Difference and Similarities in the Public and Private Sector

Introduction

“Enterprise” no longer just refers to the creation of an independent business venture or the characteristics of model entrepreneurs or successful independent business people; rather it refers to the ways in which economic, political, social and personal vitality is best achieved by generalizing a particular conception of enterprise form to all forms of conduct to the conduct of: organizations previously seen as non-commercial, government and its agencies and individuals (Du Gray, 2004). Large businesses as well as small, public and private sector organizations all need to be enterprising (Thompson, 1999). The recent research in public sector entrepreneurial activity makes this comparative analysis between private and public sector entrepreneurship timely as the topic is emerging as an area of academic inquiry.

Theoretical Considerations

The term “entrepreneurship” has historically referred to the efforts of an individual translating a vision into a successful business enterprise (Collins and Moore, 1964; Hebert and Link, 1988). Gartner (1985, p. 697) has narrowly defined entrepreneurship as “the creation of new organizations”. Birley (2001) argued that entrepreneurship is about wealth creation and ownership and therefore also includes other routes to ownership such as franchising, corporate venturing, management buy-outs and business inheritance. Other scholars adopted “opportunity based” conceptualizations and suggested that entrepreneurship is about: “discovery and exploitation of profitable opportunities” (Shane and Venkataraman, 2000, p. 217); “the pursuit of opportunity without current control of the required resources” (Stevenson, 1997, p. 9); or “… a field of business (that) seeks to understand how opportunities to create something new … arise and are discovered or created by specific persons, who then use various means to exploit or develop them, thus producing a wide range of effects” (Baron and Shane, 2005, p. 7).

Definitions of public sector entrepreneurship are limited and diverse. Ramamurti (1986, p. 143) defined a public entrepreneur as “an individual who undertakes purposeful activity to initiate, maintain or aggrandize one or more public sector organizations”. Even though as Ramamurti (1986) stated there is a great demand for the public sector to become more innovative and dynamic, it seems to be even more difficult to be a successful entrepreneur in the public sector than in the private sector. Morris and Jones (1999) developed the following working definition “Public sector entrepreneurship is the process of creating value for citizens by bringing together unique combinations of public and/or private resources to exploit social opportunities” (Morris and Jones, 1999, p. 74).

The emergence of the entrepreneurship phenomenon in the public sector has raised an interesting debate in the public administration literature regarding the democratic responsibility of public managers and politicians (Zerbinati and Souitaris, 2005). In traditional political science literature, it is emphasized that there are distinct differences between private and public organizations (Lane, 1993). Since the mid-1990s further attention has focused on these differences and the potential impact of these differences on the frameworks for the emergence of entrepreneurship within the public sector (Forster et al., 1996; Graham and Harker, 1996; Boyett, 1997; Borins, 1998a, b). Public entrepreneurs need to ...