ORGANIZATIONAL STATUS AND PERFORMANCE: THE CASE OF THE SWEDISH PHARMACIES

Abstract

In recent years, studies of the relationship between organizational status and success have focused largely on organizations transferring from the public to the private sectors: pharmacies in Sweden provide a case study of organizational status change in the reverse direction. Popular belief suggests progressive deterioration in the performance of an organization where ownership changes from owner‐manager to public corporation, market conditions change from competition to monopoly, and internal management becomes increasingly command orientated.This article explores change in various performance and organizational variables in the National Corporation of Swedish Pharmacies, from its creation in 1971 until 1990. The corporation displays a high degree of stability amongst its senior management team, task specialization amongst employees is low, whilst standardization of working methods is high. Decentralization of authority has occurred over several years.A review of several measures of success, including productivity, financial ratios and innovation, demonstrates substantial progress over the period, comparing favourably with other Swedish public sector organizations. It is concluded that public sector ownership and monopoly supply need not result in deteriorating performance and lack of innovation, provided that criteria for success are clearly stated and properly monitored.