Question

How did Dahl and Lindblom distinquish between agencies and enterprises?

Answer 1

1. An Agency is characterised by the financial relationship between two parties in which one is under the control of another and vice versa. both the parties perform entrusted duties within the scope of each others authority. An agency can be created by

• Agreement between the two parties, oral or written.
• Acts based on customs and practices of the trade.

creation of agency is essential to commercial and financial transactions, because an organization can function only through its agents.

2. An Enterprise basically means nothing but a business. There may be different meanings to enterprise but a business organization is definitely an enterprise according to the dictionary meaning of enterprise. However, a person is also referred to as enterprising when he is seen as one who is willing to take risks to start new ventures. Enterprise class is a phrase that has become common these days, and it refers to a solution or a device meant for use in a large organization. Enterprise seems to be a preferred choice when talking about IT companies as when we hear about enterprise architecture, enterprise security, and so on. ‘Small and medium enterprises’ (SME) is a very common phrase used for small ventures and units in comparison to large companies in an economy.

Difference between Agencies and Enterprises:

• While an Agency is typically an organization engaged in an economic activity for the purpose of earning profits for the stakeholders, an enterprise may not be a formal company in many instances.

• There are educational and community enterprises that do not fit into the definition of an Agency as they are not set up for the sole purpose of making profits.

• Enterprise is a word that can be used for an Agency though it is mostly used in the sense of action and growth as in private enterprise.

• Enterprise sounds more complex and interesting than an Agency.

• Enterprise has become common in the context of IT these days with enterprise class and enterprise solutions being commonly used phrases.

• SME is an acronym that clearly indicates that enterprise is meant to be used for ventures.

Distinguishing between Agencies and enterprises as per Dahl and Lindblom:

Dahl and Lindblom described the complex continuum of types of organizations ranging from enterprises(organizations controlled primarily by markets) to agencies(public or government-owned organizations). There are also on the continuum various forms of agencies and enterprises, ranging from the most public to the most private of organizations.

The Public-Private Continuum depends on 2 major elements:

(1) Ownership (public or private) and (2) Funding (public or private). The Continuum also shows the amount of economic authority, public authority, and “publicness” (degree of political influence and subject to some level of external governmental control).

Below is the diagram depicting the difference. The extreme poles in this continuum are the private enterprise (top right) and the government agency (bottom left). The top row depicts organizational forms usually referred to as private enterprise or free enterprise and the row below arrangements colloquially referred to as public, government-owned, or nationalized. In the middle are arrangements popularly considered neither public nor private

Private corporations subject to general government regulations such as affirmative action, Private corporations reliant orn Private corporations with significant funding from Private non- profit Heavily organizations govemment regulated private government totally reliant on government contracts and grants contracts for most revenues (eg, military industries) firms (heavily regulated privately owned contracts but occupationally majority of safety and health revenues fromadministration Private Enterprise utilities) private sources regulations Government ownership of part of private corporation Government Agency State oned enterprise or public corporation Government program or agency operated largely through purchases from private vendors or producers

Dahl and Lindblom construct their continuum of hybrid organizational forms based on differences in ownership. They do not explain precisely how they have chosen the various organizations’ positions on this continuum but we can assume that the characteristics of agencies apply less and less as one moves away from the extreme, while those of enterprises become more and more applicable (and vice versa).

Dahl and lindblom used theoretical analysis of societal decision and allocation mechanism methodology to conclude that Agencies under government control have more intangible goals, less incentive for cost reduction, more dysfunctions of bureaucracy than do enterprises controlled by markets.