Resource allocation and capital investment practice in Swedish local governments: A messy business

Abstract

We examine capital investment practice for large infrastructure projects undertaken by local governments. Our study contributes to the existing literature by addressing the field theoretically from both decision- and process-based investment approaches and by using multiple research methods, both qualitative and quantitative, in search of empirical evidence of investment practice in Sweden. Our results confirm the large spread of financial and non-financial criteria used to evaluate new projects. Local governments that have adopted New Public Management largely use more sophisticated capital investment routines and methods. We contribute with added granularity to capital investment practices in local governments, characterized by diverse and sometimes conflicting decision rationales in terms of financial, operational, and political considerations. The investment practice reveals a complex, competitive, and “messy” picture with potential effects and consequences.