NCPA - National Center for Policy Analysis

Lessons In Leadership

June 11, 2001

In the 19th century, private expeditions to the Arctic region achieved more success with fewer resources and fewer casualties than government-sponsored exploration. Why was the private sector more efficient and successful?

According to economist Jonathan M. Karpoff, who examined 92 expeditions from 1818 to 1909, the private expeditions were better organized and led.

  • In 77 percent of private expeditions, the leader initiated, planned and led their teams, increasing their motivation and preparation; but only 26 percent of leaders of public expeditions did so.
  • Moreover, private leaders delegated decisions more often, solicited and used crew information and participated in menial chores.
  • By contrast, the hierarchical leadership structure of public expeditions prevented a flow of information between the leaders and the crew, reducing efficiency.

The teams assembled by the private expeditions' leaders were better:

  • Private expeditions proved to be more adaptable and better able to learn from their mistakes than public expeditions.
  • Private crews were usually seasoned travelers, whereas public crews were less accustomed to the terrain.
  • Also, private crews voluntarily chose to be part of the expeditions, while public crews were often appointed -- and thus less motivated.

Finally, another important factor was the incentive for success. Public employees were paid regardless of their achievement, while private employees received additional payments for reaching their goals.

These differences between private and public efforts can be seen today in modern industries and government agencies. This suggests the entrepreneurial private sector has advantages in motivation, organization and incentives over government efforts, regardless of the century.

Source: "Lessons from the Arctic," Economic Intuition, Winter 2001; based on Jonathan M. Karpoff, "Public versus Private Initiative in Arctic Exploration: The Effects of Incentives and Organizational Structure," Journal of Political Economy, February 2001.

 

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