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Comparison of Characteristics of Private Product Producing Organizations and Public ServiceOrganizationsAuthor(s): Kathy L. Schiflett and Mary ZeySource: The Sociological Quarterly, Vol. 31, No. 4 (Winter, 1990), pp. 569-583Published by: Blackwell Publishing on behalf of the Midwest Sociological SocietyStable URL: http://www.jstor.org/stable/4121360 .Accessed: 24/12/2010 23:40

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COMPARISON OF CHARACTERISTICS OF PRIVATE PRODUCT PRODUCING

ORGANIZATIONS AND PUBLIC SERVICE ORGANIZATIONS

Kathy L. Schiflett University of Kentucky

Mary Zey* Texas A&M University

This analysis explores whether propositions and empirical findings of contemporary theories of organizations directly apply to both private product producing organizations (PPOs) and public human service organizations (PSOs). Eight central characteristics are compared: organizational values and goals, incentives, organizational structure, raw materials, power-dependency relationships, technology, revenues and accountability, and environmental constraints. Major differences between PPOs and PSOs suggest that organization theories developed from findings about PPOs inade- quately describe PSOs. Comparative research would demonstrate the need for new models of these organizational types. Since these types derive from contradictory assumptions and have differing characteristics, each should be sampled to the other's exclusion and generalizations made only to that type. The findings refute the popular assumption that all PSOs can privatize with equal success. This is not a failure by PSOs to achieve PPOs' standards; rather the types pursue different values and accomplish different goals.

Either private product producing organizations (PPOs) or public human service organizations (PSOs) inform virtually all theoretical models of organizations. Consequently, many private sector theorists assume all organizations, including PSOs, can be privat- ized with equal success. This implies there is one best way to organize (Zedlewski 1979; Musolf and Seidman 1980; Cutt 1982; Gold 1982). They further insist that, since the boundaries, if any, between PPOs and PSOs are becoming increasingly blurred, they should not be considered separate types (Murray 1975; Shostack 1977; Musolf and Seidman 1980; Cutt 1982; Gold 1982; Bozeman 1987). Accordingly, they support applying the business administrative practices of PPOs to PSOs.

*Direct all correspondence to: Mary Zey, Department of Sociology, University of Wisconsin-Madison, Madison, WI 53706.

The Sociological Quarterly, Volume 31, Number 4, pages 569-583. Copyright @ 1990 by JAI Press, Inc. All rights of reproduction in any form reserved. ISSN: 0038-0253.

570 THE SOCIOLOGICAL QUARTERLY Vol. 31/No. 4/1990

Other researchers find distinct differences between these organization types (Siffin 1962; Sarri and Hasenfeld 1978; Files 1981; Stein 1981). Divergent values, goals, incentives, structure, power and dependency, revenue acquisition, and environmental constraints prohibit joining PPOs and PSOs in one nondistinguishing organizational category (Rainey, Backoff, and Levine 1976; Hasenfeld 1983). Also, public management scholars and practitioners seeking to enhance managerial effectiveness insist on type distinction from PPOs (e.g., Rainey, Backoff, and Levine 1976; Allison 1979). Anecdotal evidence, moreover, implies these organizations differ substantially (cf., Rumsfeld 1979; Califano 1981; Blumenthal 1983). The differences between PPOs and PSOs bring these researchers to agree with Lawrence and Lorsch (1967) and Wood- ward (1965) that there is not one best way to organize.

We define PSOs as human service organizations publicly held by government. They provide services such as income, health care, or employment subsidies. Examples include, but are not limited to, public schools, welfare agencies, and public hospitals. Thus, where the designation PSO is used, the reader should assume that only government supported human service organizations are designated. PPOs are privately held organizations with a tangible product. Examples include automobile manufacturers, electronics equipment manufacturers, and grocers. Where the designation PPO is used, the reader should assume that only private product producing firms are designated.

Although the literature debates the characteristics of PPOs and PSOs, no one sys- tematically contrasts the differences between the types. This article sheds light on how they differ with regard to 8 major characteristics: (1) organizational values and goals, (2) incentives, (3) organizational structure, (4) raw materials, (5) power dependency relationships, (6) technology, (7) revenues and accountability, and (8) environmental constraints. Rather than attempt a taxonomy or a classification of all organizations (for such taxonomies, see McKelvey 1982), we contrast ideal polar types, excluding mixed types, in the tradition of Rothschild-Whitt (1979) and Knoke and Prensky (1984). We have excluded mixed types, such as client paid PSOs, and PPOs that perform functions for government (Donahue 1989), because such organizations may be construed as both public and private sector. Therefore, only agencies funded solely by taxpayers' money, donations, or grants are compared with such private organizations as banks and insurance agencies, which produce human services for profit. Although variation exists within each category, only differences between the polar types interest us.

PPOs and PSOs exhibit two dimensions: the charter dimension, which varies between private and public organizations; and the function dimension, which varies between product and service producing organizations. Description of the difference between PPOs and PSOs implies a two-by-two configuration (see Figure 1). Cell 1 contains PPOs; Cell 4, PSOs. These, the most diverse of the four types, are our focus. Cell 3 represents private service producing organizations such as banks and insurance agencies; Cell 2, public product producing organizations such as the TVA (Selznick 1960), relatively scarce in capitalist countries (e.g., the U.S. government produces few, if any, products that compete with private enterprise). Rather than elaborate the differences between Cells 3 and 4 to expose the variance between private and public organizations in the service sector, we compare polar types to treat both function and charter differences. Characteristics 4, 5, and 6 below (raw materials, power-dependency relationships, and technology) rest largely on the function of product producing versus

Characteristics of Private Product Producing Organizations 571

Function Charter

Private Public

Cell 1 Cell 2

Product Private Product Producing (PPOs) Public Product Producing Producing

(Examples: automobile (Example: TVA) manufacturers, electronic

equipment, grocery stores)

Cell 3 Cell 4

Service Private Service Producing Public Service Producing (PSOs) Producing

(Examples: banks, insurance (Example: public schools, agencies, privately owned state welfare agencies,

hospitals) publicly owned hospitals)

Figure 1. Function and Charter of Private Product Producing Organizations and Public Service Organizations.

service producing; the remaining, on the charter of private versus public. The combina- tion of these two dimensions creates maximum diversity between PPOs and PSOs.

Before comparisons proceed, analysis requires we clearly explicate a problem in other typologies of organizations. Organizations are often ranked on three dimensions: charter-publicly versus privately held; function-service versus product producing; motive-not-for-profit versus for-profit. Our analysis types organizations by charter and function, comparing privately held product producing organizations with publicly held service organizations. Some authors (Weisbrod 1977, 1988; Rose-Ackerman 1986) fail to differentiate between charter and motive. They thus discuss privately held organizations as though they all seek profit. This is clearly not so. We do not compare for-profit and not-for-profit organizations; whether a service organization is nonprofit is not relevant to our analysis, except as we specifically discuss organizational motives.

POINTS OF COMPARISON Analysis compares PPOs and PSOs on 8 major points mentioned above and elaborated below.

Organizational Values and Goals The logic that shapes organizational values of PPOs is formal rationality, while the

logic at the basis of the organizational values of PSOs is largely substantive rationality. Weber (1968) delineates four ideal types of authority, two of them rational-legal- rational and value-rational. He associates with each authority type, except value- rational, a corresponding organization type that implements its objectives. However,


value-rational authority recently has been used to explain professional organizations and churches (Satow 1975; Wood 1978).

Value rationality is a belief in work unto itself rather than as a means to material profits (Weber 1968, p. 24). PPOs are largely instrumental-rational, while PSOs are more often substantive- or value-rational. PSOs often confront a conflict between an abstract legal certainty (means-ends, instrumental relationship) and the desire to realize substantive, value-driven goals. To some extent, they exercise counter legal-rational action (inefficient means-ends relationships) and aspire to be value-rational. They fol- low not only legal-rational, but also value-rational standards, that is, the values members hold.

In Etzioni's (1961) terms, compliance in PSOs is chiefly normative. In its ideal state, the organization appeals to its members to work for it because it is "right," "fair," and "for the good of the organization," not because it is "profitable," likely an appropriate appeal in PPOs. In PPOs compliance more likely derives from monetary remuneration; bureaucratic authority chiefly achieves social control. PSOs also rely on direct bureaucratic authority (e.g., supervision and standardized rules) for control (Perrow 1976), but rely more heavily on moral appeals based on substantive values (e.g., equality, fairness, and consistency) applied consistently and universally.

Although both PPOs and PSOs are goal-oriented and both are criticized for discrep- ancies between stated (official) goals and actual (operative) goals' (Perrow 1968), their respective goals feature some major differences. Gibson, Ivancevich, and Donnely (1976, p. 69) indicate that PPOs' major goals are "profitability, productivity, and growth." PSOs' goals differ because they are "mandated to protect and to promote the welfare of the people they serve" (Hasenfeld 1983, p. 1), not to make profits nor to maximize production, but to deliver public services to individuals or communities deemed appropriate (Sarri and Hasenfeld 1978; Cutt 1982). Although PSOs do not seek a profit, Cutt (1982) proposes that a major goal is to either break even or maintain enough capital to survive. In contrast, many PPOs' major goal is profit (Harshbarger 1974); customer welfare is incidental to their own well-being or survival.

Economic goals are generally considered clearer, more consistent, and quantifiable, and are usually thought possessed by PPOs as the major actors in the economic market (Buchanan 1974, 1975; Rainey, Backoff, and Levine 1976; Gold 1982). Siffin (1962) claims PPOs' goals are more rational and tangible than PSOs', and Files (1981) suggests they are more definite and precise. Although both organization types may hold complex and conflicting goals, PSOs tend more often to do so because of PSOs' multiple service objectives and political nature. These same grounds render PSOs' goals ambiguous (Cohen and March 1974), intangible, and problematic (Newman and Wallender 1978).

Meyer and Rowan (1977) find that official PSO goals often serve as an organizational mechanism to elicit legitimization and support from a broad range of social interest groups. They label official goals as "institutionalized myths," and note that since these may be stated in abstract and vague terms to appeal to the diverse values and norms of external groups, such formulations may impede the rational-efficient functioning of the organization. PSOs' goals often provide post facto justification and rationale for organizational activities that might be challenged. Every PSO action taken involves value choices and moral decisions that may have little or no support among diverse publics.


Since PPOs' goals are set by their boards of directors to earn profits, major strategies are economic. PSOs' major management strategies are political consensus and compromise, as principal goals are "determined through negotiation processes among interest groups" (Hasenfeld 1983, p. 109) often external to the organization. PSO administrators' attempts toward internal consensus typically result in diverse definitions of organizational goals, formed as political "resultants" (as Allison [1971] calls them) of compromise among staff and publics. The multiplicity of interest groups increases the complexity of strategies and the ambiguity, inconsistency, and contradiction in goals. In contrast, PPOs' managers and boards of directors are highly involved in strategy setting, while publics and lower level employees are less involved.

Incentives Incentive structures are often thought necessary for organizational commitment (see

Knoke and Prensky 1984). Knoke and Wood (1981, p. 10) observe that "Commitment directs a participant's attention toward collective interests and welfare and away from individual pursuit." Highly committed participants identify strongly with their organization's aims and purposes and will perform exceptionally towards its objectives (see Hirschmann 1970).

Etzioni's (1961) and Clark and Wilson's (1961) works inform much of the contemporary work on incentive structures. The latter define types of incentives and Etzioni, types of power/compliance relationships. They agree that PPOs emphasize utilitarian incentives such as wages, salaries, pensions, and other monetary compensation to obtain members' compliance (labor). PSOs stress normative incentives such as participants' values, needs, perceptions of fair share, and sense of responsibility to fellow humans; and secondarily, monetary incentives. Normative incentive structures generate high levels of moral commitment to the organization; members labor at least partially due to shared values.

Tightly controlled bureaucratic structure and formalized rules and regulations may defeat the purposes of PSOs (Schaupp 1971; Knoke and Wood 1981), as they mitigate moral commitment and normative incentives. Thus, normative incentives serve the same employee control function in PSOs as hierarchy and formalization in PPOs (Franklin 1975).

Organizational Structure Since Weber's seminal work, many researchers have analyzed various types of orga-

nizations to determine whether their structural dimensions vary together (e.g., Udy 1959; Stinchcombe 1959). Contemporary researchers find organizations multi-dimensional and that these dimensions differentially relate (Hage and Aiken 1969; Scott 1981; Hall 1982). The Aston Group (Pugh et al. 1969) demonstrates the multi-dimensionality of organizational structure and differentially related structural characteristics across public and private organizations, based on 46 work organizations in the English Mid- lands. Child's (1972) replication of the Aston Group's study, which samples 82 British organizations, finds that while Weber's model might describe manufacturing organizations, the complex multi-dimensional model may better depict private service organizations; and that private service organizations do not fit the bureaucratic model as


congruently as PPOs. Although Child's sample is only private enterprises, PPOs' structures differ from those of private service organizations. One would expect that PSOs vary even more from PPOs than do private service organizations.

PPOs' and PSOs' structures diverge with regard to power, process, and rule consistency. There are countless studies of PSOs' dual power structures (professionals and administrators), in such organizations as prisons (Jacobs 1977), hospitals, and school systems (Siffin 1962; Rainey, Backoff, and Levine 1976; Lewis and Lewis 1983). Many PSOs' decision-making and power are more decentralized than PPOs' (Meyer and Rowan 1977; Meyer and Scott 1983). Other structural characteristics controlled, PSOs are more complex and decentralized and thus are often "loosely coupled" (Weick 1976), with means unrelated to ends, processes irregular, and technologies implemented after extensive trial-and-error search procedures. This differs from PPOs' more rational means-ends relations, regular processes, and standardized technologies. Decentralized decision-making, dual power structures, and overall greater complexity in PSOs com- monly bring more and greater contradictions, less specificity and clarity in regulations, and more conflict between bureaucrats and professionals than found in PPOs of similar size.

Raw Materials Hasenfeld (1983) suggests the two organizational types use different types of raw

materials: PPOs process inanimate objects; PSOs, human beings. Sarri and Hasenfeld (1978) submit that humans are not only the raw materials, but also the products of PSOs, as their major objective is to change humans through processing them, individually or collectively.

PPOs' products are tangible, concrete, and not as perishable as PSOs' services: PPOs can store their products as inventory, unlike PSOs (Murray 1975; Greenberg 1982). PPOs' clear definitions of end products (Harshbarger 1974) provide them and consum- ers clear guidance for evaluating outputs (Cutt 1982; Hasenfeld 1983). PSOs' less explicit definitions render outcome evaluations more difficult.

Unlike PPOs' raw materials, PSOs' are not value-neutral (Perrow 1965); they are value-laden, socially and morally identifying actors with an ideological component. Furthermore, as humans, PSOs' raw materials are self-initiating: through humans' self-action, these organizations can change their human raw material's nature. The clients interact with the production processes meant to change them, thus determining their success.

Power-Dependency Relationships Hasenfeld, Rafferty, and Zald (1987) utilize a power-dependency model to depict the

relationship between organization and client. Clients need PSOs' goods and services while PSOs need clients to justify their existence, obtain finances, operate their service technologies, and demonstrate their effectiveness. Clients depend on PSOs directly, which reflects their need for PSO resources and services and inversely relates to their ability to obtain resources and services elsewhere.

PSOs have a power advantage over clients when their client dependency is less than clients' PSO dependency (Cook and Emerson 1978). Hasenfeld and associates (1987)


point out PSOs' considerable structural power advantage over clients. They control more resources and in fact often have a monopoly or quasi-monopoly over their services. Thus, PSOs usually hold power over their clients and more so than PPOs over their customers (individuals or organizations), who often can turn elsewhere.

The power advantage of PSOs over PPOs in relation to clients is augmented by PSOs' intense involvement with clients. PPOs' contact is limited to a single point, primarily at the purchase of the product rather than its production. The purchase decision usually presents a field of choices, unless there is a monopoly. PSOs' clients are generally indirectly involved in the purchase, but directly in the production and consumption of the services (Rainey, Backoff, and Levine 1976) and contact is extensive: "The client is the recipient and consumer of the service, ... is the raw material to be worked upon, . . and becomes a quasi-member of the organization" (Hasenfeld 1983, p. 177). Furthermore, individuals in political units, not just clients, pay for PSO services through taxes, usually coercive since required by law (Newman and Wallender 1978; Cutt 1982). PPOs tend to develop largely instrumental/functional relationships between sales personnel and customers; customers maintain control over the purchase process. In contrast, in face-to-face contact with the professional, PSO clients often lose power through dependency on services, resources, and the expertise of professionals.

According to Lipsky (1980), PSOs develop largely instrumental relationships between professionals and clients through professionals' bureaucratic control of the latter. Although such relationships may for clients be largely nonvoluntary, this does not mean clients are helpless: professionals depend on clients' compliance in order to evaluate their behavior or performance.

On the one hand, PSOs have a great power advantage over their clients, one greater than between PPOs and their customers; on the other, the power advantage of PSOs in relation to their funding agencies is less than that of PPOs vis-a-vis their funding sources. That is, the ultimate dependency of PSOs on a single source of funds, the government, greatly limits their power.

Technology According to Perrow (1967, p. 195), technology is "the action that individuals

perform upon an object, with or without the aid of tools or mechanical devices, in order to make some changes in the object."2 One difference between the technologies of PPOs and PSOs is the extent to which knowledge of processing is standardized. Since customers do not hold a close, quasi-membership relationship to PPOs, PPO knowledge technologies are standardized and generally require little or no strategic search for the technology appropriate to each product; in contrast, PSOs' knowledge technologies tend to be unstandardized and quite vague, requiring extensive strategic searches for the technology proper for each service.

PPO technology aims to continually and efficiently produce standardized and mar- ketable products (Rainey, Backoff, and Levine 1976; Greenberg 1982). PSO technology seeks not standardized products, but rather "to change the physical, psychological, social, or cultural attributes of people in order to transform them from a given status to a new prescribed status" (Hasenfeld 1983, p. 111). In fact, the complexity of human attributes requires that PSOs should frequently change and customize their technolo-


gies for each client. However, "street-level bureaucrats" often minimize or wholly disregard client differences, standardizing interaction as well as treatments in order to control client performance or outcomes (Lipsky 1980).

A number of factors affect administrators' certainty about technology: (1) the extent to which desired outcomes are tangible and well-defined; (2) the degree of stability and invariability of the raw materials; and (3) the knowledge available about cause-effect relationships in the processing of raw materials. Non-routine technology and a complex and unstable environment, variability among clients, unpredictable consequences of techniques, and uncontrollable changes in the raw material (i.e., clients) enhance decision-making uncertainty. Since these characteristics occur more often in PSOs than PPOs, PSOs experience greater uncertainty in decision-making.

Revenues and Accountability Differing sources of revenue determine each organizational type's accountability.

Although both PPOs and PSOs obtain revenue externally, the channel of receipt differs. PPOs' revenues come from loans or from sales of products in the targeted private market (Harshbarger 1974; Rainey, Backoff, and Levine 1976); PSOs' accrue indirectly from taxes or the general public and directly from funding agencies. These differences enable PPO customers to take their business elsewhere, enhancing PPO accountability to them. In contrast, PSO clients have fewer alternatives, rendering PSOs less accountable.

PSOs' dependency on appropriations, donations, and grants (i.e., federal, state, and local governments) for a steady flow of revenue fundamentally distinguishes them from PPOs. PSOs' receipt of necessary resources depends upon some degree of consensus about their domain among those elements or interest groups that control access to resources. Forming this consensus is particularly complicated because it cannot be negotiated via market mechanisms, and organizational activities are not subject to the relatively simple criterion of profitability as in PPOs. Rather, negotiations may be affected by (1) ideological compatibility between the domain and key actors in the task environment, (2) support for the organization by important political and professional elites, (3) potential threats of the domain to the PSO's flow of clients and resources from other organizations, and (4) benefits that may accrue to other organizations. Without such domain consensus, interest groups are likely to challenge the PSO legitimacy and withhold critical revenues. Therefore, PSOs are often vulnerable to their environment, dependent on a single or a few funding agencies. PPOs, in contrast, can change location, redefine their market, or close a plant operating in a less than friendly environment. As a result, PPOs have a greater ability than PSOs to manipulate their funding sources. Insofar as PSOs depend on the government and on interest groups for support, they tend to be controlled by the political/legal environment (Sarri and Hasenfeld 1978). Furthermore, Newman and Wallender (1978, p. 76) suggest this threatens autonomy, as such "resource contributors may intrude into the internal management" of the organization. This is not the case for PPOs; they do not lose control over their internal planning and management processes as a function of acquiring resources (Rainey, Backoff, and Levine 1976). Thus, while PPOs enjoy less accountability than PSOs vis-a-vis their task environment, the situation is reversed with regard to clients.


Environmental Constraints Multiple social and political mechanisms constrain PSOs, while PPOs experience

select economic constraints. The taxpayer's vested interest in PSOs exposes them to scrutiny by multiple and diverse publics; PPOs are generally evaluated by their boards and select consuming publics.

A close relationship has always existed between the predominant social and cultural beliefs of a period and the particular form and direction that human services adopt. PSOs' characteristics and goals reflect the ideologies of dominant elites concerning the causes of human problems and needs, the values that must be upheld, and the means of response. A significant proportion of the revenues available to PSOs are publicly controlled, accessed through political processes. In addition, a large array of legal constraints define and control many conditions PSOs and their services must meet. Both funding agencies and the public, especially the press, scrutinize PSOs. A human service may be eliminated for political or ideological reasons without assessing efficiency within the organization: the rhetoric of efficiency is used to eliminate PSOs on the grounds of inefficiency.

This is not to say that economic conditions do not influence PSOs. On the contrary, they affect the type, range, and magnitude of human problems and needs PSOs address. For example, massive unemployment produces immense social and personal disloca- tions that heighten demand for the intervention of such organizations as welfare, mental health, and child and family service agencies.

CONCLUSIONS Four major conclusions emerge from our comparison of PPOs and PSOs on 8 essential characteristics (see Table 1). First, assumptions about PPOs minimally pertain to PSOs. Second, empirical findings do not apply across organizational types. The research demonstrates that operational definitions and congruency between conceptual and operational definitions are limited across PPOs and PSOs. However, few researchers have attempted to test the validity of organizational relationships for both. That administrators' and professionals' perceptions of PSOs differ from managers' and employees' perceptions about PPOs complicates data collection. Nevertheless, existing research evidence implies that the directions and magnitudes of relationships between characteristics of organizations differ sharply between PSOs and PPOs.

Third, when other characteristics are controlled, PSOs are more complex than PPOs in nearly every aspect of functioning and structure. PSOs have competing sociopolitical goals, dual power structures, and rule contradiction. Their raw materials interact with their technical processing to redefine the production process, which is generally non- standardized and ill-defined. Furthermore, PSOs have loosely-coupled means-ends relationships, accountability to numerous types of funding agencies and publics, un- identifiable domains, great resource dependency, and multiple, diverse task environments. Consequently, their management tasks are not defined well by existing organizational models.

Finally, attempts to privatize PSOs are problematic due to the differences between private and public organizations in technologies, power dependence relationships, and


Table 1 Summary: Comparison of Private Product Producing

Organizations and Public Service Organizations Private Product Producing Public Service

Organizations Organizations 1. Organizational Values and Goals

a. Value work as means to ends. a. Value work for itself. b. Are based on instrumental-rational b. Are based on value-rational action.

action. c. Hold major goals of profitability, c. Hold major goals of enhancing

economic efficiency, productivity, and individuals, promoting political consensus economic growth. and compromise, and maintaining capital.

d. Seek customer's welfare only to the d. Seek to enhance client's personal extent that it influences the well-being by shaping or altering personal organization's welfare. attributes.

e. Hold clear, quantitative, and consistent e. Hold ambiguous, qualitative, and goals. inconsistent goals.

f. Hold operative goals, closely related to f. Hold operative goals, often unrelated to means and rational. means.

g. Pursue goals determined by board of g. Pursue goals determined by public directors, based on private interest, and interest groups through negotiation. implemented by authority.

h. Hold goals defined within the h. Hold goals often defined by external organization; thus, operative goals may interest groups that supply resources; closely relate to officials goals. thus, operative goals may deal with

internal functions, while official goals may be little more than institutionalized myths.

2. Incentives a. Emphasize utilitarian incentives such as a. Emphasize normative incentives based on

wages, salaries, pensions, and other values of employees with secondary monetary compensations. emphasis on utilitarian incentives.

b. Rest on compliance based on b. Rest on moral compliance. calculation of benefits.

3. Organizational Structure a. Have a single power structure. a. Have a dual power structure (i.e.,

professionals and administrators). b. Hold authority as a major basis of b. Hold multiple power bases.

power. c. Exhibit a centralized distribution of c. Exhibit a decentralized distribution of

power. power. d. Have tightly coupled processes. d. Have loosely coupled processes. e. Exhibit consistent rules and regulations. e. Exhibit contradictory rules and

regulations. 4. Raw Materials

a. Raw materials are inanimate objects. a. Raw materials are human beings. b. Produce standardized products. b. Produce client-customized services. c. Produce tangible products. c. Produce intangible services. d. Produce storable, less perishable d. Produce unstorable, highly perishable

products. services.


Private Product Producing Public Service Organizations Organizations

e. Produce products amenable to e. Produce services not amenable to evaluation, as characteristics are defined evaluation, as characteristics are not and observable. well-defined and not observable.

5. Power-Dependency Relationships a. Customers hold power over the a. PSOs hold power over the clients.

organization. b. Customers contact the PPO at point of b. Clients contact the PSO at point of

purchase, solely as a purchaser of a purchase, as the raw materials to be product. processed and as quasi-members.

c. Customers, according to classical c. Clients lose power to professionals as economic theory, have power since "the experts. customer is always right."

d. Customers choose among PPOs and d. Clients cannot choose among PSOs and their products. their services.

e. Customers pay for products they e. Third-party agencies directly and choose to purchase. indirectly (through taxes) pay for services.

6. Technology a. Have standardized technologies, a. Have unstandardized technologies. b. Require no search for implementation b. Require a search for implementation of

of technologies, technologies. c. Have no ideological component to c. Have ideological component to

technology. technology, as the process is performed on human beings.

7. Revenues and Accountability a. Legitimize revenues by market-share a. Legitimize revenues by domain claims.

claims. b. Generate revenues from sales of b. Receive revenues from

products. interest-groups/agencies and taxes. c. Are accountable to purchasers. c. Are accountable to funding agencies and

taxpayers. d. Can manipulate multiple sources of d. Depend on limited number of funding

resources. agencies. 8. Environmental Constraints

a. Depend on customers for capital. a. Depend on public through taxes and on agencies through allotments, for capital.

b. Are insensitive to the dominant b. Are sensitive to the dominant cultural cultural system, as goals are and political systems, as goals and economically determined, resources are politically determined by

funding agencies and clients.

accountability measures. Such efforts substitute profit goals for human service goals and place greater emphasis on organizational autonomy in relation to clients and the government; client service becomes more standardized, less individually appropriate, and less tailored to needs. This transformation of public into private service organizations may be both difficult and ineffective.

Our comparative analysis impels the following recommendations. First, due to the


differing characteristics of PSOs and PPOs, practicality concludes that attempts to privatize PSOs by applying business models-strategies and tactics-of organizational functioning will be ineffective and are not justified; the reverse holds, as well. It is more fruitful to distinguish between PPOs and PSOs as distinct types when theorizing and applying findings. Second, PPO and PSO comparison should be systematic.3 For example, much could be gained by viewing the relationships among values, goals, incentive systems, and allocation process within each type respectively; then, relationships within PPOs could be compared with those within PSOs. Third, to construct cogent and valid theories and models of organization, theorists and analysts should sample exclusively either PSOs or PPOs, unless comparison is the object of analysis; data combined from mixed samples reveals little or no relationship between variables.

ACKNOWLEDGMENTS The authors thank Charles Bonjean, Yeheskel Hasenfeld, Paul DiMaggio, David Knoke, Charles Perrow, Mayer Zald, and the anonymous reviewers for their comments on earlier drafts of the manuscript.

NOTES 1. See Mandell's (1971) analysis of welfare departments, which perpetuate poverty; Martin-

son's (1974) of therapeutic conventional institutions, unable to rehabilitate offenders; and Goff- man's (1961) of mental institutions, which further diminish the individual's self-concept.

2. Woodward (1965) elaborates 3 categories of operative technology: (a) small batch or unit products, custom built; (b) mass production, generally by assembly line; and (c) continuous flow production, totally transforming raw materials by machines.

3. We do not wish to preempt an integrated, empirically grounded approach. Type of organization might be used as a specifier variable. Thus variable x and variable y interact differentially as a function of the PSOs' or PPOs' nature. This question can ultimately be resolved only by deliberate empirical comparison of data collected on a range of organizational types.

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Issue Table of ContentsThe Sociological Quarterly, Vol. 31, No. 4 (Winter, 1990), pp. 495-640Volume Information [pp. 635-640]Front MatterNeighboring and Neighborhood: Three StudiesGender Differences in Urban Neighboring [pp. 495-512]Social Class and Tactics: Neighborhood Opposition to Group Homes [pp. 513-529]Neighborhood Stabilization: A Fragile Movement [pp. 531-549]

Patterns of Religious Mobility among Black Americans [pp. 551-568]Comparison of Characteristics of Private Product Producing Organizations and Public Service Organizations [pp. 569-583]Research NotesThe Politics of Abortion: Husband Notification Legislation, Self-Disclosure, and Marital Bargaining [pp. 585-598]Execution Publicity and Homicide in South Carolina: A Research Note [pp. 599-611]

Comment and ReplyLegitimate Violence or Agoraphobia? Re-Examining the Legitimate Violence Index [pp. 613-618]The Strength of Weak Indicators: A Response to Gilles, Brown, Geletta, and Dalecki [pp. 619-624]

Back Matter [pp. 625-636]

comparison of characteristics of public and private copy

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