Public value describes the value that an organization or activity contributes to society. The term was originally coined by Harvard professor Mark H. Moore who saw it as the equivalent of shareholder value in public management. Public value is supposed to provide managers with a notion of how entrepreneurial activity can contribute to the common good. Nowadays, public value is no longer limited to the public sector, but is used by all types of organization, including non-governmental organizations and private sector firms. Therefore, the public value researcher Timo Meynhardt from the University of St. Gallen and HHL Leipzig Graduate School of Management uses the term to generally raise the question about organizations' contribution to the common good. He believes that current management concepts, such as shareholder value, stakeholder value, customer value, sustainability or corporate social responsibility, should legitimize themselves in regard to their impact on the common good. In his (social-)psychological-based concept, public value emerges for individuals from the experiences made in social structures and relationships. Hence, it can be seen as a prerequisite and a resource for successful living.
Definitions
Public value is value for the public. It equates managerial success in the public sector with initiating and reshaping public sector enterprises in ways that increase their value to the public in both the short and the long run. Moore, 1995 According to a recent systematic review of empirical public value research, public value has four key dimensions: outcome achievement (i.e. the extent to which a public body is improving publicly valued outcomes across a wide variety of areas), trust and legitimacy (i.e. the extent to which an organisation and its activities are trusted and perceived to be legitimate by the public and by key stakeholders), service delivery quality (i.e the extent to which services are experienced as being delivered in high‐quality manner that is considerate of users' needs), and efficiency (i.e. the extent to which an organisation is achieving maximal benefits with minimal resources).
Public values are those providing normative consensus about (1) the rights, benefits, and prerogatives to which citizens should (and should not) be entitled; (2) the obligations of citizens to society, the state and one another; and (3) the principles on which governments and policies should be based. Public Value is the combined view of the public about what they regard as valuable. Talbot, 2006. Value for the public is therefore situated in relationships between the individual and society, founded in individuals, constituted by subjective evaluations against basic needs, activated by and realized in emotional-motivational states, and produced and reproduced in experience-intense practices. Meynhardt, 2009
In 2006 Accenture launched the Institute for Public Service Value (IPSV), to explore how public value is created in government organizations. Greg Parston, co-founder and former Chief Executive of the Office for Public Management, and a collaborator with Professor Moore, was appointed Director. Among many other studies, IPSV conducted the Global Cities Forum in 2007-2009, which facilitated citizens' deliberations on their experiences and expectations of public value in 17 cities around the world.
In 2006, the Center for Technology in Government (CTG) in partnership with SAP AG, conducted research on the topic of public value in the context of governments' investments in information technology (IT). The results of this research found that governments' ability to realize the full value of IT investments is not completely measurable in terms of financial results. More specifically, the five U.S. and international governments studied, looked for the full value of government IT investments in both the internal value to government operations and the broader political and social returns to the public at large.
From this point of view, there are two sources of public value:
- value that results from improving the government itself as an asset to society and
- value that results from the delivery of specific benefits directly to persons or groups.
In November 2006, UK-based The Work Foundation published a report on their project, titled Deliberative democracy and the role of public managers', followed in October 2008 by Public Value: The Next Steps in Public Service Reform
The German Federal Employment Agency uses the public value concept to better understand its contribution to society that goes beyond simple task fulfillment and make it a yardstick for management decisions. An empirical study has shown that a particular value of this organization is seen in its contribution to social peace in Germany.
In the private sector
Public value is also taken up by private sector companies that want to maintain a license to operate and understand what implications new strategies and projects might have in terms of public value creation/ destruction. Such analyses can be done using a Public Value Scorecard as proposed by Timo Meynhardt and Peter Gomez. Public value acknowledges that established business paradigms such as customer value or stakeholder value risk overemphasizing certain aspects of business' value contribution to society at the expense of other important dimensions. It pledges for a redefinition of the entire notion of value creation as it takes utilitarian and hedonistic as well as political and moral aspects of value creation into account.
A number of firms use public value to obtain management information helping to take strategic decisions. Examples include:
- Fresenius Medical Care, a German producer of medical supplies and operator of dialysis clinics, complements its balanced scorecard with the Public Value Scorecard. Through the inclusion of an external perspective the firm wants to gain a better understanding of the public value of healthcare service that are supplied by private firms. In a first project, the firm has systematically measured the public value of its dialysis centers in Great Britain. The management wants to use the insights gained in this study for positioning towards the firms' stakeholders.
- The football club FC Bayern Munich uses a public value approach to systematically assess the challenges pertaining to its societal role that come along with its growth from a regionally embedded football club to a global entertainment brand. For a football club that enjoys permanent public attention and is seen as a role model by many people, such questions are especially relevant. Different public values such as "Mia san mia" (Bavarian for "us is us") and "global brand image" are partly in tension with each other. The structured compilation of the club's societal value can be used as management information for strategic decision-making.
The Strategic Triangle
When further developing his thinking on public value, Moore focused his book Recognizing Public Value (2013) on how to assist public managers to focus on creating public value within the environment they work within, rather than as a theoretical framework. Moore created the strategic triangle as an analytical framework to help turn abstract possibilities into the concrete circumstances managers are facing. The strategic triangle is used by many public managers across the world, to understand and measure the public value they create and what kind of capability and capacity is required to create it. In a study by Höglund et al. (2021) of the Swedish public sector it was used to analyse the strategic management and management control practices at Region Stockholm and in particular, the Culture Unit. It is challenging to find alignment among the three points of the strategic triangle when it comes to strategic management and public value creation.
Measurement and Evaluation
Measuring public value has become increasingly important in efficient public administration. Although there has been a great deal of research dedicated to establishing public value, there has been relatively little focus on how to measure it. Evaluating and measuring results assists the understanding and application of public value principles.
Public managers can utilize performance measurement for: (1) evaluating; (2) controlling; (3) budgeting; (4) motivating; (5) promoting; (6) celebrating; (7) learning; and (8) improving. Leaders of public agencies should first determine the managerial purposes for which performance measurement will be used, and then select a set of performance measures that can effectively support these purposes both directly and indirectly. Some researchers suggest expanding assessment to consider the influence of policies and programs on various activities. This implies that every activity related to creating public value must be evaluated. and public confidence.