An investigation into government owned corporatised entities and strategic management of multiple stakeholders in the Australian land development sector

In the context of corporatised government entities where managers are told to operate on commercial principles, and yet undertake some projects that are not profitable, a difficult set of circumstances is created by these seemingly conflicting objectives. There is little information on this phenomenon. In this study I address the lack of knowledge through the lens of stakeholder and institutional theories that form the basis of this study. In Australia, there has been a trend towards reforming the public sector. Corporatising many government departments at all levels has been a major outcome. These entities play a significant, growing, but little understood role in the economy. Some of the many examples of public entities required to carry out these objectives include government owned urban development corporations. The exploration of this phenomenon and some of the difficulties and issues it presents are the focus of this study. The selection of the urban development corporations is salient given the heavy focus on housing affordability and affordable living in Australia today. This research employs qualitative case study methodology. Interviews and focus groups are the selected method of data collection and are supplemented with document analysis. Participants are a purposefully selected group of executive managers from these entities. In addition one Treasury department was selected as representative of all state government Treasury departments. The findings add to the literature and advance theory in a number of ways. The private sector is identified as a very important stakeholder in the public sector. Manipulation as a strategic response to demands from stakeholders exists in the complex relationship between these entities and the private sector. The Oliver (1991) strategic responses to institutional processes model can be extended to include an active and positive strategic response indicating managers at times go 'above and beyond' what is required by stakeholders. Other findings confirm the more attributes a stakeholder possesses the more managers will 'notice' them. This finding concurs with the Mitchell et al (1997) stakeholder typology model. These attributes include power, legitimacy and urgency. However, the type of power whether coercive or symbolic can influence the decision making of managers. Further findings indicate some institutional factors can be more influential than others as predictors of strategic response. The findings also suggest the type of management control system (MCS) in use in the organisation can be predicted from the overall strategic response of management to demands from stakeholders.