The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation

Katalin Fülöp; Tibor Tatay

doi:doi:10.11648/j.sjbm.s.2015030101.19

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The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation

Katalin Fülöp, Tibor Tatay

Published in Science Journal of Business and Management (Volume 3, Issue 1-1)

Received: 19 November 2014 Accepted: 19 December 2014 Published: 31 December 2014

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Abstract

Implicit and explicit risks implied in contracts are allocated optimally if the risk-taker is always the party who can manage risk at the lowest cost. This principle shall apply even if one of the parties work in the public sector, and the other in the private sector. As risk-attitude of contacting partners is of vital importance in risk-sharing, this paper reviews the key factors influencing risk attitude of governmental organizations and their leaders, government officials elected or appointed for a cycle, and business organizations and their managers. Factors resulting in non-optimized risk allocation are discussed in detail, for example, public sector bureaucrats elected for a cycle focus on outputs of great public interest and tend to discount targets to be realized after the election cycle, and therefore projects more risk appetite than previously assumed. In business organizations principal-agent relationship and lack of entrepreneurial orientation are key factors, whose significance increase in proportion to the size of business and make companies more risk-averse. Short-term contracts, partnership of small-scale businesses, or if there is too much at stake (e.g. a large value bids) for the scale of a company give less space for such distorting factors, and reduce the possibility of risk allocation detrimental to the public sector.

Published in	Science Journal of Business and Management (Volume 3, Issue 1-1) This article belongs to the Special Issue The Role of Knowledge and Management’s Tasks in the Companies
DOI	10.11648/j.sjbm.s.2015030101.19
Page(s)	53-58
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Risk Attitude, Risk Allocation, Public-Private Co-Operation

References

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APA Style

Katalin Fülöp, Tibor Tatay. (2014). The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Science Journal of Business and Management, 3(1-1), 53-58. https://doi.org/10.11648/j.sjbm.s.2015030101.19

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ACS Style

Katalin Fülöp; Tibor Tatay. The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Sci. J. Bus. Manag. 2014, 3(1-1), 53-58. doi: 10.11648/j.sjbm.s.2015030101.19

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AMA Style

Katalin Fülöp, Tibor Tatay. The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Sci J Bus Manag. 2014;3(1-1):53-58. doi: 10.11648/j.sjbm.s.2015030101.19

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@article{10.11648/j.sjbm.s.2015030101.19,
  author = {Katalin Fülöp and Tibor Tatay},
  title = {The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation},
  journal = {Science Journal of Business and Management},
  volume = {3},
  number = {1-1},
  pages = {53-58},
  doi = {10.11648/j.sjbm.s.2015030101.19},
  url = {https://doi.org/10.11648/j.sjbm.s.2015030101.19},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjbm.s.2015030101.19},
  abstract = {Implicit and explicit risks implied in contracts are allocated optimally if the risk-taker is always the party who can manage risk at the lowest cost. This principle shall apply even if one of the parties work in the public sector, and the other in the private sector. As risk-attitude of contacting partners is of vital importance in risk-sharing, this paper reviews the key factors influencing risk attitude of governmental organizations and their leaders, government officials elected or appointed for a cycle, and business organizations and their managers. Factors resulting in non-optimized risk allocation are discussed in detail, for example, public sector bureaucrats elected for a cycle focus on outputs of great public interest and tend to discount targets to be realized after the election cycle, and therefore projects more risk appetite than previously assumed. In business organizations principal-agent relationship and lack of entrepreneurial orientation are key factors, whose significance increase in proportion to the size of business and make companies more risk-averse. Short-term contracts, partnership of small-scale businesses, or if there is too much at stake (e.g. a large value bids) for the scale of a company give less space for such distorting factors, and reduce the possibility of risk allocation detrimental to the public sector.},
 year = {2014}
}

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TY  - JOUR
T1  - The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation
AU  - Katalin Fülöp
AU  - Tibor Tatay
Y1  - 2014/12/31
PY  - 2014
N1  - https://doi.org/10.11648/j.sjbm.s.2015030101.19
DO  - 10.11648/j.sjbm.s.2015030101.19
T2  - Science Journal of Business and Management
JF  - Science Journal of Business and Management
JO  - Science Journal of Business and Management
SP  - 53
EP  - 58
PB  - Science Publishing Group
SN  - 2331-0634
UR  - https://doi.org/10.11648/j.sjbm.s.2015030101.19
AB  - Implicit and explicit risks implied in contracts are allocated optimally if the risk-taker is always the party who can manage risk at the lowest cost. This principle shall apply even if one of the parties work in the public sector, and the other in the private sector. As risk-attitude of contacting partners is of vital importance in risk-sharing, this paper reviews the key factors influencing risk attitude of governmental organizations and their leaders, government officials elected or appointed for a cycle, and business organizations and their managers. Factors resulting in non-optimized risk allocation are discussed in detail, for example, public sector bureaucrats elected for a cycle focus on outputs of great public interest and tend to discount targets to be realized after the election cycle, and therefore projects more risk appetite than previously assumed. In business organizations principal-agent relationship and lack of entrepreneurial orientation are key factors, whose significance increase in proportion to the size of business and make companies more risk-averse. Short-term contracts, partnership of small-scale businesses, or if there is too much at stake (e.g. a large value bids) for the scale of a company give less space for such distorting factors, and reduce the possibility of risk allocation detrimental to the public sector.
VL  - 3
IS  - 1-1
ER  -

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Author Information

Katalin Fülöp
Tibor Tatay

Department of Economic Analysis, Kautz Gyula Economics Faculty, Széchenyi István University, Gy?r, Hungary

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APA Style

Katalin Fülöp, Tibor Tatay. (2014). The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Science Journal of Business and Management, 3(1-1), 53-58. https://doi.org/10.11648/j.sjbm.s.2015030101.19

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ACS Style

Katalin Fülöp; Tibor Tatay. The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Sci. J. Bus. Manag. 2014, 3(1-1), 53-58. doi: 10.11648/j.sjbm.s.2015030101.19

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AMA Style

Katalin Fülöp, Tibor Tatay. The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation. Sci J Bus Manag. 2014;3(1-1):53-58. doi: 10.11648/j.sjbm.s.2015030101.19

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@article{10.11648/j.sjbm.s.2015030101.19,
  author = {Katalin Fülöp and Tibor Tatay},
  title = {The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation},
  journal = {Science Journal of Business and Management},
  volume = {3},
  number = {1-1},
  pages = {53-58},
  doi = {10.11648/j.sjbm.s.2015030101.19},
  url = {https://doi.org/10.11648/j.sjbm.s.2015030101.19},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjbm.s.2015030101.19},
  abstract = {Implicit and explicit risks implied in contracts are allocated optimally if the risk-taker is always the party who can manage risk at the lowest cost. This principle shall apply even if one of the parties work in the public sector, and the other in the private sector. As risk-attitude of contacting partners is of vital importance in risk-sharing, this paper reviews the key factors influencing risk attitude of governmental organizations and their leaders, government officials elected or appointed for a cycle, and business organizations and their managers. Factors resulting in non-optimized risk allocation are discussed in detail, for example, public sector bureaucrats elected for a cycle focus on outputs of great public interest and tend to discount targets to be realized after the election cycle, and therefore projects more risk appetite than previously assumed. In business organizations principal-agent relationship and lack of entrepreneurial orientation are key factors, whose significance increase in proportion to the size of business and make companies more risk-averse. Short-term contracts, partnership of small-scale businesses, or if there is too much at stake (e.g. a large value bids) for the scale of a company give less space for such distorting factors, and reduce the possibility of risk allocation detrimental to the public sector.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - The Co-Operation between a Private and a Public Company from the Perspective of Desirable Risk Allocation
AU  - Katalin Fülöp
AU  - Tibor Tatay
Y1  - 2014/12/31
PY  - 2014
N1  - https://doi.org/10.11648/j.sjbm.s.2015030101.19
DO  - 10.11648/j.sjbm.s.2015030101.19
T2  - Science Journal of Business and Management
JF  - Science Journal of Business and Management
JO  - Science Journal of Business and Management
SP  - 53
EP  - 58
PB  - Science Publishing Group
SN  - 2331-0634
UR  - https://doi.org/10.11648/j.sjbm.s.2015030101.19
AB  - Implicit and explicit risks implied in contracts are allocated optimally if the risk-taker is always the party who can manage risk at the lowest cost. This principle shall apply even if one of the parties work in the public sector, and the other in the private sector. As risk-attitude of contacting partners is of vital importance in risk-sharing, this paper reviews the key factors influencing risk attitude of governmental organizations and their leaders, government officials elected or appointed for a cycle, and business organizations and their managers. Factors resulting in non-optimized risk allocation are discussed in detail, for example, public sector bureaucrats elected for a cycle focus on outputs of great public interest and tend to discount targets to be realized after the election cycle, and therefore projects more risk appetite than previously assumed. In business organizations principal-agent relationship and lack of entrepreneurial orientation are key factors, whose significance increase in proportion to the size of business and make companies more risk-averse. Short-term contracts, partnership of small-scale businesses, or if there is too much at stake (e.g. a large value bids) for the scale of a company give less space for such distorting factors, and reduce the possibility of risk allocation detrimental to the public sector.
VL  - 3
IS  - 1-1
ER  -

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