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.
Bergh, A., Erlingsson, G., Gustafsson, A. & Wittberg, E. (2018). Municipally owned enterprises as danger zones for corruption? How politician’s having feet in two camps may undermine conditions for accountability. Ratio Working Paper No 306. Stockholm:Ratio.