Major Differences between Public and Private Sector Organisations: a brief literature review
Major differences between public and private sector organisations have been specified and addressed by a range of management scholars. According to Wirick (2009) the main difference between public and private sector organisations relates to forms of ownership. Specifically, public sector organisations are owned and operated by government, whereas private sector organisations are not part of the government. The form of ownership as the main distinctive point between public and private sector organisations has also been mentioned by Kassel (2010), Sims (2010) and others.
Linked to the point above, aims and objectives of organisations have also been specified by authors as a major point of difference between public and private sector organisations. Kassel (2010) and Starling (2010) assert that the primary objective of organisations operating in private sector is profit maximisation. Gallos (2008) advises not to be deluded by charitable acts of private sector organisations in regards to intentions and insists that all of these acts are aimed at supporting the primary objective of private sector organisations which is profit maximisation.
The aims of public sector organisations, on the other hand, involve serving the interests of taxpayers through various manners according to the type of the organisation (Sims, 2010). For example, public schools aim to provide education to citizens within a country, whereas the objectives of public health organisations involve providing quality healthcare.
Importantly, the source of funding of organisations represents another point of difference between public and private sector organisations (Sabatier, 2007). Namely, public sector organisations are funded by taxpayers; therefore serve the interest of taxpayers, while private sector organisations are funded by individuals and corporate investors aiming to make a profit.
Gallos, J.V. (2008) “Business Leadership: A Jossey-Bass Reader” 2nd edition, John Wiley & Sons
Kassel, D.S. (2010) “Managing Public Sector Projects: A Strategic Framework for Success in an Era of Downsized Government” Taylor & Francis
Sabatier, P.A. (2007) “Theories of the Policy Process” Westview Press
Sims, R.R. (2010) “Change (Transformation) in Public Sector Organisations”, IAP
Starling, G. (2010) “Managing the Public Sector” Wadsworth
Wirick, D.W. (2009) “Public-Sector Project Management: Meeting the Challenges and Achieving the Results” John Wiles & Sons