The Public Service Mutual: Theories of Motivational Advantage

Public service mutuals are a form of employee‐led organization in which service workers spin out of the public sector to form “mutuals” that contract back with government to provide a service. This article draws on economic and psychological theory to demonstrate that mutuals can align both self‐interested and altruistic or public service motivations so as to serve the social good; moreover, by offering greater autonomy to public service professionals, mutuals are predicted to encourage energetic and persistent behaviors. In both cases, there is an advantage over alternative forms of organization such as the public sector bureaucracy, the shareholder‐owned private firm, or the nonprofit organization. The employee‐led mutual form, however, may not appeal to risk‐averse workers, its collective decision‐making systems may be inefficient, and external mechanisms may be required to ensure that organizational outcomes are always directed toward the social good.