This section reflects on the alternative way in understanding the GoG. We argue that while the public choice theorists have had their fair share of contributions, contemporary literature on the entrepreneurial state or public sector entrepreneurship has opened new horizons to glean new insights into the determinants of the GoG. Figure 1 shows the new conceptual framework.
3.2.1 New Public Management, Public Entrepreneurship, and Entrepreneurial Orientation
Since the late 18th century, the role of the state vis-à-vis the market has been an intriguing issue among scholars and policymakers. The Great Deal of the 1930s, the rise of welfare systems, and the developments after World War II further reinforced state intervention in the economy and society (Farazmand, 2005; Hughes, 2017; Schuknecht, 2020).
The role played by the government has drastically changed in the past 150 years from minimal economic participation, handling 10% of the GDP, to handling 40%-60% of the GDP (Schuknecht, 2020). The neo-liberal market ideologues argued that governments were too much involved in the economy and and consumed too many resources. In addition, public bureaucracy was accused of sheer inefficiency, corruption, and lack of innovation. The neo-liberal market idealogues came up with massive recommendations. Along with the reduced role and scope of the public sector, NPM or managerialism replaced the traditional Weberian bureaucracy model. The protagonists of the neo-liberal market ideology succeeded in spreading the messages of market-driven reforms under the auspices of the World Bank, the United Nations, and the International Monetary Fund (Knafo, 2019, Farazmand, 1999, 2012, 2017).
Managerialism is an umbrella term that essentially means to implant business-oriented structural processes and functional features in managing public affairs. The introduction of managerialism in the public sector dates to the 1980s primarily because of the ascendency of the neo-liberal market ideology, globalization, and the deteriorating performance of public sector organizations worldwide (Farazmand, 1999). Managerialism began its journey in New Zealand and Great Britain and soon spread to other parts of the world. Managerial processes include strategic planning, customer orientation, performance management, managing for results, and entrepreneurial orientation. The model also emphasized competition, essentially implying outsourcing public services to the private and non-profit sectors and public-private partnerships (Kim, 2010; Hood, 1991; Pollitt and Bouckaert, 2017).
During the momentous ethos of globalization, public sector transformation has embraced the precepts of entrepreneurship and EO since the 1980s (Shockley et al., 2006; Kim, 2010; Haque, 2020; Naldi et al.,2020). Seminal works (Osborne and Gaebler, 1992; Hood, 1995) underscored the need for public sector entrepreneurship in different forms to revamp the structure and processes of public sector organizations. While there is no dearth of criticisms about globalization, Farazmand (2009, p. 1010) “argues for the inevitability of globalization as a historical development and suggests adaptability and innovation as a response strategy while warning against its threats to national, sovereignty, self-determination, and democratic governance and public administration.” This article considers the influx of entrepreneurial spirit into public services management as what Farazmand call a significant adaptive and innovation strategy amidst the turmoil amidst globalization and institutional failures (Fazmand, 2009, 2012, 2020).
There is no consensus about the definition of public sector entrepreneurship. Morris and Jones (1999, p. 71) define public sector entrepreneurship as “creating value for citizens by bringing together unique combinations of public and private resources to exploit social opportunities.” In literature, public sector entrepreneurs are categorized as political entrepreneurs, policy entrepreneurs, and bureaucratic entrepreneurs (Holcombe, 2002). However, the notion of bureaucratic entrepreneur resonates well with NPM or entrepreneurial government.
On the other hand, public entrepreneurship can also be conceptualized in terms of its roles. Klein et al. (2010) observe that public sector entrepreneurs are engrossed in changing the institutional environment, creating new public agencies, inventive management of public resources, and availing the advantage of spillovers by private actions to the public domain. Remarkably, the fourth role pertains to the proliferation of the third party (private and non-profit sectors) in providing public services to the citizenry (Klein et al., 2010; Kim, 2010).
The roles played by public sector entrepreneurs vary. However, it mostly has to do with creativity and pro-activeness. It also involves guiding public organizations to shift from bureaucracy to flexible governments that are result oriented and guided by measurable performance according to performance indicators (Hood, 1991). Morris and Jones (1999) acknowledged that public sector entrepreneurship is essential because it enhances efficiency and productivity. Shepherd (2017) added that managerialism is ideal for organizations because it is vital and universally applicable. The exponents of public sector entrepreneurship identify several attributes of bureaucratic entrepreneurs as opposed to conventional Weberian bureaucracy. These include, among other things, creativity and innovativeness, a knack for public value in creating new programs, explicit focus on outputs and outcomes, keenness to withstand profound challenges under turbulent environments, emphasis on service quality as per the demands of the citizens, pro-activeness and so forth (Diefenbach, 2011; Demircioglu and Choudhury, 2021; Kim, 2010).
EO is one of the significant constructs of entrepreneurship. EO encompasses a “firm’s decision-making practices, managerial philosophies, and strategic behaviours that are entrepreneurial in nature” (Wales, 2016, p. 4). EO enables individuals to transform through innovativeness, pro-activeness, and risk-taking inclination (Diefenbach, 2009; Wales et al., 2020). Miller (1983) discussed the core dimensions of EO, such as risk-taking, pro-activeness, and product innovation. Innovativeness pertains to adopting and implementing new ideas in products, technology, policy, and processes (DE Vries et al., 2016). Risk-taking orientation implies that managers are willing to confront threats and make bold decisions involving significant resources (Miller and Friesen, 1978). In addition, variations in the innovativeness, risk-taking, and pro-activeness of public organizations exist worldwide. However, their necessity cannot be overemphasized (Moon et al., 2020; Swann, 2016; Kraus et al., 2019).
How EO impacts the growth of organizations is an issue to be delved into. In mainstream management literature, organizational growth is one of the measures of overall performance (Engelen et al., 2015; Real et al., 2014; Rezaei and Ortt, 2018; Kearney and Meynhardt, 2016; Wiklund and Shepherd, 2005; Wang, 2008). The measures embodied in the growth of an organization include sales, revenues, employees, and customers (Weinzimmer et al., 1998). Literature in management studies shows the positive impact of EO on a firm’s overall performance, including the organization’s growth. Zhao et al. (2009) observe that this positive impact of EO on business performance is not uniform across different contexts. While reviewing the literature about the relationship between EO and the GoG, the study has identified learning orientation and organization structure as critical variables in the EO-GoG nexus.
3.2.2 Learning Orientation (LO)
LO refers to the availability of values affecting the extent to which an organization questions its theories, mental models, and the most dominant logic (Li and Lin, 2008). LO signifies a fundamental attitude towards learning. It entails three organizational values influencing an organization’s tendency to create and use knowledge. These values include management’s commitment to learning, shared vision, and open-mindedness (Kinder, 2012; Sinkula et al., 1997). An organization’s commitment to learning helps to support a culture that fosters LO.
3.2.3 Organizational Structure (OS)
OS combines methods that separate but coordinate organizational tasks (Willem and Buelens, 2009). Five dimensions of OS are frequently found in the literature. These are specialization, standardization, formalization, centralization, and configuration (Pugh et al., 1968). Following Burns and Stalker (1961), this study focuses on two dimensions of OS – formalization, and centralization. Formalization refers to the extent of the presence of explicitly written policies, rules, procedures, and job descriptions. On the other hand, centralization refers to the degree to which the authority to make decisions is dispersed throughout an organization (Venkateswarlu et al., 2020; Pugh et al., 1968).