Intent, Risks and Capability: Some Considerations on Rethinking Organizational Capability
| Author | Gambhir Bhatta |
| Published date | 01 September 2003 |
| Date | 01 September 2003 |
| DOI | http://doi.org/10.1177/0020852303693007 |
| Subject Matter | Journal Article |
Intent, risks and capability: some considerations on
rethinking organizational capability
Gambhir Bhatta
Abstract
The notion of capability — including that of organizational capability — has been
studied extensively in the literature. The standard treatment on this subject matter has
tended to focus on building the capacity of its human resources since its impact on the
ability of the organization to fulfil its mandates has been well recognized. In looking at
the broader concept of organizational capability, however, consideration must be
given to the assertion that an organization does not work in a vacuum and that its
external environment plays a key role in shaping the manner in which it works. Since
the environment tends to be complex and turbulent, the introduction of uncertainty and
risks in the analysis makes the notion of organizational capability murkier. This article
argues that one way of dealing with this constraint is to look at capability as being
derived from its sequential relationship with results and strategy, and which affords
governments a more holistic picture. It also argues that by preparing organizational
statements of intent (sois), public organizations are better able to understand their
environments as well as convey purposeful action to Parliaments. Empirical evidence
from application of sois in public agencies shows that they are useful tools for
governments to consider applying seriously.
Introduction
A large component of the work on public administration reforms in developing
countries continues to be centred on institution-building and is encapsulated, in
particular, in the notion of capacity enhancement. This is centred largely on
capacity-building interventions including training for individuals (Cohen, 1995)
or strengthening the information technology resources in specific sectoral agen-
cies.1 In many jurisdictions around the world, this is still the traditional approach
to technical assistance taken by donor agencies although it is driven largely by the
nature of the capacity constraints existing in sectoral agencies, including lack of a
‘critical mass of effective capacity and internal coherence to formulate and co-
ordinate macroeconomic and strategic policies’ (World Bank, 1997: 83). That
such an approach has more often failed than succeeded in developing countries
has been well documented (see, for example, Grindle and Hilderbrand, 1995; Haq
and Aziz, 1999).
Gambhir Bhatta is Senior Advisor (Public Management) in the Strategic Development
Branch of the State Services Commission, Wellington, New Zealand. CDU: 65.012.3.
International Review of Administrative Sciences [0020–8523(200309)69:3]
Copyright © 2003 IIAS. SAGE Publications (London, Thousand Oaks, CA and New
Delhi), Vol. 69 (2003), 401–418; 036086
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International Review of Administrative Sciences 69(3)
This article picks up on the general theme of institution-building whose impact
on contributing to a capable public sector has been widely accepted (World Bank,
1997: 79).2 It looks at the generics of organizational capability and presents
approaches that enable policy-makers to reconceptualize such capability and
better construct an understanding of how they might best sustain it in public
organizations. In so doing, the article argues for a need to frame a more rigorous
determination of organizational intent that should revolve around a firm under-
standing of the environment in which the organization operates and the capability
needed to fulfil its mandates.
Much of the academic literature looks at the issue of enhancing organizational
capability through building the capacity of its human resources and framing that
into some theoretical and practical explanations (see, for example, Jurie, 2000;
Bowen et al., 2002). This appears to be largely because many agencies (even in
advanced jurisdictions) tend to equate organizational capability with capability of
staff (see, for example, Public Service and Merit Protection Commission, 2001:
123). While people are, indeed, the most important feature of organizational
capability and ‘all other capability is derived from the competence and quality of
key human resources’ (State Services Commission, 1999: 6),3 there is clearly a
need to take a more extensive view of organizational capability.
A more recent strand of analysis has emerged on the need for studying organi-
zational competence as well as individual competence so that the needs of the
organization and what it wants from its employees are wedded properly with what
the individuals are able — and willing — to offer to the organization (Bhatta,
2001). However, there is little by way of examining capability in relation to
environments and the consequent risks that it entails. This is particularly so since
‘a competent organization makes choices which not only benefit its own impera-
tives, but also takes into active consideration the environment of which it is a
part’ (Jurie, 2000: 272). And despite the fact that, intuitively, an organization’s
environment is considered to be relevant in the study of organizational outcomes
(Eldridge and Crombie, 1974: 72–3), there has tended to be comparatively little
on capability and the organizational environment. The work on organizational
entrepreneurship takes the research in the right direction in this regard4 but clearly
there is room for more work in this area. In particular, the lack of focus on risks as
they impact organizational capability is glaring despite the fact that survival tends
not to be as serious a concern in public organizations as in private firms.
Methodology
This article analyses the issue of organizational capability from a systems per-
spective and puts forth an argument that it is important to look at organizational
capability from the perspective of its external environment and this needs to be
reflected in a rigorously prepared statement of organizational intent. The degree
of environmental turbulence (Aldrich, 1979) that is in evidence will influence the
extent to which organizations will be able to meet their mandates.5 Because the
focus is on environment — and, by extension, something that is not in the control
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Bhatta: Intent, risks and capability
403
of the organizations — risks and risk management also become key considera-
tions in the study of organizational capability. The article argues that organiza-
tions will be better placed to understand and manage any potential environmental
turbulence if they prepare a rigorous statement of organizational intent. Such a
statement should also invariably assist organizations to assess and determine their
capability needs to deal with their particular environments.
The unit of analysis here is public organizations (primarily in the developing
country context) whose external environment can be said to be more ‘complex’
than for those in the private sector. While all organizations have a certain degree
of publicness (see Bozeman, 1987; Boyne, 2002), there are fundamental differ-
ences between the two types particularly in the domain of environmental com-
plexity. The public sector — not unlike the private — continually faces new
pressures to adapt but there are some factors that are unique to it, e.g. work in the
public sector at times tends to deal with intangible products that defy calculation
(Kee and Black, 1985). Also, in the public sector, there is no ‘netting effect’ —
i.e. one big success does not offset many failures (Sundakov and Yeabsley, 1999:
4). This is a very relevant observation especially in light of the ensuing discussion
on risks and risk management in the public sector.
There are also some ontological (i.e. a priori) assumptions that are made here
and they merit mention:
1. Drawing from New Institutional Economics, we assume that institutions
matter (see Williamson, 2000: 595; Rutherford, 2001).
2. Drawing from a political economy approach, we assume that governments
do tend to pursue different forms for different functions (i.e. form follows func-
tion).
3. Drawing from systems theory, we assume that a holistic view is needed to
study organizational capability (i.e. there is a need to look at capability from a
comprehensive and environmental perspective).
4. Finally, drawing from market behaviour, we assume that survival for public
organizations is not necessarily a pressure point since a general lack of competi-
tion erodes the constraints that private sector firms face for entry and exit.
For the purposes of this article, some key terms used in the analysis are defined
simply and are taken to mean the following:
1. Capacity and capability Capacity is ‘the inherent endowment possessed by
individuals or organizations to achieve their fullest potential’ while capability is
taken to mean ‘the action taken on capacity in order to realise this potential’
(Jurie, 2000: 271). Specifically, capability refers to the resources, systems, struc-
tures and processes necessary to deliver — currently and in the future — the
required level of performance in fulfilment of the mandated objectives. The litera-
ture on capability also talks of the notion of ‘negative capability’ (see, for exam-
ple, French, 2001), which is taken to mean the capacity of the organization to
tolerate ambiguity. This implies that the organization has the ability to learn and
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