Dealing with multiple principals in at arm's length organizations: A qualitative study of Dutch municipally owned corporations

Abstract

AbstractWhile we have increasing knowledge of causes and effects of municipal corporatization, we know relatively little about governance of municipally owned corporations (MOCs). The literature has pointed to various governance problems that can occur when MOCs are owned by multiple municipalities. We conduct six case studies into Dutch jointly owned MOCs to understand governance problems that occur in these MOCs and coordination mechanisms used to overcome these problems. We find various governance problems, including free‐riding and duplication in governance and lobbying of MOCs. We also find coordination mechanisms in place that help bridge differences in interests between municipalities, wherein local civil services play a particularly large role. The result is a level of consensus and stewardship in MOCs, regardless of context. However, this is undermined by interventions of municipal councils of individual municipal owners in private‐law MOCs, and the conflict of interest of the municipal executive board as both principal and agent in public‐law MOCs.