Linking Managers With Ministers: Dilemmas of the state owned enterprise


  • Raymond Vernon

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    • Raymond Vernon is the editor of the Journal of Policy Analysis and Management and Clarence Dillon Professor of International Affairs, Emeritus at Harvard University. Because of Professor Vernon's association with the Journal, a double-blind procedure was followed for the referee process.

  • This article was stimulated by an unpublished memorandum prepared by Richard Mallon. Jean-Pierre Nioche supplied invaluable material and comments. John Sheahan's perceptive criticisms of an earlier draft generated substantial revisions.


In relations with their state-owned enterprises, governments try to capture the advantages that are thought to exist in operating through autonomous institutions. At the same time, they attempt to prod the enterprises toward a set of governmental goals. The resulting relationships between ministers and managers have produced a pattern of behavior by state-owned enterprises that differs considerably at times from those of private enterprises. But articulating the goals of the government in ways that are internally consistent has proved difficult, as has securing the benefits of autonomy. Some governments are attempting to improve the relationship with their state-owned enterprises by developing explicit agreements, even contracts, between ministers and managers. Although this approach does not face up to some basic problems in the manager-minister relationship, it cannot be ruled out as a significant step in improving the link.