Management control in public sector Joint Ventures

• Cooperation among public sector organizations (PSOs) is increasingly important in the management of resources in welfare systems. A Joint Venture (JV) is an organization form that enables PSOs to cooperate with each other in order to achieve economies of scale. However, JVs contain interrelated horizontal and vertical control relationships (between the owners and between the owners and the JV Company) that complicate their control. The first aim of this paper is to map the dynamics in vertical and horizontal control packages in municipal JVs and to investigate the relational factors that affect them. Based on three case studies we conclude that vertical control packages are affected by: goodwill trust and competence trust; parent differences in size in combination with control competence; parent diversification (low relatedness between the JVs activity and the parents other activities); and horizontal control (e.g., rules for parent interaction and distribution of work). Horizontal control packages are affected by: goodwill trust, system trust and calculative trust; and parent differences. The second aim of the paper is to contribute to the discussion on the relationship between trust and control. We observed how goodwill trust and competence trust over time made action control narrower and looser, and the opposite when goodwill trust diminished. Also, we found an inverted crowding out effect of trust on control. High ambitions to maintain trust lead to underdeveloped formal controls. In addition, we found that ambitions to preserve trust may inhibit the realisation of economies of scale. JV Companies that value autonomy and manage their activities to preserve vertical and horizontal trust may underutilize economically justified opportunities. This strategy is contrary to the reasoning behind the creation of municipal JVs

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Keyword

Business Administration

Företagsekonomi

Publication and Content Type

ref (subject category)

kon (subject category)