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Municipally owned corporations in Sweden: A cautionary tale
Lund Univ, Sweden; Res Inst Ind Econ IFN, Sweden.
Linköping University, Department of Culture and Society, Centre for Local Government Studies. Linköping University, Faculty of Arts and Sciences.ORCID iD: 0000-0003-2323-9092
2023 (English)In: Public Money & Management, ISSN 0954-0962, E-ISSN 1467-9302Article in journal (Refereed) Epub ahead of print
Abstract [en]

Municipally owned corporations (MOCs) exist across the globe and have become increasingly common. They are motivated by the need for flexibility, a desire to cut costs and to increase efficiency. This article summarizes Swedish experiences with MOCs. It shows that the stated motivations are not necessarily wrong, but that relying heavily on MOCs may have unintended and adverse side-effects. Such side-effects include blurring the role of local politicians, increasing corruption risks and giving rise to complex organizational structures within local governments. Ultimately, transparency and democratic accountability may suffer because of an excessive reliance on MOCs. In particular, councillors, mayors and MOC chief executive officers will benefit from reading these results, and ask themselves what kind of MOCs their municipality should operate, how many MOCs are appropriate to run, and also how members of MOC boards need to be educated. Over the past 30 years, the use of municipally owned corporations (MOCs) has increased rapidly in Sweden. Proponents of MOCs claim that they promote efficiency. However, at the same time, critics stress that MOCs risk blurring accountability, harbour anti-competitive elements and may negatively affect public ethics. The authors review and summarize contemporary research into Swedish MOCs. They highlight that municipalities that create and own relatively more MOCs have higher perceived corruption levels-but not lower taxes, more satisfied citizens or a better business climate. Municipalities with relatively more MOCs display less transparent and more complex organizational structures, where the same politicians hold offices as both principals and agents simultaneously. This runs the risk of short-circuiting accountability chains, thus making it difficult to hold decision-makers accountable. Ultimately, the article contributes to the literature by highlighting the need for taking adverse and unintended side-effects of MOCs into account to better understand their implications for public administration ethics as well as accountability.

Place, publisher, year, edition, pages
ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD , 2023.
Keywords [en]
Accountability; corruption; delegation; local government; municipally owned corporations; New Public Management; principal-agent problems; Sweden
National Category
Economics
Identifiers
URN: urn:nbn:se:liu:diva-199124DOI: 10.1080/09540962.2023.2270272ISI: 001087611900001OAI: oai:DiVA.org:liu-199124DiVA, id: diva2:1811580
Available from: 2023-11-13 Created: 2023-11-13 Last updated: 2024-06-17

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Erlingsson, Gissur Ó.
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CiteExportLink to record
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