How Economic Decisions Are Made in Public vs. Private Sectors: A Comparison of Methods

How Economic Decisions Are Made in Public vs. Private Sectors: A Comparison of Methods

Brian J. Galli (Assistant Professor and Graduate Program Director, Master of Science in Engineering Management Industrial Engineering, Hofstra University, USA)
Copyright: © 2018 |Pages: 10
DOI: 10.4018/IJoSE.2018010103
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This article describes how economic decisions are made differ from the public and private sectors. Both cater their decisions to the needs of the public but the context and the purpose behind the decisions differ. The primary purpose of article is to evaluate and compare the most common and effective methods of decision making used in private or public sectors. This article used a traditional systematic review of current literature in the field in order to perform the purpose of the study. It was found that although both sectors will make similar decisions, the sectors would utilize different methods to achieve economic decisions, primarily because both are affected by diverse factors. While private sector decisions may be hindered by government regulation, the public-sector faces challenges with financing a project and politics. This paper concludes that all the methods the private and public sectors utilize, including those in common, are viewed differently, and therefore their economic decision-making is not one in the same. Therefore, the method used to make the decision is dependent on the context of the decisions being made and also several other factors (operational, culture, regulatory) that depend on the type of sector (public or private).
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Research Methodology

The author used Kothari’s (2009) book to choose the method to implement for this research study. According to his book, the author chose to collect existing literature about economic decision-making in the public and private sectors. The author achieved this with a traditional systematic review of current literature. The traditional systematic review of literature is a quantitative approach that helps to standardize methods and results in the studies that were collected. Because the researchers do not need to compare estimates manually, bias can be eliminated. Furthermore, with traditional systematic review of literature, the author can find papers that have been published internationally, all over the world, based off priori defined criteria. Unfortunately, the traditional systematic review of literature has some limitations. It usually returns a narrower range of results because of the confinements mentioned before. It may also not find the type of studies the researchers want to collect, because the traditional systematic review of literature is only going to look at articles that have been published with significant results. It will not find literature that is discrete in its findings. When a traditional systematic review of literature cannot unearth relevant studies, it is coined the “file-drawer” problem. Fortunately, this limitation can be avoided, since many new ways have been developed in methodological literature to test and eliminate it (Rosenthal, 1979; Card & Krueger, 1995; Begg & Mazumdar, 1994).

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