Co‐owned Local Government Organisations: Conditions for Strategy Development

• Published date: 01 August 2015
• DOI: http://doi.org/10.1111/faam.12057
• Author: Ulf Ramberg,Ola Mattisson
• Date: 01 August 2015

Financial Accountability & Management, 31(3), August 2015, 0267-4424

Co-owned Local Government

Organisations: Conditions for

Strategy Development

OLA MATTISSON AND ULF RAMBERG∗

Abstract: Local governments tend to join resources and create co-owned

organisations to solve the supply of public services. From a strategic perspective

on local government cooperation, this paper analyses the conditions for strategy

development in a co-owned municipal organisation. The empirical data stem from

a longitudinal case study of a Swedish provider of water and sewerage services. We

show that difficulties in formulating and agreeing upon strategies are not dependent

on the structural form. Instead, there is an intrinsic dilemma when municipalities

are to create a joint strategy at the same time as each municipality is sovereign to

decide on all local matters.

Keywords: local government, strategy development, cooperation, co-owned organi-

sation, strategy conditions

INTRODUCTION

The research on inter-organisational cooperation is extensive, and the contribu-

tions stem from many academic disciplines such as economics, management

psychology and political science (Byrnes and Dollery, 2002; Huxham and

Vangen, 2005; and Smith et al., 1995). However, cooperation in providing local

government services in co-owned organisations has received limited attention

(Mattisson, 2000; Elasass, 2003; and Warner, 2011). Few studies have been

concerned with the question of what happens ex post, i.e., in the process after the

∗The authors are both from the Department of Business Administration, School of Economics

and Management, Lund University, Sweden.

Address for correspondence: Ulf Ramberg, PhD, Associate Professor, Department of

Business Administration, School of Economics and Management, Lund University, PO Box

7080, S-220 07 Lund, Sweden.

e-mail: ulf.ramberg@fek.lu.se

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270 MATTISSON AND RAMBERG

new organisation has started its operations. How can the established cooperation

be managed once underway to put expected advantages into effect?

The purpose of this paper is to extend previous research on local government

cooperation in terms of conditions for strategic development and decision

making. It is suggested that difficulties in formulating and agreeing upon

strategies and ways of controlling them are not inherent in the particular form of

collaboration. Rather, the difficulties seem derived from (a) the way participants

view the collaboration and (b) how the operations are to be run. It is also

obvious that (c) the new structural form of collaboration highlights questions

about the possibilities for politicians, as representatives of the owners, to fulfil

political goals and obtain insight into strategy issues. This paper elaborates on

the intrinsic dilemma for a local government to act both independently and

jointly. It contributes with knowledge about conditions for strategy development

and decision making in a co-owned local government organisation.

The rest of the paper is organised as follows. In the next section we

describe the research context. Then follow the methods used to collect and sort

empirical data, after which we describe the theoretical framework on strategic

development and cooperation. The case is then presented and analysed, and the

paper ends with conclusions and suggestions for future research.

RESEARCH CONTEXT

A large part of public sector activities in Sweden are produced within the

290 municipalities (13% of GNP). The autonomy of local governments is

specified in law, which also states that municipalities have the right to levy

taxes. According to legislation, the municipalities are obliged to deliver services

(output) decided by central government through special regulations (consuming

approximately 80% of municipal resources). Besides the regulated services

(output), municipalities have a large degree of freedom as to how they organise

their activities. In fact, the local government sector is characterised by a wide

variety of organisational forms and local adjustments.

During the last decade, the local government sector has been put under

financial pressure, and a growing number of municipalities have experienced

difficulties making both ends meet. The available resources have stagnated but

the expectations of service delivery, from authorities as well as citizens, are

still increasing. At the same time, the demographic structure implies a strong

generational shift in the workforce as a large part of it will retire within the

next decade. Generally, Swedish municipalities need to rationalise at a time

when the number of recruitments necessary is higher than ever before. Today

the sector is characterised by intensive work to reform municipal organisations

to deal with these challenges. In other words, there is a more intense search for

output and outcome legitimacy than for input legitimacy.

By joining forces, local government organisations have high hopes for large-

scale advantages and opportunities to share critical resources and competencies.

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2015 John Wiley & Sons Ltd