Governance as a process for strategy development – Collaboration in jointly owned local government organizations

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Summary, in English

In Sweden, municipalities organize a large share of public services but the conditions for providing these services differ considerably due to differences in size and wealth. In the wake of financial stress and New Public Management reforms the Swedish local governments seeks new ways to make both ends meet and still manage the services to be in line with the present (not the past) demands of the organizations from different stakeholders. One such strategy is to seek solutions in different forms of collaboration with other local governments to secure efficient service delivery and to meet growing future demand. In Sweden there is a growing interest at the municipal level to collaborate in jointly owned organizations and the number of such organizations is growing fast. What this study shows is that in order to achieve these goals it is not enough to focus on the creation of the organization. Equally important is it to focus on the governance process and its impact on the strategy development of the organization. The purpose of this paper is to investigate how the local government can develop and implement a governance process that supports strategic development in a jointly owned organization, i.e. how local governments can collaborate to develop the provision of services.

Corporate governance theory focuses on the responsibilities the different actors involved in the governance of an organization have, and the relationship between those actors. Especially attention has been directed towards the relationship between the owners and the organization they own and on how owners can secure their interest by exerting control over the company. Lesser attention has been directed to the strategy adopted by the owner and to what extent this can be a reflection of their ambitions. Also, collaboration about providing local government services in joint organizations has received limited attention. Few studies have been concerned with the question of what happens ex post, i.e. in the process after the new joint organization has started its operations. What will be the role of the owners, being local government organizations collaborating in the provision of services and still keeping viable political solutions for local government decision making. How can the established jointly owned organization be managed underway to be able to put expected advantages into effect? Can governance substitute for sole ownership?

We use a strategy perspective on governance and management. These perspectives are applied on a longitudinal case study; the decision process, start and first years of a ”joint statutory authority” which is a specifically designated legal form for joint local government organizations. It is suggested that difficulties in formulating and agreeing upon strategies and ways of controlling them are not inherent in the particular form. Rather, the difficulties seem derived from 1) the way participants view the collaboration and 2) how the joint operations are to be run. It is a matter of either see the organization as a means for jointly forming a stronger strategy together, or as a matter of reducing cost of production through economies of scale gained from cooperation. It is also obvious that 3) the new form (governance structure and size) of collaboration highlights questions about the owners (politicians) possibilities to fulfill political goals and obtain insight in strategy issues.

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