chapter  6
40 Pages

A Systems Approach to Public Enterprises

WithAlfred H. Saulniers

Two different perspectives structure public enterprise management systems. The first, commonly known as the 'accountability problem," addresses the design of a system that forces managers or that gives them appropriate incentives to align company operations with what the central government authorities define as the "public good." The second perspective accepts that public enterprises are independent units with limited autonomy in planning, goals, finance, and administration. Legal issues translate the philosophical basis into a working legal-institutional environment to structure public enterprise action. Peru's government rarely fixed public enterprise prices on the basis of any rational and consistent general principles. Peruvian governments' reliance on executive acts often led to contradictory or incomplete laws about public enterprises. Public enterprises form part of a system of interlinkages among differentiated government units. Interlinkages consist of cooperative, competitive, collaborative, or coercive relations that influence company performance either positively or negatively.