Public Enterprise as an Instrument of Development

DOIhttp://doi.org/10.1002/j.1099-162X.1967.tb00296.x
Published date01 July 1967
Date01 July 1967
Public Enterprise as an
Instrument of
Development
by
CHI-
YUEN
\XlU
This is a paper presented on 6th October, 1966 by the author at the tenth
session
of
the Working Party on Economic Deuclopment and Planning; United Nations
Economic Commission for Asia and the Far East
(ECAFE),
which was
organized by
ECAFE
toitli the co-operation of the United Nations Public
Administration Branch and held in Bangkok, Thailand,
3-10
October, 1966.
The author is the Head
of
the United Nations Public Administration Branch
and concurrently the Senior Deputy Director
of
the Bureau
of
Technical Assist-
ance Operations. The 'views expressed herewith are the views
of
the author and
do not necessarily represent those of the United Nations.
Introduction
This
paper deals with the administrative aspects
of
public enterprises, with
emphasis on their role as an instrument for economic development. In this
paper we shall make full use of the conclusions and recommendations made
by the United Nations seminar on Organization and Administration of
Public Enterprises, and concentrate on the situation
of
the countries in
Asia and the
Far
East. I
Public
Enterprises and
National
Development
For
a long time public enterprise has been established to further govern-
ment objectives. These objectives include the acquisition
of
profit by the
state, the control
of
monopolistic undertakings, the provision for defence
needs, and the promotion
of
cultural, educational and social purposes, but
our primary concern here is with those public enterprises which have as their
objective the promotion
of
economic growth and which serve as instruments
for economic development.
The
place which public enterprises occupy in
the economy
of
acountry depends partly on its economic and political
system and partly on such practical considerations as whether an industry
could be established if the government did not assume the responsibility for
starting it.?
ISec Report
the United Nations Seminar 011 Organization and Administration
of
Public Enterprises, which was
adopted
by
the
seminar on 3
October
1966
and
will
be issued as
United
Nations
document
ST/TAO/M/35.
Hereafter
in this
paper
we shall call this
Seminar
the
Geneva
Seminar.
See also
United
Nations
Public
Administration
Branch,
Organization and Administration
of
Public Enterprises,
Report
of
Preliminary
Study,
prepared
by Prof. A. H.
Hanson
on the basis
of
country
reports.
This
report
serves as the
basic
paper
for the
Geneva
Seminar.
It
will be
issued, together with
other
papers,
as
United
Nations
document
ST
jTAO/M/36.
In a way, this
paper
will
supply
some
additional information on the experience
of
countries in the region.
2
United
Nations
Public
Administration
Branch,
Organization and Administration
of
Public Enterprises,
Report
of
Preliminary
Study,
pp. 18-19 (para 25). A list
of
'pragmatic'
considerations which impel a
government
to
expand
public
enterprise
is given
therein.
149
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In
Asia and the
Far
East, the extent and significance
of
public enterprise
in the total economic system vary from country to country.
There
are areas
where the economy is centrally planned and public enterprise predominates
in the fields
of
industry, trade and services.
There
is Burma: which has,
since 1963, embarked on a policy
of
wholesale nationalization
of
industry
and commerce and which has a public sector embracing a wide range
of
manufacturing industries and mining, as well as power and transport facilities.
Other countries in the region have a mixed economy, and the size and
permanency
of
the public enterprises in a country depend on the basic
policies
of
the government. A more prominent and permanent position has
been assigned to public enterprises in countries like Ceylon, India or
Indonesia.
In
Indonesia, the government has since 1951 reserved certain
defence productions, public utilities, and manufacturing industries to the
State-. In India, the government's Industry Policy Resolution
of
1956
adopted the socialistic pattern
of
society as the national objective, which
together with the need for rapid development requires
that
"all industries
of
basic and strategic importance, or in the nature
of
public utility services,
should be in the public sector and that other industries which are essential
and
require investment on a scale which only the State in present circum-
stances could provide, have also to be in the public scctor".s
In
Ceylon, in
addition to public utilities, the government has set up State industrial
corporations for a variety
of
heavy and light industrics.«
In
the Republic
of
Taiwan, Japan, the Republic
of
Korea, Pakistan, the
Philippines, Thailand, the Republic of Viet-Nam, and a
number
of
other
countries in the region," the declared government policy has been active
encouragement
of
private enterprise. Because, however,
of
the failure
of
private enterprise to obtain the necessary resources, or to assume the risks
involved, or to have an interest in developing certain lines
of
production, a
number
of
countries in this group (for example, Pakistan) has been compelled
to establish an apparatus
of
public enterprises far more extensive than
originally envisaged. In such countries the governments pioneer in the
complex, capital-intensive, slow-yielding, and risky industries. Many
countries in this group (the Republic
of
Taiwan, Japan, the Republic
of
Korea, Pakistan
and
the Philippines) have also adopted the policy
of
selling,
at an appropriate time, public enterprises (primarily those earning a profit)
to the private scctor.s
There
are not many countries which have been able
3
ECAFE
secretariat, Coulltry
Study
ill Burma, paper submitted to the Asian
Conference on Industrialization, 6-20 December 1965, Manila.
4
ECAFE
secretariat, Country Study 011 Indonesia, paper submitted to the Asian
Conference on Industrialization, 6-20 December 1965, Manila. See also Public
Industrial Management in Asia
GIld
the Far East
(ST/TAO/r-.ljI5),
p. 78.
SSee
S.S.
Khera, Gouernment in
business
(Bombay, 1963),
pp.ra,
See also Khera, Manageme»: and Control ill Public Enterprise (Bombay, 1964).
6
These
industries are iron and steel, chemicals, fertilizer, petroleum, salt, paper,
ceramics, cement,
rubber
lyres and tubes, textiles, footwear, plywood, hardware,
flour mills, oils and fats, sugar, as well as smal1 industries. See V. Perampalam,
Organization and Administration of Public Enterprises ill Ceylon paper presented to
the Geneva Seminar, p.z.
7See Labour Management Relations in Public Industrial Undertakings, paper
prepared by
ILO
for the thirteenth session of its Asian Advisory Committee held in
Singapore in November-December 1966, pp. 8-9.
8
For
the experience of the Republic of China (Taiwan), see J. C. Huang, Transfer
of Public Enterprise to Private Otcncrship, paper presented to the Geneva Seminar.
PUBLIC
ENTERPRISE
AS AN
INSTRUMENT
OF
DEVELOPMENT
151
to limit their public enterprises to public utilities and infra-structural under-
takings.
On the whole we can say that public enterprises have expanded con-
tinuously in the region.
The
expansion has been due, especially in recent
years, mainly to the establishment
of
new public enterprises rather than to
nationalization.
There
were many exceptions such as the nationalization
of
foreign-owned private enterprises in Indonesia, the nationalization
of
the
oil industry in Iran, and the nationalization
of
airlines, life insurance and
certain banking institutions in some countries. But recently there have been
few such cases.
Creation
of
Public
Enterprises
The
question
of
what kind
of
economic activities should go to the public
sector is a policy question outside the field
of
public administration. Once
the
broad economic and industrial policies have been decided upon, it would
be most desirable to enlist the help
of
administrators at as early a stage as
possible.
For
the creation
of
apublic enterprise, for instance, both the
technicians and the administrators should be asked to study the technical,
economic and administrative feasibility
of
a project. In Asian countries, as
in developing countries elsewhere, the decision to create a new public
enterprise is often made on such general considerations as industrial potenti-
alities, import substitution, comparative costs and expected dernand.s
Not
in all cases have detailed cost-and-benefit studies been made. In the cases
where cost-and-benefit studies are made,
the
question of possible alternative
uses
of
resources is not often examined, nor is adequate attention being given
to alternative methods and techniques
of
producing aparticular product.
Even more frequently the question
of
administrative capability to implement
the project has been overlooked.
In a cost-and-benefit study, one should include both direct and indirect
benefits and take a long-term point
of
view. Many projects which are really
beneficial to a country could appear to be 'uneconomical' from a narrow
'cost-accounting' viewpoint.tv On the one hand, adevelopment orientated
government should not be overcautious and should be ready to take risk.
As Professor Gross rightly points out,
'the
entire history
of
Western industrial
growth in the nineteenth and early twentieth centuries has been one
of
taking
great risks and many failures'.
II
On the other hand, it is equally important
that the risks to be taken are informed and calculated risks, based on best
available information and calculation through cost-and-benefit study or
feasibility survey. Another point which may be mentioned is the desirability
of
agovernment to undertake more feasibility studies so that feasible projects
are ready for execution
if
and when resources should become available.
Such a step would have two distinct advantages. First, the availability
of
well-prepared projects would give the planning authorities more alternatives
for using available resources to meet certain broad national objectives.
Second, this may facilitate the inflow
of
foreign capital. According to Albert
9See H. K. Paranjapc, Regional Report on India, Iran, Iraq, Pakistan and the
Philippines, paper submitted to the Geneva Seminar, pp. 5-7.
10 The Administration of Economic Deuelopment Planning: Principles and Fallacies
CST
/TAO/M/32
or
E/CN.II/DPWP.ro/r),
prepared for the United Nations Public
Administration Branch by Professor Bertram M. Gross, P.34.
11 Ibid, p.
20.
o
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Waterson, there exists a 'project gap' due to a serious shortage
of
well
prepared projects relative to the funds available to finance good proiects.u
It
is, however, important to bear in mind that the preparation of feasibility
studies and bankable projects is a very costly operation and no developing
country can afford to divert scarce resources to prepare for them
if
the
probability
of
their being implemented is small.
Objectives
for
an
Individual
Enterprise
In addition to the broad national objectives, there must be specific ob-
jectives for an individual enterprise. In countries with development plans,
such objectives normally take the form
of
directives from the planning
machinery. In order to facilitate the implementation of these objectives, it
would be best
if
the management of the public enterprises is fully consulted
at an initial stage of plan formulation.
The
involvement
of
the managerial
personnel of the public enterprises in the formulation of targets and objectives
would not only make for the more ready implementation
of
the plan,
but
would also make the personnel concerned work more enthusiastically for
their fulfilment.
The
managers
of
public enterprises should administer them by reference
to the objectives, instead of by reference to the book
of
procedures. It is
important to point out that successful administration and efficient imple-
mentation would only be possible (a)
if
the objectives arc clearly defined and
(b)
if
the administrators at all levels are not only fully aware
of
such objectives,
but
also use them as their administrative guides. An analysis of the actual
practices in the countries of the region, like most other developing countries,
show that the objectives are often not clearly defined. Sometimes an enter-
prise receives more than one directive (for example, one from the finance
ministry emphasizing the objective of economy and one from the planning
ministry highlighting the objective of development).
Objectives should not only be clear,
but
they should also be feasible.
One of the frequent mistakes in planning has been to set a target so high that
it cannot be achieved. Even in a country which has considerable experience
in planning like India, a study of its planning process reveals that the planners
have a persistent tendency to over-estimate the capacity
of
the implementing
agencies and to assume that they possess abilities and attitudes which they
neither actually possess nor can readily acquirc.u
The
result of such an
,approach is not to make the job of the management
of
a public enterprise
more challenging,
but
to become an important cause for demoralizing its
staff.
In
a country with a development plan, normally the plan sets a target for a
particular branch of the economy, which is broken down into specific targets
for each enterprise within that branch, unless an enterprise is so important
that the plan itself sets the target.
The
targets may take many different
forms, such as targets for production, targets to yield a certain level of profit,
targets to save foreign exchange, to provide certain levels of employment, to
12 Albert Waterson, Deuelopment Planning:
LeSS0I1S
of
Experience (Baltimore,
1965) p. 325·
13 A. H. Hanson, The Process
of
Planning: A Study
of
India's Five-Year Plans
1950-1964 (London, 1966) pp. 531-532. Professor Hanson in this book analyzed
the Indian planning process from the standpoint of public administration. Reference
should especially be made
to
pages 267-310 and 525-538.
PUBLIC
ENTERPRISE
AS AN
INSTRUMENT
OF
DEVELOPMENT
153
achieve certain non-economic objectives such as
'the
spreading
of
technical
culture', assistance in the development
of
abackward area, rendering
of
certain social services, or a combination
of
different targets.
The
Geneva
seminar found that
'it
cannot be said
that
any objective is absolutely wrong,
for their are circumstances under which even the most "uneconomic"
objectives may be entirely appropriate,
but
it is essential to make a selection
from the range
of
possible objectives or to arrange them in some clear order
of
priority.· Unless this is done, not only are national purposes unlikely to
be carried out
but
the morale
of
the enterprise managers is likely to be
undermined, since every critic
of
management will have a different criterion
by which he assesses its performance.' 14
If
the objectives include social or
other intentions which involve the enterprise in otherwise avoidable economic
loss, it is very important that their impact on the enterprise's performance
should be clearly seen, so that management is not unjustly condemned for
failure to show a profit or to break even. In fact, normally, it would be
better to subsidize the enterprise in respect
of
the losses which it has incurred
as a result
of
pursuing these non-economic ends.
The
Geneva seminar
reached the conclusion that even for a public enterprise whose target is not
one
of
profitability, 'the importance
of
making a surplus should nevertheless
be emphasized, particularly in developing countries.
This
does not mean
that every enterprise should aim at a surplus. Infra-structural enterprises,
for instance, should often aim at no more than covering their expenditure
from their revenue. Industrial enterprises, on the other hand, should
normally aim at something very much more than a'break even' position, as
they can be expected to contribute significantly to the process
of
capital
accumulation, the surpluses either being ploughed back into the enterprise
itselfor made available for other enterprises through the Ministry
of
Finance
or the Treasury. Such accumulation
of
capital by public enterprise is
particularly important in countries where the raising
of
revenue for develop-
mental purposes through the taxation system or the floating
of
public loans
is difficult or impracticable. Indeed, if a public enterprise is not expected
to make a profit this should be specifically stated in its terms
of
reference.
Otherwise there is always the danger that non-profitability which is the
product
of
poor management will be attributed after the event, to the pursuit
of
objectives other than profitability.us
Legal Status and Organizational
Forms
Given the objectives, the major concern
of
apublic enterprise (besides
economic, financial and technical matters) is how to ensure efficient admini-
stration and management so that it can fulfil the targets set and serve as an
effective instrument for economic development,
The
first questions raised in this connection are often those
of
the legal
and organizational forms. In earlier days, considerable importance was
attached to them and they wen: considered to be the instruments to ensure
the requisite 'autonomv' for a public enterprise.
Thus,
the Rangoon seminar
stated that
'the
single most critical control point is the law, decree or other
basic authority providing for the creation
of
a public enterprise.
This
is
14 Quoted from Section I of the report of the Geneva Seminar CST
/TAO/M/35).
IS Quoted from Section I of the report of the Geneva Seminar
(ST;TAO/M/35).
154
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likely to determine in large measure all other organizational rclationships.ie
It
is now generally agreed, as indicated in the report
of
the
Geneva seminar,
that
such an emphasis on legal forms represents aconsiderable exaggeration;
that
the
alleged decisive influence
of
the law regulating
the
public enterprises
of
acountry has been proved illusory; and
that
there is no discoverable
correlation between
the
legal rights and obligations
of
apublic enterprise
and
the
quality
of
its performance.
The
legal structure
of
apublic enterprise
is, however, important in providing its management with certain opportunities
(which
mayor
may
not
be taken) and does impose certain restrictions
upon
the
enterprise, which,
if
not
of
an appropriate kind, could indeed be crippling.
Until
inappropriate restrictions,
if
any, are removed or modified, management
may find it difficult,
if
not
impossible, to achieve an adequate standard
of
commercial operation.
For
instance,
'if
the law prescribes
that
the budgetary
and
accounting methods
of
the enterprise shall be
the
same as those used
in government departments or
that
its staff shall be subject to the normal
civil service regulations, it is unlikely
that
even the most able management
will produce good results.'17
The
question was raised at the Geneva seminar as to whether anything
would be gained by passing ageneral law applying to all public enterprises.
The
seminar found
that
a law which applies to all public enterprises without
exception could easily become astraitjacket, particularly
if
it attempts to
impose common organizational forms, as distinct from common patterns
of
public accountability, on the enterprises falling within its scope. Public
enterprise is so varied in its character and purposes
that
the
attempt
to
impose uniform legal regulations upon it, even in respect only
of
account-
ability, can be unwise. Most countries in the region do
not
have a general
law governing public corporations.
The
Philippines has such ageneral law,
but
it makes special provisions for different kinds
of
public enterprise.
It
also has a
number
of
public enterprises established
under
the
law governing
joint stock companies.
Many
countries in the region,
of
which India is an
example, subject a large
number
of
their manufacturing enterprises to
the
provisions
of
the company law, with or without modifications. Some
countries, such as Pakistan, though without ageneral law, have legislation
applying solely to public enterprises and aimed at the prevention
of
specific
abuses,
but
not at the creation
of
common structural characteristics.u
Among
the
questions already discussed at the Rangoon seminar was that
of
the
organizational forms suitable for public enterprises.
That
seminar
analyzed the characteristics as well as the advantages and disadvantages
of
the
three classical forms
of
organization, namely,
(I)
government
depart-
mental organizations, (2) public corporations,
and
(3) mixed-ownership
corporations. Countries in the region have all these principal forms
of
organization. Some
of
them
have tried to relate
the
legal structure
and
organizational form
of
an enterprise to its purpose.
In
India, for example,
the
normal practice is to establish apublic utility as a corporation operating
under
a special statute,
and
to establish the manufacturing and
trading
16
The
first United Nations Seminar on public enterprises was held in Rangoon
in
March
1954. Its report was issued as Some Problems
ill
the Organization and
Administration of Public Enterprises in the Industrial Field (document
ST/TAA/M/7).
17 Quoted from Section II of the report of the Geneva Seminar
(ST
IT
AO/
M/35).
18 See the Financial Safeguards Ordinance of Pakistan.
PUBLIC
ENTERPRISE
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DEVELOPMENT
155
enterprises under the provisions of the company law. In countries which
have established what is sometimes known as 'two tier' public enterprises,
such as agricultural and industrial development corporations, the 'parent'
body usually takes the form of a public"Corporation whereas its subsidiaries
are established as companies. One should note, as pointed out by the Geneva
seminar, that the difference between a corporation and a company may be
more apparent than real.
The
articles of association may be so framed
that the duties and obligations of a state company differ considerably from
those of a private company, but approach very closely the pattern of a public
corporation. In some countries, the companies law itself has been modified
in order to accommodate the needs
of
companies which are owned by the
state. For instance, the Indian Companies Act of 1956 imposed a larger
measure of public accountability upon the state company than upon the
private company. In view of the foregoing points, the seminar reached the
following conclusion: 'What needs to be stressed is the great and increasing
variety of public enterprises. This clearly points to the necessity for experi-
ment in the field of legal and formal structure. Already there are many
types of enterprise which cannot comfortably be accommodated within the
three classical legal forms
...
Developing countries, therefore, no longer
have any need to be hidebound by the experience of the more developed
countries in respect of institution building. From the great variety
of
organizational forms now available to them for adoption they have to discover
what works best under given circurnstanccs.'
iv
The
important point is that
in the selection of an appropriate organizational form, the essential
purpose
of the organization should always be kept in mind.
Autonomy
and
Control
Whatever may be the form of organization, it is important to ensure that a
public enterprise is given the operating and financial flexibility necessary
for the successful conduct of its business. But there is not, and cannot be,
absolute 'autonomy' for a public enterprise. Public enterprises are estab-
lished to further national objectives and their capital is provided by the
Government. Effective controls must be designed to ensure public account-
ability and consistency with public policy.
The
question is how to establish
the organizational relationships with a proper balance between 'autonomy'
and control.
In the Asian and Far Eastern countries, as in most other countries, control
of public enterprises is exercised mainly by the executive branch of the
government.
The
general practice is to place a public enterprise under the
supervision of the minister with responsibility for the area of the economy
within which it operates. In some cases where the enterprises are of special
importance, they may be placed under the chief executive (the President or
the Prime Minister), as in the case of the Atomic Energy Commission in
India, or that of a number of key enterprises in the Philippines. In some
countries, attempts have been made to bring all public enterprises under one
organization (for example, an Office of Economic Co-ordination in the
Philippines or a Ministry of Production in India), but such attempts did not
last long because
of
the number and complexity of the public enterprises.
19 Quoted from Section II of the report of the Geneva Seminar
(ST
/TAO/M/3S).
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The
Geneva seminar, while recognizing the need for some kind of co-
ordination machinery among the controlling ministries, or a national institute
for public enterprise, reached the conclusion that the practice of placing all
enterprises under a single ministry regardless of their nature and purpose is
unsatisfactory, except possibly in very early stages of economic growth.
Ministerial control takes the form of the issuing of policy directives,
appointment and removal of directors and principal executives, and approval
of specific managerial decisions, such as those relating to long-term pro-
grammes, major investments and sometimes prices. There seems to be a
general agreement that the minister should normally abstain from interfering
with the day-to-day management, and confine himself to policy direction.
In all countries, the Ministry of Finance has an important role to play (and
sometimes even a more decisive role than the responsible ministry), because
of its control over the funds required for capital and for other purposes by
the public enterprises. Such a dual control would work only ifthe Ministry
of Finance would refrain both from interfering excessively with the sub-
stantive policy direction of the responsible ministry and from participation
in the management decisions of the enterprises.
The
planning organization also has a role to play. In the Asian countries,
the normal practice is for the planning organization to consult the ministries
rather than the public enterprises, both in the process of the formulation of
the plan and in its implementation.
In addition, there is legislative control, because of the ultimate authority
of the legislative body (wheresuch exists). It is the legislature which enacts
the law whereby new enterprises are established, votes funds and performs
other supervisory functions. It is, therefore, natural that it should exercise
some control. Such control is conducted by a special parliamentary com-
mittee in the Philippines, India and Iran, and this is considered as an effective
arrangement.
The
Geneva seminar pointed out the danger of the legislative
body examining day-to-day management, because it may gravely undermine
the autonomy which the enterprise ought to enjoy. In the countries of the
region, the present role of many legislative bodies, with respect to established
public enterprises, appears to be at best passive. In some countries, except
when new funds are required, the legislative body may have no opportunity
to review corporate operations.
In addition to the control of policy and management, there is also the
formal and legal type of control, which aims at ensuring the correctness of
the accounts of the enterprise and its conformity with legal provisions.
The
most important form of this type of control is government audit of the
accounts. At the Geneva seminar it was generally felt that the traditional
government audit and accounting procedure are usually unsuited to the
needs of public enterprise. While commercial accounting is preferable to
such traditional procedure, standard commercial accounting principles also
do not completely meet the needs of public enterprise. Neither the govern-
ment accounting system nor the standard commercial system is able to
reflect adequately the contribution an enterprise makes
to
national develop-
ment. It is suggested that more research should be made on designing an
accounting system for public enterprise which would reflect the performance
of an enterprise in terms of value added to the national income. Such an
accounting system should be able to measure operational efficiency not only
PUBLIC
ENTERPRISE
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157
of
profit-making enterprises,
but
also enterprises which arc not supposed to
make profit or which must
incur
deficits in
order
to accomplish certain social
or
other
non-economic objectives.
Management
While external relations with the Government, as well as legal and organiza-
tional form, have to provide the necessary conditions for the successful
operation
of
apublic enterprise, the final outcome depends more on
management
than
on any
other
factor.
The
question
of
management,
especially personnel management, was examined fully
both
at the Rangoon
seminar
and
at the
New
Delhi seminar.
The
report
of
the Rangoon seminar
devoted a special chapter to problems
of
personnel management (including
recruitment, training, wage>, salary
and
conditions
of
employment) as well
as one on managerial policy
and
internal relationships.a» Questions
of
management
and
measurement
of
management constituted the central
theme
of
the
New
Delhi scminar.>! At the Geneva seminar, attention was
concentrated on top-level management
and
personnel administration. On
this subject, as on all other subjects, the Geneva seminar highlighted the fact
that
a wide variety
of
forms
of
organization and arrangement arc possible.
III designing the appropriate form, policy-makers should think in terms
of
a
number
of
possible alternatives rather
than
in terms
of
one specific form
'hallowed by convention or rationalized by doctrine'. Another recommenda-
tion
of
the Geneva seminar was to allow for possible variations between one
sector,
branch
or even enterprise
and
another, according to
the
structure
of
the industry, its organizational needs
and
the character
of
its management
problems.
'The
purpose
of
any particular form
of
top-management organiza-
tion is to facilitate effective performance.
There
is an evident need for
further empirical testing
of
how specific forms, from among existing diverse
forms in different countries, help or impede public enterprise performance.
No
definitive a
priori
answers can be given.
This
area
of
public enterprise
organization is full
of
unresolved
and
controversial issues.
To
name only a
few, there arc
the
issues
of
one-man
versus collegiate management, external
versus internal boards, managing versus supervisory boards,
and
the
optimum
size
and
composition
of
boards.
In
the light
of
current
practice, few accept-
able rules can be laid down.
No
one form can be regarded as inevitable
and
universal,
and
there is more room for variation
and
adaptation
than
is
usually assumed'.22
I do
not
propose to go into the details
of
all the management problems
dealt with in the New Delhi seminar
and
the
Geneva
seminar;
all I would
like to say here is
that
management is
the
key to
the
success
of
apublic
enterprise
and
personnel is the key to a successful management.
The
top-
management personnel, in particular, is most important.
To
get
the
right
man
on
the
top, to give
him
asuitable organization, to
supply
him
with
20
United
Nations
Document
ST
/TAA/M/7,
pp.
46-54
21 Public Industrial
,\fallil,£:CI/lLllt
in
Asia
and
the Far
East,
aselection from the
material prepared for a United Nations Seminar held in
New
Delhi in
December
1959
(ST/TAO/M/15).
The
New Delhi Seminar was the second seminar on this subject
organized by the
United
Nations, and the Geneva Seminar the
third.
The
reports of the three seminars (documents
ST/TAA/M/7,
ST/TAOjM/I5
and
ST
/TAO/M/35)
constitute the
United
Nations contribution to the subject of the
administration of public enterprises,
22
Quoted
from Section IV of the
report
of the Geneva Seminar
(STjTAOjM/35).
JOURNAL
OF
ADMINISTRATION
OVERSEAS
adequate resources, to accord him necessary freedom
of
action, especially
on personnel administration, as well as to organize a good training pro-
gramme for management personnel, would greatly increase the chance
of
a
successful operation.
General Remarks
In
conclusion, I would like to make a few general points: First, on the
subject
of
public enterprise, as on other subjects relating to development
planning, the economics profession and the public administration profession
should join together and adopt an inter-disciplinary approach. On the one
hand, there should be no under-estimation
of
the crucial role that the
administrators can play in the implementation
of
economic plans, especially
if
public enterprises are the instrument for plan implementation. On the
other hand, it would equally be mistaken for the public administration
profession to go its own way.
The
only solution is to bring the economic
and non-economic approaches together and to build an integral framework.
Another general point I would like to make is that when we deal with
public enterprise or with similar subjects, we would be running the risk
of
a
loss
of
perspective
if
we were to approach the subject in isolation or to
allow ourselves to be buried under studies on narrow techniques and detailed
administrative procedures and arrangements. It is important to relate the
problem
of
public enterprise to the general problem
of
national development
and to approach all questions from the viewpoint
of
improving the effective-
ness
of
public enterprise as an instrument
of
coherent and co-ordinated
national development.
Finally, in view
of
the wide differences in circumstances, and in the
objectives
of
public enterprises, it is important to adopt a flexible approach.
There
can be no fixed formula for solving their problems which would be
applicable to all public enterprises.

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