Privatization and Agency Status: Identifying the Critical Factors for Performance Improvement

SUMMARY Earlier research into the impact of public and private ownership on economic and financial performance concluded that performance may be affected but that the relationship is more complicated than policy makers have often assumed. This paper is concerned with explaining these earlier results in terms of changes in the internal environment of organizations. Six key internal characteristics are identified from the management literature and the history of ten UK organizations is summarized in terms of these characteristics. The model appears to be robust. Performance changes and lack of change are explained by the internal environment. The results are congruent with organizational theory which suggests that the internal environment has to adapt to changes in the external environment.