Managerial behaviour and public sector performance

Abstract

Growth of the Public Sector is a phenomenon characteristic of many developing countries today. The protective government policies and controls are such that industry, whether it is in the public or private sector, can reap handsome profits. The co-existence, therefore, of private firms which behave like the nineteenth century profit maximisers and earn sub stantial returns on investment, and State-owned business enterprises whose overall performance and profitability are generally at low levels in these countries naturally attracts considerable attention. Some observers have concluded from this that private enterprise is ruthless and short-run profit oriented and/or that state-owned business firms suffer from inherent lethargy and inefficiency. Others argue that the discouraging per formance of public enterprises can be traced to their teething troubles, lack of adequate technical and administrative skills and improper planning and price policies of the govern ment. All observers, however, agree generally that management is a crucial limiting factor in this context.