公私利益的相互依赖性

OrganizationScience Vol. 20, No. 6, November–December 2009, pp. 1034–1052 issn 1047-7039 �eissn 1526-5455 �09 �2006 �1034 informs ® doi 10.1287/orsc.1090.0472 ©2009 INFORMS The Interdependence of Private and Public Interests Joseph T. Mahoney College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820, josephm@illinois.edu Anita M. McGahan AIC Institute for Corporate Citizenship, Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada, and Department of Global Health and Social Medicine, Institute for Strategy and Competitiveness, Harvard University, Boston, Massachusetts 02130, amcgahan@rotman.utoronto.ca Christos N. Pitelis Centre for International Business and Management, Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom, c.pitelis@jbs.cam.ac.uk The predominant focus in research on organizations is on private or public institutions without consistent considerationof their interdependencies. The emphasis in scholarship on private or public interests has strengthened as disciplinary and professional knowledge has deepened: Management scholars, for example, tend to consider the corporation as the unit of analysis, whereas scholars of public policy often analyze governmental, multilateral, community, and nonprofit organizations. This article advocates a partial merging of these research agendas on the grounds that private and public interests cannot be fully understood if they are conceived independently. We review three major areas of activity today in which public and private interests interact in complex ways and maintain that current theories of organization science can be deployed to understand these interactions better. We also suggest that theories of public-private interaction require development and describe a concept called global sustainable value creation, which may be used to identify organizational and institutional configurations and strategies conducive to worldwide, intertemporal efficiency and value creation. We conclude that scholarship on organizations would advance if private-public interactions were evaluated by the criterion of global sustainable value creation, and we identify organizational research opportunities that jointly consider public and private interests. Key words : private-public interaction; sustainable value creation History : Published online in Articles in Advance September 25, 2009. Introduction The field of organization science is devoting greater atten- tion to the interdependence between private and public interests. The December 2005 issue of the Academy of Management Journal contained several related articles on management and public policy, and a recent issue of the International Journal of Industrial Organization (2008) focuses on public-private partnerships. Despite this increased attention, research studies that deal specifi- cally with relationships between private and public inter- ests (sometimes referred to as “the general welfare” or “common good”) continue to be exceptional (Carlsson 2008). In this article, we maintain that the field of orga- nization science would be greatly served by a consis- tent, sustained focus on the connections between pub- lic and private interests (Glachant and Saussier 2006, Rangan et al. 2006). Worldwide discussion on public and private interests is currently at a fever pitch over the global financial crisis. The issue vividly shows that public and private interests cannot be fully understood if they are conceived as separate (Barney 2005, Hitt 2005, Jacobides 2008). In general, public interests are well defined only when private interests can be aligned or aggregated cogently. Almost without exception, the public interest favors some private interests over others. Ill-defined public interests may favor specific organizations and individu- als whose interests would not be favored if all members 1034 Mahoney, McGahan, and Pitelis: Perspective Organization Science 20(6), pp. 1034–1052, © 2009 INFORMS 1035 of a community were represented equally. In general, public interests run along a spectrum from poorly to well defined. Under this conceptualization, specific interests may become more or less aligned over time and shift in character between private and public. Private and public action may also activate the degree of alignment in interests, thus creating endogeneity in the public interest. For example, private transactions in subprime lending led to a substantial drop in the economic value of federally guaranteed mortgages in the United States (Coleman et al. 2008, Cowan and Cowan 2004), which in turn created a public interest in stabilizing the financial system. Also, public actions such as the release of oil reserves in the wake of high prices have substantive economic implications for pri- vate firms that invest in oil-extraction technologies under initial uncertainty around a government’s release pol- icy (Just et al. 2004). Furthermore, large firms with geographically diverse, specialized activities influence macroeconomic trade flows and economic development (Dunning 1993). These examples of how private and public interests interact and are inseparable illustrate the challenge of identifying interests, organizations, activi- ties, and institutions as independently private and public (Ostrom 1990). Conceptualizing public policy and especially the pub- lic interest has long been the subject of a rich research literature in the social sciences. Classical economists, including Smith (1776), considered the public interest as the overall wealth of society. Drawing on research by Robbins (1935), neoclassical economists used “alloca- tive efficiency” as a fundamental criterion for identi- fying effective economic policy in the public interest, with this key criterion defined as the generation of consumer and producer welfare through the effective deployment of scarce resources. Subsequently, organi- zation scholars developed alternative criteria for deter- mining actions in the public interest that emphasize intertemporal wealth creation under resource scarcity and identified how rewards to innovative investment are directed (Penrose 1959). Our approach in this article is complementary to this extant research literature and conceives of public inter- ests as a complex amalgam of interdependent individ- ual and private interests (along the lines of Mahoney and McGahan 2007). This perspective follows the tra- dition of Arrow’s (1951) impossibility theorem, which points to the theoretical intractability of aggregating pri- vate interests into a well-defined public interest. We also conceive of public and private interests as changing over time, as suggested in Doering’s (2007) presidential address to the American Agricultural Economics Associ- ation, which noted that most societies go through periods when public goods become quasipublic or private goods and that the opposite process occurs as well (Hirschman 1982). The changing concept of public goods throughout the economic history of the United States is documented in North (1990). Salient contemporary examples include higher education being increasingly valued principally as a private good (Burch 2009), and the $700 billion bailout of Wall Street enterprises in which specific pri- vate institutions may be fundamentally transformed to become quasipublic institutions (Zingales 2008). Public (or “collective,” Mishan 1982) and private goods are typically conceived as distinctive theoreti- cal constructs, but we emphasize here that the nuanced contextual details of interests can reveal that a particu- lar good may simultaneously have a public and private character. Furthermore, we maintain that the concept of “public or collective goods” should be expanded to allow for multiple levels of community, and particularly the global community. In other words, the unit of analysis for understanding the public interest is itself complex (Ostrom 1990). An alignment of private interests may occur at the level of the community, state, or nation, yet competing national interests, for example, may mean the global public interest is poorly defined. We also discuss the idea that many private interests are defined by reference to public institutions, prac- tices, norms, and incentives; for example, the private interests of public corporations arise from the legal, social, and cultural context that establishes the public corporation as a juristic person with limited liability. Private interests are often shaped by global collective goods, which are defined as nonexcludable across bor- ders, generations, and population groups (Kaul et al. 1999). Knowledge flow is the canonical example of a global public and collective good (Bell and Zaheer 2007, Stiglitz 1999). Health, peace, security, and a clean envi- ronment are examples of public and collective goods that may be global. Potentially catastrophic air pollution is a salient example of a global collective good that gener- ates extensive negative externalities (Lee and Alm 2004). Increasingly, international institutions such as the United Nations and the World Bank are redefining their mis- sions in terms of providing global public and collective goods, which often differentially shape private interests across geographical areas and over time. These examples indicate that private and public inter- ests are interdependent, yet, historically, private and public organizations have been examined primarily in research settings that emphasize one or the other exclu- sively. In particular, corporations have been studied principally by scholars of management and public insti- tutions have been the province of economics, politi- cal science, education, public health, and public policy. As a consequence, research has tended to emphasize, first, how private organizations such as corporations can be constrained in the public interest through regula- tion and other public policy (Spulber 1989), and sec- ond, how public organizations can benefit from insights Mahoney, McGahan, and Pitelis: Perspective 1036 Organization Science 20(6), pp. 1034–1052, © 2009 INFORMS about the organizational systems, structures, and prac- tices of private organizations (Simon 1976). Research at the boundaries tended to show how problems of the commons (or externalities) emerge in the aggregation of interests (Dahlman 1979, Libecap 1989, Stiglitz 1989). However, little research has been devoted to the com- plex character of many organizations as simultaneously public and private (Doering 2007, Huet and Saussier 2003, Stiglitz 1998). Notable exceptions include the research by Henisz and Zelner (2003) on nonmarket strategies and the interplay between business and pub- lic policy, Knott and Posen’s (2005) work on entry and exit in banking, the study of Ouchi et al. (2005) on public schools, and Mahoney and McGahan’s concern over “pervasive and worsening poverty among vast pop- ulations of the economically disenfranchised; natural- resource depletion; energy challenges; digitization; the globalization of many industries; the prospect of sky- rocketing interest rates; the integration of capital markets across many countries; corruption and terrorism” (2007, p. 85). Ouchi (2006) compares innovative with conven- tional school systems and concludes that school per- formance is tied to decentralized management systems. Such analysis and discussions will lead to healthy debate (e.g., Howard and Preisman 2007) and an increased like- lihood of more informed policy decisions. This article recommends a partial merging of research agendas across diverse areas of organizational research to integrate the study of private and public interests using innovative theory and methods. In particular, we call for joint research that emphasizes the consequences of pol- icy implementation for the interplay of public and pri- vate interests. The primary goal is to examine a range of subtle issues that reflect the connections among private and public institutions, behavior, and performance. The proposed agenda considers diversity in public interests, how public and private organizations align (or fail to align) their interests, how public and private behavior is shaped by the interaction between them, and how public and private interests merge and diverge dynamically. Three observations are made here in support of this agenda. First, a range of institutional forms such as public-private partnerships and governmental subcon- tracting can be explored more deeply through integration of theories and methods used by scholars with diverse disciplinary backgrounds and research agendas. Some private corporations, foundations, and agencies are tak- ing on responsibilities that previously were considered part of the public domain. Second, a large range of pri- vate actions have substantive consequences for the pub- lic. For example, many firms in low-income countries are locked into competitive disadvantages against rivals in high-income countries (Grabowski 1994). Third, a shift is occurring in societal expectations concerning the limited- liability corporation (McGahan 2007a). This institutional form, which was established in the 19th century, protects investors and managers from personal liability for actions they take as stewards of invested capital, provided that they do not act fraudulently or commit other crimes in the course of their duties. Social preferences for greater accountability are now calling into question this form of organization. Indeed, the concept of crime is being reconsidered and expanded to include “white-collar” and corporate offenses, such as infringements against the environment. The following sections discuss (a) these three major new developments in public-private dynamics, which collectively illustrate the compelling need for new ways of thinking; (b) conceptual developments concern- ing private-public interactions that can guide further research; and (c) a proposal to adopt a new criterion called global sustainable value creation to integrate the- ory and serve as a modern welfare criterion for evalu- ating policies, actions, institutions, and context by both private and public actors. This concept involves consid- ering strategies that promote intertemporal efficiency and economic value creation on a global scale. For exam- ple, on policies for addressing climate change, the cri- terion would involve analyzing objectives for achieving consummate performance (Williamson 1991) in environ- mental cleanliness over the long run and then aiming to achieve appropriate institutional and organizational configurations and actions that promote these objectives, given the current and probable future technologies for preserving the environment. We maintain that a focus on global sustainable value creation has important implica- tions for organizations, institutions, incentives, competi- tion, innovation, and global governance. Development #1: Important Institutions that Merge Public and Private Interests Research on the connections between public and pri- vate interests has focused primarily on externalities and agency questions such as the following: When and how do private interests aggregate to a common inter- est? How should decision-making authority be allocated among individuals for the public good? How can exter- nalities best be managed (Hart 1995b, Spulber 1989)? What determines the boundaries and the potential “opti- mal mix” between public and private in a mature market economy (Coase 1960, Hart 2003)? The public choice tradition has also raised questions about whether inter- ests can be aggregated and goes so far as to suggest that the public interest may be a fictionalized construct in which public policy is shaped in negotiations among par- ties that pursue private interests (Buchanan and Tullock 1962, Mueller 2003, Stigler 1971). The framing of these questions—and the implications both for public and business policy—has become limit- ing because institutions and organizations have formed Mahoney, McGahan, and Pitelis: Perspective Organization Science 20(6), pp. 1034–1052, © 2009 INFORMS 1037 that simultaneously reflect public and private interests (Ostrom 1990). Some of these institutions have existed for decades but have only recently become central to the public interest, and others have emerged recently. Examples include subcontracted military services (Avant 2005, Singer 2003, Baum and McGahan 2009), priva- tized prisons (McDonald 1990), and the Gates Founda- tion (Muraskin 2006), which is spearheading major ini- tiatives to improve global health. The design of these organizations can be seen as endogenously determined by how public and private interests are defined and rec- onciled (Dunbar and Starbuck 2006). Several areas of theory in related fields carry the potential to delve deeper into fundamental questions that reside in connections between public and private inter- ests within these institutions. First, research in strate- gic management considers how decision makers in a particular situation interact to create, capture, and sus- tain economic value (Song et al. 2002). The develop- ment and application of transaction-costs theory in the context of public-private interactions can indicate how the framing of decisions to subcontract essential mili- tary services, for example, shapes the subsequent emer- gence of specialized capabilities (Baum and McGahan 2009). Property rights and agency theories assert that public-private partnerships can be further understood as emerging from inadequate private and public options for resolving incomplete contracting problems (Hart 2003, Martimort and Pouyet 2008). Second, recent research on property rights consid- ered from a resource-based view yields insights about how capabilities are created in the public and pri- vate interest and how these capabilities are owned and controlled (Foss and Foss 2005, Kim and Mahoney 2005). Consider the privatization of prisons, which has become increasingly prevalent in the past decade (Morris 2007). Privately owned firms compete for con- tracts on diverse activities such as prison construction, prisoner transportation, guard services, food and recre- ation management, and sanitation and janitorial services. Some companies act as general contractors and manage all these services. Through their normal course of busi- ness, companies develop competitive advantages based on accumulating capabilities. Are these developed capa- bilities privately or publicly owned? Once an initial con- tract expires, should the subcontracting state or federal government have property rights to appropriate these capabilities? Do these capabilities serve public or pri- vate interests or both? How can these capabilities best be sustained (Yang et al. 2008)? Third, theories of agency relationships implemented in the context of a resource-based and capability-oriented view of institutional actors carry the potential to shed substantial light on governance and decision-making authority (Hambrick et al. 2008). For example, the Gates Foundation has influenced the agenda for research con- cerning neglected diseases in public health. One of the priorities for the Foundation is sponsoring discoveries related to an HIV vaccine (Muraskin 2006). Imagine that a vaccine is discovered, perhaps in a University laboratory under grants from the Gates Foundation. How would property rights to the vaccine be governed? Many universities make partial claims on licensing rights (Argyres and Liebeskind 1998). The interests of the Foundation, of patients, and of local governments would be of central concern. Coordinating commitment of pharmaceutical companies, distributors, clinicians, and others in effective and efficient delivery of the vaccine could be enabled by thoughtful research into the conse- quences for public and private welfare. In global public health, the