Organizational Status and Performance: A Conceptual Framework for Testing Public Choice Theories

Abstract

Popular belief is that ownership change (from public to private) brings about improved performance. But (i) ownership displays a spectrum, not an either/or; (ii) degree of competition is conceptually and often actually independent of ownership; and (iii) so is change‐of‐ownership's assumed instruments for improving performance, change in managerial incentive structures and reporting structures. The article surveys the relevant theories, popular and scholarly, and develops models for testing the relationships between status change (ownership) and performance (indices of productivity, profitability etc.), and between status change and internal organizational change (indices of reorganization and of linkage), in a small number of British organizations which underwent change in recent decades. Preliminary results of one or two analyses illustrate the methods and the possibilities.

Organisational status change and performance: The case of Ireland’s national telecommunications operator

“…A number of hypotheses adapted from the Dunsire, Hartley, Parker, and Dimitriou (1988) and Dunsire, Hartley, and Parker (1991) model were examined in order to disentangle the determinants of company performance. The three main hypotheses concerned the associations between: performance and capital market status change; performance and product market competition; and performance and internal organisational structure.…”

“…2 Organisational performance is an elusive characteristic. Despite the cloudy nature of the results from organisational status change studies, the model devised by Dunsire, Hartley, Parker, and Dimitriou (1988) and Dunsire, Hartley, and Parker (1991) nonetheless provides a useful systematic framework for examining the impact of public enterprise reforms such as commercialisation and privatisation on company performance. The model is therefore applied in this paper to examine the commercialisation and subsequent privatisation of the state-owned national telecommunications operator, Telecom É ireann.…”

“…To address this issue the study conducted for this paper utilises a model of organisational status change developed by Dunsire, Hartley, Parker, and Dimitriou (1988) and Dunsire, Hartley, and Parker (1991). Their model, which draws on elements of the government failure literature such as public choice and property rights theory, consists of three separate dimensions: the capital market, the product market and internal organisational structure.…”

“…Drawing on public choice and property rights literature Dunsire, Hartley, Parker, and Dimitriou (1988) and Dunsire, Hartley, and Parker (1991) derived a number of testable hypotheses concerning how improvements in enterprise performance are associated with changes in organisational status across the three dimensions of their model. The authors examined the performance of ten UK companies privatised during the 1980s and found that ''although a substantial number of organisations provided partial support, fewer than half of those studied provided completely convincing support for the hypothesis that improvement in performance is associated with status change away from public towards private ownership'' (Dunsire, Hartley, & Parker, 1991, p. 29).…”

95/01111 Whose utility: The social impact of public utility privatisation and regulation in Britain

“…Generally it is held by all but the most partisan of privatisation proponents, that the mere transfer of monopoly industries from the public to private sectors is insufficient in itself to achieve either the consumerist or efficiency outcomes attributed to the free market, for ownership is not the key variable Dunsire et al, 1988;Cullis & Jones, 1989;Parry, 1990;Bibby, 1992). In order for these outcomes to be realised, privatisation should be accompanied by the disassembling and restructuring of public monopolies, with a view to stimulating competition in production and supply:…”