Municipally owned enterprises: Nested principal-agent relations and conditions for accountability

Andreas Bergh, Gissur Erlingsson (), Anders Gustafsson () and Emanuel Wittberg
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Gissur Erlingsson: Linköping University, Postal: Linköping University, 581 83 Linköping, https://liu.se/medarbetare/giser70
Anders Gustafsson: Jönköping International Business School, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden, http://ratio.se/medarbetare/anders-gustafsson/
Emanuel Wittberg: Linköping University, Postal: Linköping University, 581 83 Linköping, https://liu.se/medarbetare/emasv32
Authors registered in the RePEc Author Service: Anders Kärnä

No 306, Ratio Working Papers from The Ratio Institute

Abstract: Market-inspired reforms have been particularly pronounced in Swedish local government. Noteably, municipally owned enterprises (MOEs) have rapidly grown in numbers. Principal-agent theory leads us to suspect that the massive introduction of MOEs may have worsened conditions for accountability. To study this, we have employed social network analysis, mapping networks for 223 MOEs in 11 strategically chosen municipalities, covering a total of 723 politicians. The analysis shows substantial overlaps between principals (representatives of the owners) and agents (the boards of the MOEs), quantified using network modularity. Corporatization of public services therefore implies worrisome entanglings between the politicians who are set to steer, govern and oversee MOEs on the one hand, and the board members of MOEs on the other. The increasing numbers of MOEs, we argue, may hence have adverse effects on accountability in important and growing parts of the local economies.

Keywords: Social Networks; Accountability; Transparency; Corruption; Publicly Owned Enterprises; Hybrid Organizations; Local Government; New Public Management (search for similar items in EconPapers)
JEL-codes: D73 P16 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2018-03-21, Revised 2018-10-18
New Economics Papers: this item is included in nep-eur and nep-ure
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