New McQuinn Working Paper: “Capabilities and Strategic Entrepreneurship in Public Organizations”

Capabilities and Strategic Entrepreneurship in Public Organizations

Peter G. Klein
University of Missouri and Norwegian School of Economics

Joseph T. Mahoney
University of Illinois

Anita M. McGahan
University of Toronto, Harvard Business School, and Massachusetts General Hospital

Christos N. Pitelis
Cambridge University

Forthcoming in Strategic Entrepreneurship Journal

Abstract: Public organizations are relatively understudied in the strategic entrepreneurship literature. In this paper, we submit that public organizations are usefully analyzed as entities that create and capture value in both the private and public sectors, and that a capabilities lens sheds important new insights on their behavior. As they try to create and capture value, public organizations can act entrepreneurially by creating or leveraging bundles of capabilities, which may then shape subsequent entrepreneurial action. Such processes can involve complex interactions among public and private actors. For example, public organizations often partner with private firms to produce existing products, create new products, and establish new markets, which in turn generate new capabilities for both public and private actors. Yet such co-evolutionary processes are not guaranteed to create value, and capabilities acquired in the pursuit of public interests may, over time, enable activities that damage those same interests. We show how a capabilities approach helps explain the nature and evolution of public organizations and we apply this approach to a series of cases on the growth and diversification of public organizations, the private provision of public goods, and related issues.

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