Using Natural Experiments in Public Enterprise Management

Research in public enterprise management is becoming increasingly quantitative and scholars are aspiring to achieve the same standards of academic excellence that hard disciplines demand.Researchers in the domains of Public Economics, Public Finance, Human Resource, Marketing and Industrial Organisation, among others, are trying to mimic the principles of Physics by building complex mathematical models and conducting experiments.Since the scope for field experiments management is limited, scholars of these disciplines are increasingly employing natural experiments for research that aims to explore causal relationships in observational studies.Natural experiments are means to overcome some of the obstacles that researchers face while making causal inferences.To compare the actual with counterfactual, the difference-in difference methodology has seen many advances in recent years.However, mimicking research in Physics comes at a cost.Public enterprises due to their social responsibility deal with situations that have significantly more uncertainty than what Physics addresses.With some care, natural experiments can enhance research in management of public enterprises as also inform public policy.