ISSN: 2278-3369

International Journal of Advances in Management and Economics

Available online at www.managementjournal.info

RESEARCH ARTICLE

An Innovative Public Value Chain to Improve Public Services

Padula Alberto*

Dept. of Business, Govt., Philosophy Studies, University of Rome “Tor Vergata”, Rom-Italy.

*Corresponding author:Email:[email protected]

Abstract

The paper aims to give a contribution to the debate on the improvement of public services through the development
of a model, the Public Value Chain (PVC), which will take into consideration the features typical of the public
services sector and its constant evolution.PVC finds its essence and strategic importance within an active and
dynamic vision fostering the culture of change, outlining value-creating activities and determining operating
procedures and approaches that will spread within the organization structure.PVC is based on the belief that public
services organizations must be able to offer services always in line with the expectations and needs of citizens and
enterprises, according to logics of excellent performances and efficiency in the use of the resources, taking into
account that public services represent a quality factor in the life of citizens and in the productivity of enterprises.It
is therefore possible to refer to a real value chain, even though this is not enough to give a comprehensive definition
of the model applied to the public services sector. PVC highlights the complexity of operational contributions of each
activity and the need for a coordination and finalization towards the final result, which is the added value the same
public services organizations must be able to give.
Keywords: Customer satisfaction, Public services, Public services improvement, Service marketing, Value chain,
Value creation.

Introduction
Public services can be regarded as a critical factor In such a context it is essential to provide services
for the competitive development and the growth of that can meet the different needs and
‘country systems’ (national economic, social and expectations of people, enterprises, and
industrial systems). According to this approach, institutions, breaking a taboo that has been
the organizations operating in the public services curbing the development of the sector for years,
sector (including any public body and concession that is thinking of public services as something
operator) play a key role as providers of services that must be provided to everybody in the same
of general interest, which unquestionably have a way. In other words, market logic also needs to be
strong impact on both the life quality of citizens developed in the public services sector, meant as a
and the productivity of enterprises. The properly well-regulated market that may be
performances of these organizations should be useful to the development of a country system.
characterized by high quality and cost The aim is to meet demand expectations taking
effectiveness as the aim is to bring Public into consideration three macro segmentations:
Administration as much closer as possible to
 Demand from people
citizens and enterprises by creating 'public value'
 Demand from any kind of enterprise;
through the production of services increasingly
 Demand from institutions, including Public
more tailored to the needs of users.
administration bodies and non-profit
organizations.
In time, the above-mentioned considerations have
allowed significant improvements to be When changing the point of view, it becomes
introduced in the process of ‘production and evident that concepts such as market, competition
consumption’ of public services, thanks to and excellent performances are not so different in
constant and important innovations in terms of application to the private or public services sector.
services (what is offered), but mainly in terms of This is also confirmed by the social-economic
process (how it is offered), that is the ways changes that country systems are now dealing
through which activities are combined between with, which push increasingly more towards
them and create value. market liberalization and the privatization of

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public services enterprises. The sector thus has be certainly stated that the global economic crisis
had to deal with the opening of a far larger now affecting many countries helped to point out
market, with public services being compared with problems in the public governance emphasizing
those produced by other enterprises and where some weak points to work on:
the same performances started to be compared
 Attention to stakeholders;
with those of other competitors, even though the
 Coordination of the several interests at stake;
concept of competition applied to the sector may
 Systematic application of the principles of
seem inappropriate when still thinking of it as
effectiveness, efficiency and transparency.
something self-referential, static, generally over-
bureaucratized, just referring to its own rules and A governance is thus required playing an active
regulations and far from comparing itself with and innovative role, which is based on a
other organizational reference contexts, either development project providing for a more complex
national or foreign ones. process of investment in public services; the aim
is mainly to improve performances to support
In addition to this, when considering that the community development as well as to cut costs
concept of competition is also based on an referred to inefficiencies.
increasingly more compelling comparison among
organizational performances, as in the case of According to this interpretation, the governance
national borders disappearing to include reference model is the one of a public
European and extra-European marketplaces, it administration regarded as a citizen- and
becomes clear how the public services sector must enterprise-oriented network system creating
necessarily come to terms with a larger public value. Public administration is turned into
performance system. Competition forces us to a clear apparatus of skills and professional
raise the level of performances in order to improve expertise that can positively affect the competitive
quality as well as to reduce prices and rates and advantage of a country. In particular, such a
therefore the costs that can be borne. process of innovation considers not only the
Public services must consequently be measured relations between public services organizations
according to two essential points: and citizens/enterprises, but mainly the larger
network of relations within the public
 Ability to meet the expectations of all users
administration sector.
diversifying performances according to users’
features;
 Cost-effectiveness, for services either delivered The Public Value Chain
directly by public administration or by Public governance highlights the way in which
concession operators, which have to guarantee public services organizations should create social
appropriate levels of performance. and economic value, while taking into
Governance in the Public Services consideration that those organizations are but
Sector economic bodies characterized by a public goal,
with their own value-creating strategies and
A governance capability is required to understand drivers.
the logics of complex organizations such as those
generally delivering public services. Such a From a strategic point of view, one of the main
capability is designed to promote an effective and problems is to measure performances, that are to
efficient use of the resources available and, at the assess the results achieved in terms of impact on
same time, to acknowledge a permanent the community with reference to the resources
responsibility in the management and used; this is a topic that has been highly-
administration of those resources, with the discussed in the reform of public administration
purpose of adjusting the interests of the in several countries.
community to those of any other economic system,
be it public or private. In this respect, all the Effectiveness, efficiency, equity, transparency,
players need to be involved and actively ethics, social sustainability and quality of services
participate, as they must become responsible for are only some of the factors that aim to redesign
triggering a long-term development that may the complex machine of public administration.
meet the needs of everybody and not of just a few. Nonetheless, assessing those factors looks
In the latest years, in the public services system, extremely complex due to the non-competitive
the logics implied in the concept of governance nature of the public services sector in the field of
have had such a deep impact on the process of resource allocation.
management and organization change that it can

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Following an active and dynamic vision, a model, organization creates economic and social value
the Public Value Chain (PVC), is provided to be when it is able to identify the best combination of
applied to this sector, which is crucial because it those value-creating activities through which
fosters the culture of change even before any maximising the benefits for citizens and
reform, outlining value-creating activities and enterprises regarded as customers.
determining operating procedures and approaches
that will spread within the organization It is therefore possible to refer to a real ‘value
structure. PVC is deeply influenced and at the chain’, even though this cannot obviously be taken
same time fed by the operating procedures chosen as a comprehensive description of the model
to open up to the market and to serve citizens and applied to the public services sector. The mere
enterprises, in the narrowest sense of the word. application of Porter's model, in fact, does not fit
the organizations operating in such a particular
In addition to this, PVC allows public services industry sector. The activities taken into account
organizations to break away from their patterns are different, within certain limits, from those
of self-reference by innovating from the inside and theorized by Porter (1985), with regard to their
thus making the process of change easier to scale, progression and typology, even though they
spread and be accepted. Furthermore, when a are in line with the overall logic according to
public services organization is set up as a system which each organization includes two essential
of value-creating activities, the weight of each elements:
activity as well as their contribution to the final
 Primary and support activities to create value;
result can be thoroughly appreciated.
 Margin or value, which represents the difference
between the total value produced and the overall
It can be stated that PVC may represent a tool
cost incurred for the service delivery process. In
driving public services organizations towards
Fig. 1, the PVC suggested is detailed.
excellent performances, thus feeding the culture
of change and continuous improvement in the The importance of PVC is evident and its
supplier-consumption-customer satisfaction chain. application to the public services sector certainly
As a consequence, PVC may be turned into a would help to evaluate and outline strategic areas
strong driving force for the development of those for improvement in terms of both efficiency and
public services organizations pursuing a effectiveness, thanks to the ideal combination of
competitive edge. A key element will be the value-creating activities. PVC may be useful to
ability to understand the value chain in order to increase the social and economic capital that, as
achieve and keep that competitive edge. already mentioned, translates into an
improvement in the life quality of citizens and
The above-mentioned considerations are based on productivity of enterprises, thus leading to an
the belief that public services must be delivered increased competitiveness of the whole country.
according to logics of excellent performances and
efficiency in the use of the resources, in line with It is important to remind that public services
the expectations of citizens and enterprises. The organizations have been set up to perform a
activities of public services organizations are 'social' function, that is to produce and deliver
indeed based on procedures that have a strong services the community can benefit from, thus
impact on corporate outcomes and, as a fulfilling important public requirements while
consequence, on the value perceived by users; avoiding to entangle themselves. In other words,
such a value is, on its turn, the result of a perfect their main aim still is to fulfil a special productive
integration among different value-creating vocation to serve specific needs. This however
activities, which are essential to increase the happens in a context of market rules and
management and strategic quality of the same institutions that should promote not only the
organizations. respect for users and their needs, but principally
the appreciation of all the productive resources in
With regard to this, the development of a order to promote a cost-effective management
strategically relevant PVC requires prospective that may guarantee the profitability and
core results to be identified that are specific for development of any organization, be it public or
each organization. Results must be balanced private. The concepts of competitive strategy and
according to the priorities of final users, with value chain can consequently be referred to public
reference to what represents and creates the services organizations, as they represent the
value that is given by the price citizens and mirror of the entire process of service creation and
enterprises are ready to pay for a service fully management.
matching their needs. Hence, a public services

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Fig. 1: Public value chain

Service Concept and Design
The value chain is therefore the tool that allows
the focus of attention to be broadened from what
When defining the concept of public service and
is offered to users to how it is offered, referring to
designing it, the main reference is the analysis of
all the processes through which activities are
the needs of end users, whereas customer
combined together and create value.
satisfaction is meant as the goal to achieve even
before being the tool used to achieve the expected
A correct development of the PVC may
goals of efficiency and effectiveness, in addition to
consequently allow an over-bureaucratized
consistency and sustainability of services in time.
machine to be turned into a management
machine, identifying the activities essential to the
The aim is to identify and structure public
development of corporate business as well as the
services as a set of components, primary and
costs incurred and the results achieved. The
secondary ones, which could be later modified,
purpose is to promote the constant improvement
managed and controlled with reference to demand
of the services as to increase the level of
trends over time. In this context, the optimal
satisfaction of citizens and enterprises. The
management of the trade-off between
relation among the activities mentioned allows
standardization and personalization of services
the weakest links of the chain to be detected, thus
turns out to be a crucial element. In particular,
offering the opportunity to develop some
the intangible component, which is primary
strategically interesting alternatives to improve
services, must be balanced by the tangible
the entire value chain, creating a positive impact
component, which is the secondary and additional
on competitiveness.
services (supporting primary services) that
represent the added value in service supply. In
In the following paragraphs, a short description of
this view, the impact of additional elements, when
the activities of the PVC will be provided, taking
consistently integrated, helps to plan services in
into consideration that each one of the activities
line with the quality expectations of end users.
will be further approached in specific
The personalization of a service represents a
dissertations.
crucial step in the process of interaction with
Primary Activities in PVC users, as the service can be ‘objectified’ by
identifying its tangible components. This will
Public services organizations are responsible for
allow one of the primary value-creating activities
investigating the costs and the results related to
to be constantly monitored and controlled while
each one of the activities taken into consideration
detecting any shortcoming in the management or
in order to identify any weak point and turn it
into areas for improvement.

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the structure, which may be hidden in the service

The procurement practices for those resources
planning.
and the ways in which they are effectively
combined and interact should therefore be
Furthermore, an accurate planning of public
carefully analysed, in order to understand the
services must be marked by a comprehensive
competitive advantage of public services
design of the delivery process, which will take into
organizations.
consideration users' behaviour as an essential
element for the successful outcome of the process HR Selection and Management
and, therefore, of the quality of public services. Human resources are a key element to meet
customer satisfaction in the delivery process of
In particular, mapping activities and supply public services. In particular, front office staff
tangible components help to understand and play an extremely important role, as they are the
outline the role of users and contact staff in the most tangible part of public services, included in
delivery process of public services. Such a the service experience, on whom the successful
different point of view also makes the service outcome of the entire process mostly depend.
blueprint model [1] applicable, which allows
services to be subdivided into their (basic and It is therefore possible to define the third primary
additional) components. The model shows the value-creating activity, that is HR selection and
service delivery process, the times of interaction management, which becomes one of the most
with users and the tangible components of relevant strategic components. The ability of the
services simultaneously; in addition to this, it staff to manage users' needs properly is a crucial
provides for an accurate map of the entire factor because users feel the perception of what
delivery process of public services, with the they have experienced rather than reminding the
purpose of identifying the key players of the service they were delivered.
process as well as the potential criticalities that
may cause a bad perception of service quality. The quality of the people is thus essential to
Defining the service blueprint model thus means determine the competitive quality of public
to subdivide public services highlighting all the services organizations, which can stand out
phases that contribute to their planning, through increasingly more when dedicated to the effective
a careful description of activities composing management of human resources. With regard to
service supply. this, only a global and focused strategy makes
possible pursuing the goals of enhancing human
Physical Resources Procurement
resources within the context of service delivery
When the structure plan of the services offered is process. Public services organizations should act
completed, the acquisition of physical resources is according to the logic of ‘think global, act local’,
required to implement the next step of service developing and applying to themselves a
production and delivery. management approach that must take into
consideration the environmental dynamism now
In the case of public services, such a phase is very marking the sector, without leaving aside their
delicate due to both the amounts of resources to own distinctive features. Actions consequently
be acquired and the exposure to biased choices must be taken with regard to organizational
compared to the best ones. The topic of identities and cultures, relationship building,
procurement thus often becomes a very important appreciation and acknowledgement of
issue for public services organizations, as the organizational citizenship, in order to build a
widespread diffusion of a service requires a high climate of confidence without which the systems
availability of equipment, systems, materials and of evaluation and appreciation of work would not
services. be allowed to grow and develop.

The identification of the specific needs related to

To this purpose, the concept of internal marketing
the planned services is firstly required as well as,
best fits the context, as it is a management
later on, the identification of the suppliers who
philosophy through which it is possible to
are able to provide the best quality-price ratio in
recognize the internal reference market and take
the interest of citizens and enterprises. It is no
employee satisfaction as a further (not
coincidence that the procurement of physical
alternative) practicable way to meet the
resources, in the PVC structure, must be
satisfaction of end users. The ultimate goal is
developed as a primary activity and not just as a
selective employee loyalty [2], because there is no
support to value creation.
collaborator better than the one who is confident

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and satisfied with working for his/her company. describe services through their tangible
Enterprises, on their turn, should attain the components and at the same time represents the
condition of best place to work for the best people, physical structure inside which users experience
in which the best people are also those more in the entire process, with a possible positive impact
line with the needs and the expectations of the on service experience.
same organization.
Customer Care and Recovery
Service Production and Delivery
In a long-term vision, public services
This activity is designed to develop a production organizations must create a perceived and lasting
and delivery plan consistent with the available value according to the concept of social
production capability, thus focusing on an sustainability. In this sector, a key concept is
effective cost management, when considering that therefore that of stakeholders’ satisfaction that
the production cycle of public services is deeply measures the performances perceived.
affected by fluctuations in demand.
With regard to this, it is appropriate to highlight
Perishability of services makes the phases of that the service experience is generally the result
production and consumption coincide of a series of moments of interaction and truth. In
(sincromarketing), creating a real-time service the following phase, users assess service
experience through the interaction between user performance, comparing it with their own
and service provider. Perishability is therefore expectations. When considering that customer
related to the experience that may derive from satisfaction, as already stated above, is the
services rather than to the performance itself. mission of public services organizations, rather
The focus is thus shifted back to a crucial element than a goal to achieve, it is clear how such a
involved in the construction of the PVC that is the phase is extremely important to create positive
creation of public services that are perceived as expectations in connection with public services
mostly tangible by users as equipped with those consumption and how it has a deep impact on the
physical elements required to make service image and the reputation of an organization.
experience cope with user's expectations.
For this reason, when customer care activity is
considered for the construction of the PVC, the
The elements of the public services production
focus should be on those factors that may affect
and delivery system can be identified as follows:
the expectations and mostly the perception of
 User, directly involved in the process of service public services. In particular, the so-called
creation; 'tolerance zone' must be identified, which
 Contact staff (front office); represents a still acceptable service level between
 Servicescape [3], the physical environment the quality level expected by users and the
where all service production and delivery minimum quality level that does not generate
activities take place; dissatisfaction.
 Internal organization system; physical support
unseen by consumers (back office), which is In order to manage the tolerance zone at the best
essential to the service production process. and make real value be created, customer care
activity must keep the zone as large as possible.
The tangible components characterizing public
This will be done through activities that comply
services can further be subdivided into the ones
each time with standardized criteria, but which
that are referred to the contact staff and the
are also designed for a reasonable degree of
others related to the physical structures and all
personalization, with reference to the fulfilment of
the other tangible elements. Users therefore
users’ expectations in service consumption.
assess production according to the elements they
actually experience, depending on the perceived
Customer care can actually contribute to value
result.
creation as it helps users to better benefit from a
service by exploiting all its potentials, on the one
From what has been discussed so far, it is clear hand, and it is involved in the management of bad
that the entire process of service production and services also through recovery activities, on the
delivery can only be improved by triggering other hand. The outlook is that of a wide-ranging
internal organizational innovation, in line with activity coming before, during and after the
the need to increase the quality level of public acquisition and consumption of services by users.
services. This process could not exist without the Customer care is thus intended as a set of
servicescape [3], which points out the need to activities designed to make service supply richer
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and more competitive also, and maybe mostly, as

chain, on the one hand, and it helps to carry out a
the result of a preventive action and not just in
detailed analysis of the context in terms of
the case of bad services.
community needs, on the other hand. The aim is
to generate service supply consistent with the
This kind of activities generally has not been too
expectations and the needs communicated by
much effective in public services nonetheless it
stakeholders. In this way, public services
represents a very useful tool to create satisfaction.
organizations consciously become one of the main
For this reason, it is essential to develop the skills
players in the value creation process.
of the staff as well as to support them with
appropriate technologies, which may truly help to Financial Management
meet all the requests in almost real time. Financial management is an extremely important
and complex activity within the public services
Such a topic is clearly connected to the much sector, which is required to achieve the goals of
wider debate on communication, which has now efficiency and effectiveness using more limited
become an investment factor far from being resources than in the past. Without delving into
considered just a cost but also a value-creating it, it is however appropriate to highlight that
activity. public services organizations are generally
Support Activities in PVC marked by a low level of working capital and a
high level of assets, requiring a careful
The construction of the PVC requires support
management of repayment plans. As an element
activities to be designed that may be useful to
positively affecting those factors, financial
create the value perceived by users. Here below a
management can be a useful support activity to
description is provided with reference to the
value creation, with the aim of producing the best
activities regarded as significant to increase the
financial return possible by a limited production
strategic and operational quality of public services
capability available.
organizations.
Brand Management
Strategic Planning
In a market-oriented perspective – in which
Strategic planning describes the attitude marking
satisfaction, reputation and confidence are
both the basic choices of public services
increasingly more fundamental components when
organizations and their relationship with external
delivering appreciated and valued public services
and internal reference environments. Throughout
-the strategic management of the brand of public
their constant improvement process, those
services organizations is certainly applicable,
organizations often come across the need to
when the aim is to reinforce the effectiveness of
rationalize resources, in both the medium- and
the primary activities of PVC and create a
long-term period. The concepts of efficiency,
positive impact on the image perceived, which
effectiveness, and the most general cost-
may not be so valued.
effectiveness (which today can find their own
dimension inside public services organizations)
There are various components that may help to
also head for a better allocation of resources.
reinforce a brand by building reputation and
Strategic planning can and must consequently be
corporate identity and they are connected not only
used to endorse the entire process of construction
to the service delivered and communication, but
of the PVC, working as a support activity of the
also to tangible elements and staff behaviour. The
entire value chain. The purpose will be to develop
role of human resources, in particular, becomes
methodological and strategic processes through
essential. The basic principle, in fact, is that the
which fostering innovation.
staffs are able to provide users and other
stakeholders with the expected brand experience
A correct development of strategic planning may
and to provide the organization they work in with
actually help to achieve the goal of improving and
a far higher level of dedication and motivation
renovating the public sector through essentially
only when they fully understand and appreciate
increasing strategic effectiveness and operational
the 'public service' brand.
efficiency. The result would be a reduction in the
costs of the entire process and, consequently, in
the public expenditure of the whole country In such a context, a ‘testimonial’ loyalty’ [2] needs
system. to be created that aims to turn the staff into the
real spokespeople of the organization. The
employer image is an intangible resource
This activity looks crucial as it is closely
competitors cannot easily copy because it
connected with all the other activities of the
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and assessment of the delivered performances, in
the awareness that strategic decisions and choices
integrates the features typical of the working
must be taken using tools that may allow for a
position with the components typical of any
more objective assessment.
corporate culture.
The Development of ICT and the Central In the PVC it was deemed appropriate to clearly
role of Interactive Networks mention accounting and management control as
The drive for change in the public services sector one of the support activities as, in the public
pushes towards a strong development of digital services sector, this is an essential activity to look
innovation projects designed to implement the constantly at the needs of citizens, enterprises
competitiveness of the country system through e- and the whole of reference stakeholders. On the
Government actions. The aim is to improve public other hand, it is also regarded essential to
services and make public administration more improve the criteria of choice and selection with
efficient, modern and transparent, thus reducing reference to resource allocation, even with regard
the costs for the community. This would turn the to the competent public authorities.
public sector into an advocate of country
development and a leading player to fulfil a This approach is supported by the fact that
complete social, economic and environmental control and assessment activity needed the
renovation effectively. enforcement of special reference regulations in
order to define the basic goals to achieve. It can be
On the one hand, the use of ICT (Information and stated that this activity is even more important in
Communication Technology) aims to create more the public services sector, involving the before-
effective tools for interaction with users, thus and-after analysis of the consistency and/or of any
providing clear information and quality services; variance among the missions deriving from
on the other hand, it is meant to improve regulations as well as among the operational
information sharing and inclusiveness, while objectives selected, the operational choices made
broadening the web of relationships among the and the available human, financial and material
different stakeholders in order to integrate cross- resources. This activity is also designed to identify
functional and intra-functional processes in the any impediment, responsibility for the failure or
best way. partial implementation of services, as well as any
possible solution or remedy [4-47].

In this context, the synergy between human Conclusions

resources and technological applications turns out The paper aimed to highlight the importance of
to be essential to promote quality services. The the PVC model in the process of public services
ultimate goal is to overcome barriers and development and improvement.
organizational resistances, to develop a strong The model, as discussed above, fosters excellent
service culture, and to embrace an economic performances and efficiency in the supply of
foresight in line with the sustainable development public services meeting the needs and
of the country system. expectations of citizens and enterprises. It may
Accounting and Management Control therefore be worth regarding it as an issue for
debate, in particular in a phase like the one we
Control activities are essential to drive are currently experiencing, related to the
management activity and to guide the work and spending review, in which the public resources of
the functions carried out at any level of the many countries are being reduced and often cut
structure, thus fostering value creation. Leaving indiscriminately, which is an action that may
aside their different ways of application, those result in a negative impact on the quality of
activities are connected with the measurement public services and, consequently, in
disadvantages for citizens and enterprises.

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Remarks

The manuscript was presented at:2013 EGPA Annual Conference Permanent Study Group XVI "Public and
Nonprofit Marketing"Edimburgh, Scotland – UK12 September 2013.

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