We develop a theoretical framework for comparing the workings of private and public enterprises. We incorporate ''socializing'' --- an activity which both yields utility for the workers and affects the firm's output ---into a multitask model of work organization. In contrast with previous principal-agent models, we establish the two following results. First, the optimal workers' compensation policy displays a larger incentive intensity in the private firm than in the public firm. Second, labor productivity in the private firm may be higher or lower than in the public firm. Both results fit well with the findings in empirical work.