Municipally Owned Corporations in Sweden: A Cautionary Tale

Over the past 30 years, the use of municipally owned corporations (MOCs) has increased rapidly in Sweden. Proponents of MOCs claim that they promote efficiency. However, at the same time, critics stress that MOCs risk blurring accountability, harbor anti-competitive elements and may negatively affect public ethics. The authors review and summarize contemporary research into Swedish MOCs. They highlight that municipalities that create and own relatively more MOCs have higher perceived corruption levels—but not lower taxes, more satisfied citizens or a better business climate. Municipalities with relatively more MOCs display less transparent and more complex organizational structures, where the same politicians hold offices as both principals and agents simultaneously. This runs the risk of short-circuiting accountability chains, thus making it difficult to hold decision-makers accountable.