Carlos, your work has focused on some of the upsides of state-owned enterprises, and how companies and governments can sometimes perform similar tasks more effectively than the other.  Can you give us a broad overview of your research program and major findings?

Carlos described the line in his work looking at how different kinds of firms govern:  Private, state-owned, public, and so on.  Historically, we had an idea in the field that state-owned enterprises tend to underperform because of agency problems and political interference, but this is not always the case.  Sometimes they do quite well.  And the reason isn’t necessarily because they are monopolies (and even monopolies may not overperform because they are not pressured to be efficient).

Carlos’s work has shown that large, public firms such as state-owned enterprises often have lots of capital, and opportunities to invest where private companies cannot go.  

Anita asked Carlos about his papers on water utilities.  He found that state-owned enterprises were influenced by election cycles, with politicians meddling to create jobs in order to get elected by increasing employment.  Carlos’s work showed that political interference is a real issue, but also that sometimes companies act in ways that curry favor with politicians even without conventional “meddling” as we normally think of it.

The issue in utilities is that there are many dimensions of performance that must be balanced:  access, water quality, technical advances, and of course profitability.   Carlos suggested that different governance structures, i.e., private vs. public ownership, can help with this balancing.

Complementarities between public and private governance of organizations is understudied. 

We tend to think of the problem that needs to be solved as fixed, and then ask whether we’re better off with a company vs. a government agency in accomplishing that goal.   But what Carlos is finding is that sometimes what can be accomplished – the very thing that is the goal – becomes possible when public and private organizations work together.

In healthcare, for example, the public sector in general may be great at affordability, but may lack the ability to attract highly talented workers.   If we think of service in public hospitals as learning opportunities for highly ambitious physicians, then rotations across private and public hospitals may benefit everyone.   Patients get frontier medical care while physicians learn more about local problems and solutions.  Everyone is better off.

A key research question in a recent paper that Carlos has written with Jillian Chown is on these learning opportunities.   The team asks:  Do we see peer influence and learning among physicians?   The answer is yes.  Physicians are highly influenced by structures in the organizations that they serve.  The implication is that the style of a physician’s practice can be ported across hospitals.  There can be adaptation and adjustement.

What makes Carlos optimistic?

Every day, he sees new ways that people work together to solve hard problems, and often without worrying about the profit implications for their employers.   People are willing to work across organizational boundaries to tackle important challenges that affect the lives of those who are sick or struggling.   By bringing together people who have been trained and who are working in different types of organizations and allowing the transfer of skills to occur, everyone can be better off.