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What happens when municipalities run corporations? Empirical evidence from 290 Swedish municipalities

Bergh, Andreas LU ; Erlingsson, Gissur LU and Wittberg, Emanuel (2022) In Local Government Studies 48(4). p.704-727
Abstract

Local governments are increasingly relying on municipally owned corporations (MOCs) to provide public services. Some describe this development as a rational response to austerity challenges and emphasise the cost-efficiency of MOCs (‘the optimistic view’). Others identify complications and associate MOCs with weak supervision, lack of accountability, and corruption risks (‘the sceptical view’). Hitherto, no studies have analysed these opposing claims on MOCs in the one and same inquiry. We address this gap by focusing on Sweden, which has experienced a dramatic growth in the number of MOCs. We examine the association between the number of MOCs, the business climate, satisfaction with local government, local tax rates, and a corruption... (More)

Local governments are increasingly relying on municipally owned corporations (MOCs) to provide public services. Some describe this development as a rational response to austerity challenges and emphasise the cost-efficiency of MOCs (‘the optimistic view’). Others identify complications and associate MOCs with weak supervision, lack of accountability, and corruption risks (‘the sceptical view’). Hitherto, no studies have analysed these opposing claims on MOCs in the one and same inquiry. We address this gap by focusing on Sweden, which has experienced a dramatic growth in the number of MOCs. We examine the association between the number of MOCs, the business climate, satisfaction with local government, local tax rates, and a corruption index for all 290 Swedish municipalities. Putting the ‘optimistic view’ into doubt, results indicate that municipalities relying heavily on MOCs are associated with more perceived corruption and higher taxes but do not have more satisfied citizens nor a better business climate.

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Please use this url to cite or link to this publication:
author
; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
arms-length principle, corruption, hybrid-organisations, Municipally owned corporations, new public management, quasi-privatisation
in
Local Government Studies
volume
48
issue
4
pages
704 - 727
publisher
Taylor & Francis
external identifiers
  • scopus:85110873509
ISSN
0300-3930
DOI
10.1080/03003930.2021.1944857
language
English
LU publication?
yes
id
7fc3bb03-70d6-46dd-b9f8-29efd6f48231
date added to LUP
2021-09-01 17:17:02
date last changed
2023-01-16 10:14:59
@article{7fc3bb03-70d6-46dd-b9f8-29efd6f48231,
  abstract     = {{<p>Local governments are increasingly relying on municipally owned corporations (MOCs) to provide public services. Some describe this development as a rational response to austerity challenges and emphasise the cost-efficiency of MOCs (‘the optimistic view’). Others identify complications and associate MOCs with weak supervision, lack of accountability, and corruption risks (‘the sceptical view’). Hitherto, no studies have analysed these opposing claims on MOCs in the one and same inquiry. We address this gap by focusing on Sweden, which has experienced a dramatic growth in the number of MOCs. We examine the association between the number of MOCs, the business climate, satisfaction with local government, local tax rates, and a corruption index for all 290 Swedish municipalities. Putting the ‘optimistic view’ into doubt, results indicate that municipalities relying heavily on MOCs are associated with more perceived corruption and higher taxes but do not have more satisfied citizens nor a better business climate.</p>}},
  author       = {{Bergh, Andreas and Erlingsson, Gissur and Wittberg, Emanuel}},
  issn         = {{0300-3930}},
  keywords     = {{arms-length principle; corruption; hybrid-organisations; Municipally owned corporations; new public management; quasi-privatisation}},
  language     = {{eng}},
  number       = {{4}},
  pages        = {{704--727}},
  publisher    = {{Taylor & Francis}},
  series       = {{Local Government Studies}},
  title        = {{What happens when municipalities run corporations? Empirical evidence from 290 Swedish municipalities}},
  url          = {{http://dx.doi.org/10.1080/03003930.2021.1944857}},
  doi          = {{10.1080/03003930.2021.1944857}},
  volume       = {{48}},
  year         = {{2022}},
}