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Understanding Public Administration Through the Concept of Failure

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization. 

By Michael R. Ford
March 8, 2019

It is common to define the field of Public Administration (PA) by distinguishing it from the private sector. In Masters of Public Administration courses we discuss contrasting governance structures, service motivations, transparency expectations, etc. But we always seem to land on the nature of profit. In private enterprise monetary profit serves as a tangible measurable benchmark of success. Because the bottom line in the public sector is less clear, our benchmarks for success are often vague and contested. Less discussed, but just as useful in contrasting PA from private enterprise, is the nature of failure.

In a 2002 Public Administration Review article Barry Bozeman discussed public failure, rightly pointing out the difficulty in measuring the concept and highlighting ways the nature of public and private sector failure overlap. More recently Fredrik Andersson and I attempt to define failure in the hollow state, placing organizational failure into four related categories. When explained, these categories provide an alternative framework for contrasting public and private administration.

Marketplace Failure

Marketplace failure occurs when a critical mass of customers stop utilizing an organization’s services. Marketplace failure is a key feature of a capitalist society. In the private sector, it results in the disappearance of the firm. But what does it mean in the public sector? When a critical mass of citizens leave Detroit, or when large numbers of parents leave a school district, those public organizations continue to exist, albeit with diminished service capacity. In other words, there is no explicit market signal for marketplace failure in the public sector, meaning it can theoretically continue in perpetuity to the detriment of citizens.   

Service Failure

Service failure refers to an organization’s inability to meet its customers’ needs. In the private sector this leads to marketplace failure and the eventual disappearance of the firm. In government there is often only one provider of services, and hence no clear path to marketplace failure. Instead, service failure is addressed through accountability systems like political oversight, personnel changes and budget cuts. A necessary tool for addressing service failure in the public sector is feedback systems that identify the occurrence and nature of service failure. Feedback systems include analytical tools like benchmarking, as well as citizen satisfaction surveys and focus groups. However, the absence of clear market signals makes service failure more difficult to identify in the public sector.

Institutional Failure

Institutional failures consist of non-market or non-service issues that nonetheless imperil the future of the organization. Examples in both the public and private sector include embezzlement of funds, a failure to comply with government regulations and any other illegal activities. Institutional failures unique to the public sector include inadequate transparency mechanisms, not working towards the public interest, a lack of due process and a lack of proactive commitment to the ideals of social equity. In the private sector, institutional failure can tarnish an organization’s reputation and lead to marketplace failure, or total organizational failure due to legal action. In the public sector institutional failure hurts service capacity, legitimacy in the eyes of the governed and can even imperil organizational autonomy by putting the organization at risk of a takeover or forced restructuring.  

Customer Satisfaction Failure

Customer satisfaction failure refers to customer dissatisfaction with services provided, and is closely related to marketplace failure. In the private sector customers will simply seek a different provider, and the private firm will eventually succumb to market forces. In the public sector citizens may move or complain, but the end state of customer satisfaction failure is less certain—and perhaps more problematic. Citizens that are persistently dissatisfied with their government will lose faith in its legitimacy, and that government will eventually lose its credibility (and authority). Customer satisfaction failure is most problematic for PA because it can be difficult to identify, can manifest suddenly and is an existential threat to a democratic society. 

Citizens cede freedom and treasure to be part of a governed society. Their willingness to do so is based on the expectation that the benefits of being in said governed society are worth the investment. In addition to clearly articulating the goals of our government, we must be able and willing to engage with its inevitable failures so as to maintain legitimacy and trust.


Well, the presented categories are imperfect, but do show that public sector failure rarely presents itself via a clear universally agreed upon signal like bankruptcy. As such, PA professionals must develop our own methods for forecasting, identifying, and classifying public sector failure. This is, of course, easier said than done. But we have the tools, including analytics, e-government and strategic planning, which can aid us in these tasks.

Author: Michael R. Ford is an assistant professor of public administration at the University of Wisconsin – Oshkosh, where he teaches graduate courses in budgeting and research methods. He frequently publishes on the topics of public and nonprofit board governance, accountability and school choice. He currently serves as the president of the Midwest Public Affairs Conference.

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