Risk Culture in Public and Private Organizations

Abstract

Compared to private managers, are public managers more afraid to take risks' If so, why? These questions have permeated much of the recent discussion of bureaucratic reform, especially the work of the National Performance Review (Gore, 1993). The familiar view is that public sector managers are risk averse, that the risk aversion results in managerial ineffectiveness and that incentives should be provided to embolden public managers. Interestingly, while most government reformers take the risk aversion of public managers as both axiomatic and as a malady that must be addressed, the gurus of reinvention, Gaebler and Osborne, are not convinced of the connection between risk-taking and effective public management. Osborne and Gaebler (1993: p. xx) argue that the need to be more entrepreneurial should not be interpreted as taking risks: Many people also assume that entrepreneurs are risk-takers. They shy away from the notion of entrepreneurial government because, after all, who wants bureaucrats taking risks with their hard earned tax dollars' But, as careful studies demonstrate, entrepreneurs do not seek risks, they seek opportunities. Other studies of reform accept that risk-taking is a part of public entrepreneurship but argue that this can be tempered. For example, Bellone and Goerl (1992) suggest that public entrepreneurial behavior should be accompanied by a civic-regarding ethic that encourages citizen participation. But the pervasive,view is thai risk aversion is a proble…