A Strategic Framework for Devolving Responsibility and Functions from Government to the Private Sector

• Author: Steven Cohen
• DOI: http://doi.org/10.1111/0033-3352.00047
• Date: 01 July 2001
• Published date: 01 July 2001

432 Public Administration Review •July/August 2001, Vol. 61, No. 4

Steven Cohen

Columbia University

A Strategic Framework for Devolving

Responsibility and Functions from Government

to the Private Sector

Whether a function should be performed within or outside government is a very broad issue that

relates to personal values and views concerning the relationship between individual and state, as

well as a complex set of management issues. Without trying to answer those questions here, this

article begins from the premise that a particular function has been judged by the political process

to be the responsibility of government. The article seeks to develop an approach for government

managers to use when deciding whether to perform the function directly in-house or to perform the

function indirectly through the use of a non-governmental organization. The first part of this article

begins by delineating distinguishing characteristics of government, nonprofit, and private organi-

zations, and then assesses the degree to which those characteristics impede or facilitate the perfor-

mance of public functions. The article then develops a framework and a method for making

privatization decisions. The decision to privatize requires strategic thinking; this article provides

an example of how a strategic framework might be applied by analyzing the issues that would be

faced in privatizing a key element of New York City’s homeless program.

Steven Cohen is the director of the executive MPA program and the gradu-

ate program in Earth Systems, Science, Policy, and Management at Colum-

bia University’s School of International and Public Affairs. He is the author of

The Effective Public Manager

(1998) and the co-author of

Environmental

Regulation Through Strategic Planning

(1991),

Total Quality Management in

Government

(1993),

The New Effective Public Manager

(1995),

Tools for

Innovators: Creative Strategies for Managing Public Sector Organizations

(1998), and numerous articles on public management innovation, public

ethics, and environmental management. Email: sc32@columbia.edu.

A new element has found its way into government de-

cision making in the United States as public officials are

asked to justify government funding of services and di-

rect government provision of services. Whether a job

belongs within or outside government is a very broad

policy issue that relates to personal values and views con-

cerning the relationship between the individual and the

state. Without trying to answer that question here, this

article begins from the premise that a particular function

has been judged by the political process to be the respon-

sibility of government. The article seeks to develop an

approach for deciding how the function should be car-

ried out—directly by government, or indirectly through

the use of a non-governmental organization.

This is a decision that government managers must make

every day. The first part of this article examines what

might be termed the “functional-matching” approach to

privatization. It begins by delineating the distinguishing

characteristics of government, nonprofit, and private or-

ganizations, and then assesses the degree to which those

characteristics impede or facilitate the performance of a

carefully defined set of typical public functions. The sec-

ond portion of this article seeks to put the theory into

practice by beginning the process of developing a frame-

work and a method for making such decisions. The func-

tional-matching process outlined here requires strategic

thinking. It is not a straightforward, formulaic set of tasks:

It requires decision makers to ask a number of critical

questions and then to use their judgment and experience

in framing a decision.

Approaches to Privatization

The modern impulse toward privatization is motivated

by various perceived problems that it seeks to solve. The

first is the supposed inefficiency of public enterprises due