Organizational Implications of Divestment: A Comparison of Innovative Practices in Crown and Private Corporations in Canada

Abstract

The move to divest many of the Crown corporations in Canada over the last seven years has had far‐reaching economic and social effects. Since divestment's inception, however, little research has attempted to examine some of the managerial and organizational implications of these policies; in effect, to determine whether or not divested (and other private) companies actually do operate in a more proactive and innovative manner than do Crown corporations. This article reports on a recent exploratory study that compared the processes by which new innovations are implemented in Canadian Crown and private corporations. It also assesses the impact of a number of external environmental factors on private firm and Crown operations. The results suggest that private firms do differ from Crown companies in that privatized organizations tend to show a greater willingness to take risks in developing new innovations and offer significantly greater rewards for innovative approaches and behaviors than do Crown corporations. Implications for encouraging future innovative behavior among both Crown and private firms are discussed.