---
id: "pisquared:interview/Klein-Peter"
type: "Pi-Squared interview"
title: "Anita McGahan in conversation with Peter Klein"
url: "https://pisquared.theburnescenter.org/interviews/klein-peter"
date: "2025-01-28"
people: ["Anita McGahan","Peter Klein"]
summary: "Peter G. Klein is W. W. Caruth Endowed Chair, Professor of Entrepreneurship, and Chair of the Department of Entrepreneurship and Corporate Innovation at..."
recording: "https://vimeo.com/1150539818"
source: "Pi-Squared (pisquared.theburnescenter.org), The Burnes Center for Social Change"
licence: "none stated"
---

# Anita McGahan in conversation with Peter Klein

Peter Klein, W. W. Caruth Endowed Chair and Professor of Entrepreneurship at Baylor University’s Hankamer School of Business · 28 January 2025

## About the guest

Peter G. Klein is W. W. Caruth Endowed Chair, Professor of Entrepreneurship, and Chair of the Department of Entrepreneurship and Corporate Innovation at Baylor University’s Hankamer School of Business. He also serves as Director of the Baugh Center’s Free Enterprise Initiative. Currently, Peter is Co-Editor of the Strategic Entrepreneurship Journal and Associate Editor of the Independent Review. He was previously Field Editor for the Journal of Business Venturing and Associate Editor for the Academy of Management Perspectives. He has held many elected posts in our most important academic Associations, and he is Anita's long-term friend and collaborator.

## Reflections from the interview

Anita asked Peter a number of questions that reflect his stature as a theorist.  The goal was to try to get at some of the fundamental challenges that private and public organizations face in working together.

1.      What do we mean by public entrepreneurship?   Are we talking about internal innovation within governments?  Or is this about corporate entrepreneurship that is focused on public outcomes?   Does it matter?

Peter responded by saying, essentially, “all of the above plus more.”    We really have no broad consensus even on what we mean by entrepreneurship.   Some of us are thinking about people who are creative.  Others focus on behavior of individuals.  Yet others are thinking about business practices like starting companies or attracting venture capital.   You could be thinking about societal progress, such as when you call a country entrepreneurial.

Now layer on top of that ambiguity the question of what constitutes public entrepreneurship.   You could be talking about anything from innovating within a public administration to the creation of a new tool by a company that is procured by government.    We could think about starting a new government agency.   You could even think of public entrepreneurship as a mindset change.   Within public-private partnerships, “public entrepreneurship” might mean something like collaboration to accomplish something that cannot be accomplished by either the private or public sector alone.  So all of the above plus more!

2.      One of the things that we’ve discussed in our papers is “public bads” that can emerge from corporate engagement in activities that are customarily reserved for the public sector.  These include, for example, private prisons that exploit prisoners; mercenaries that have no commitment to purpose; exploitative healthcare practices.    Is there a systematic organizational dynamic that gives rise to these “public bads”?  Whare are the conditions that give rise to these “bads”?

Peter’s answer to this question rested on the insight that systems work when there is decentralization at some level.  We need division of labor, exchange, decentralized control in order for systems to work effectively.    With decentralization – whether through public or private organizations – comes the possibility of malalignment of behavior with mission.   The problem of corruption and/or simply ineffectiveness can arise in any time of organization.

Now lets think about how that problem gets exacerbated when the organization is some sort of public-private hybrid.  Now we have actors that are out of alignment in things like governance mechanisms, incentives, performance targets, mandates, etc.   Consider a private prison operator who might have different incentives in the provision of justice than a public operator.   There can be distortions that even include an incentive to incarcerate itself.    There may be harms that are not anticipated by the original arrangements.    So then the question arises:   How do you adapt governance to deal with these issues?

This is a problem that Anita and Peter have considered in their joint work with Joe Mahoney and Christos Pitelis.   We think about how, in a multi-stakeholder environment, the problem of handling unanticipated surprises is even more complex.  Who gets the final word on how to solve a problem such as unjust incarceration?   You might argue that the government should deal with this.  But how?    And in other situations, the answer is much more ambiguous.    Ambiguity about governance can invite problems.

3.      How can we design collaborations to foster trust?  Is there a sweet spot on the scope of the issues that we should be addressing through public-private collaboration?

Peter pointed to a tension:   Smaller, more local collaborations that occur in communities where people know each other can elicit trust-based problem-solving when something unanticipated arises.   Neighbors get together and work things out.   That might lead us to think that smaller, narrow collaborations are better suited to trust.

But this leaves us with the challenge of fostering collaboration on big global problems….

4.      If we think for a moment about an all-hands-on-deck public problem such as the heating of the climate or of COVID, can we reasonably expect markets to emerge that will reward innovation at scale by companies, or do we need to deal with externality problems through government?  And conversely, given the siloed nature of government and the focus on accountable resource deployment, can governments effectively respond?   What’s the path for a coordinated, strategic response?

Peter responded by saying that it might be worthwhile to decompose big problems into portions in which private collaboration can be effective through goal alignment.  He talked about capitalizing on the advantages of bureaucratic constraints that constitute “rules of the game,” which is set up in contrast to the “play of the game.”   When governments – or more broadly, leaders in the institutional environment – set up incentives and guidelines and rules, and then deploy the private sector to experiment and innovation, you often get better outcomes than when governments try to shape private actions in a more detailed way.   Of course, there are many examples of effective internalization of innovation problems by government (Anita gave the example of NASA).  

Peter described a new research project that looks at how variations in the ideologies of entrepreneurs and political leaders play out in innovation.   He talked about how ideology can shape conversations about what constitutes legitimate innovation, such as is occurring in the United States as Elon Musk becomes involved in government.  There’s a lot to learn, Peter said, about how the trajectory of innovation in the private sector is shaped by this kind of ideological framing.  (And of course, constrained by time, Anita had a million unasked questions about whether this could lead to adverse outcomes.)

5.      What makes you optimistic? 

Peter’s answer centered on the persistence and creativity of human actors.   He described how, back in the era of the Jetson’s TV show, we couldn’t have and didn’t anticipate innovation such as cellphones and the Internet.   Today, it’s hard to anticipate what big new life-changing innovation may be around the corner.   The possibility of a big breakthrough is what makes him optimistic.

## Related resources

- [Peter Klein's profile at Baylor](https://hankamer.baylor.edu/person/peter-g-klein)
- [Baylor University](https://www.baylor.edu/)
- [Peter's paper with Anita, Joe Mahoney and Chris Pitelis on public entrepreneurship](https://onlinelibrary.wiley.com/doi/abs/10.1057/emr.2010.1)
- [Peter's paper with Anita, Joe and Chris on capability development through entrepreneurship](https://onlinelibrary.wiley.com/doi/abs/10.1002/sej.1147)
- [Peter’s and Anita’s recent Brookings publication on the importance of intersectional governance between public and private actors](https://www.jstor.org/stable/10.7864/j.ctv13xpqm9.8)

## Recording

Video: https://vimeo.com/1150539818

## Category

[Where Do We Go From Here?](https://pisquared.theburnescenter.org/category/where-next)

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Original page: https://pisquared.theburnescenter.org/interviews/klein-peter · Licence: none stated