Privatisation of the IT Sector in Sweden

Abstract: The majority of research on privatisation has been driven by, inter alia, economics. Some economists have argued that private ownership introduces capital market pressures into inefficient state bureaucracies. Private property rights are expected to maximise the incentives for management to achieve a high level of production efficiency. The argument put forward in this research is that in so far as ownership and competition are important, they impact on performance through an internal adjustment process. In other words, they affect the performance of a privatised firm through a number of mediating factors. It is further argued that each of these factors is the outcome of a gradual process of development which is conditioned by the particular situation of the firm in question, i.e. its product market, its labour market, its managerial labour market and its credit market. This study further shows that an organisation which has functioned as a de facto or de jure government or municipal agency (even if financed by fees) for a long period of time has, as a rule, developed characteristics and behavioural patterns - that which we call the institutional identity of the organisation - which must undergo a fundamental change if the organisation is to function as a successful company. The mediating factors mentioned before, are the instruments for transforming the old institutional identity to a new one. A specific sector of the Swedish economy, information technology (IT) sector, was selected for the purpose of this research. A study of the two main conglomerates which used to provide services for the central government and local authorities in Sweden was conducted. Prior to their privatisation, the two companies had natural monopoly for that segment of the market they were serving. It is hoped that the results of this study would reveal certain characteristics about the transformation of organisations and the manner in which such transformation is implemented. The study has also implications for such theoretical issues as evolutionary vs. revolutionary transformation, strategic choice vs. strategic implementation, institutional identity and critical leadership. It is further hoped that the current study would bridge a gap between the social and economic versions of the institutional theory, and, thus, provide a platform for better understanding of the inner intricacies of organisations experiencing drastic changes in their ownership structure.