structure.…”

“…Conversely, public organizations are subject to significant and varying legal and political mandates on their domain, goals, technology, and structure. In fact, they can be and have been eliminated for political or ideological reasons regardless of their economic efficiency or effectiveness (Meyer and Rowan 1977;Pfeffer and Salancik 1978;Schiflett and Zey 1990). Consequently, private companies have more direct control of their survival, which is based on profitability, because they can focus primarily on efficiency and effectiveness; these are evaluated only by the board of directors, the investors, and demand.…”

“…Private organizations generally face fewer environmental constraints. These are primarily economic, and are evaluated only by each company's board of directors, the investors, and (indirectly) by their consumers (Pfeffer and Salancik 1978;Schiflett and Zey 1990;Scott 1995).…”