Financial performance of public enterprises in the era of new public management

Abstract

Public enterprises have always been considered less efficient than private enterprises in literature due to the traditional management model previously adopted. As a result, several OECD countries, as well as some developing countries—notably Morocco—have opted for New Public Management, which aims to improve the performance of the public sector in general and public enterprises in particular.

This work is a narrative literature review that focuses on the transition from the classic public management model, also known in the literature as the “Weberian?? model, to the new management model inspired by private management. Thus, this article highlights the points of convergence and divergence between public and private management. In addition, our work highlights the importance of New Public Management in improving the financial performance of public enterprises. The theoretical framework of this work is based on agency theory, property rights theory, and public choice theory, in order to compare the performance of the two types of ownership (public and private). These schools of thought mainly support the idea that private companies outperform public companies.

In this regard, the Moroccan government has implemented a series of reforms to improve the performance of Moroccan public enterprises, drawing inspiration from private sector management practices, notably through contractual agreements between the government and public institutions and enterprises, corporatization, the establishment of control and audit mechanisms, accountability and the reissuing of accounts, as well as the rationalization of resources.

Key-words: New Public Management, financial performance, private management, public enterprise, Weberian model.

Classification JEL : H32

Paper type : Theoretical Research