Evaluating the performance of local SoE as output-maximizing entities: the case of Friuli Venezia Giulia

Publicly owned private-law organizations represent a sort of a hybrid between pure-public and pure-private management forms, and a rather successful one, at least if one considers the ongoing success that such organizations encounter in many European countries, especially at the local level. Economic theory has devoted scant attention to the reasons that may confer a competitive advantage to public enterprises, vis-à-vis both entirely privatized companies and traditional public bureaucracies. The paper develops a conceptual framework to systematically evaluate the performances of local SoEs in relation to their ability to achieve policy goals. By considering SoEs as output-maximizing organizations rather than profit-maximizing ones, the proposed approach entails an interactive dialogue between evaluators, policymakers and managers to deliver better evaluation outcomes. The methodology is applied to assess the performance of a sample of local SoEs owned by the Region Friuli Venezia Giulia in Italy in an effort to support policymakers in deciding whether to maintain its shareholding participations or divest them, that is, privatizing the public services involved.