Principles of organization of public sector entities

Principles of organization of public sector entities
See also

In today's economy, there is growing importance of different types of institutions whose goal is not to maximize profits and increase value but meet important social needs. These organizations make up the so-called public sector. These include both institutions of particular importance for the functioning of the state and its citizens, as well as organizations engaged in a market activity.

New Public Management

New Public Management - its main idea comes down to the implementation of the principles of managing of public entities relevant to the business units. Between the management of public organizations and business units there are a number of differences:

  • Management of network of public entities is done by public authorities, i.e. authorities which are representatives of the public and implement specific, democratically approved program
  • In business organizations within a single organization the individual members are always connected to a common goal and act together for the success of all, the network of public bodies consist of individual institutions which do not have to interact with each other and may even have contradictory goals and therefore, these institutions do not have to contribute to the success of the whole,
  • The right to manage the business organizations derives from law to property, and in public organizations it arises from the power of state bodies and local authorities,
  • Business organization is guided by the individual good. Management of the public organization is related to the common good of communities across the country, region or locality
  • As opposed to business organizations, public institutions can not be assessed on the basis of making a profit or market value. Assessment can only be based on a realization of the public interest which makes these judgements difficult to quantify, very diverse and characterized by subjectivity,
  • Despite fact that public organizations often do business on the market, they are to a small extent subject to the influence of the market forces,
  • Public organizations often carry out tasks assigned by top level government bodies.
  • Activities of public entities is regulated primarily by administrative law, while the business units operate primarily on the basis of the code of commercial and civil law. As a result, public organizations are less flexible than typical businesses.


  • Christensen, T., & Lægreid, P. (Eds.). (2002). New public management: the transformation of ideas and practice. Ashgate Pub Limited.
  • Gruening, G. (2001). Origin and theoretical basis of New Public Management. International public management journal, 4(1), 1-25.
  • Schedler, K., Proeller, I., &... Schedler-Proeller. (2000). New public management. Bern: Haupt.