Strategic corporate governance factors for municipally owned companies: an empirical analysis from a municipal perspective

Abstract

Empirical research on municipally owned companies is still an under-researched field. In particular, there is a lack of sound empirical success factor-related studies that take into account the municipal mission of creating public value, as well as future-oriented strategic measures by which municipally owned companies can be directed from a municipal perspective. Therefore, this study examines strategic success factors that have an impact on the perceived success of municipally owned companies by investigating the responses from 271 qualified key informants using structural equation modelling. The analysis of the responses indicates that three factors (shared vision, strategic coordination and goal clarity) show a positive significant impact on the perceived success of municipally owned companies. In summary, the study provides insights to academics and public officials, and contributes to address the prevailing gap of empirical knowledge in the field.

Points for practitioners

The findings suggest that creating a shared vision and building a common understanding with their municipally owned companies concerning their goals, roles and duties is an important task for municipalities. Furthermore, the results indicate that municipalities that take an active part in their ownership role are more likely to experience enhanced municipally owned company success than others that instead rely on contractual agreements. Thus, creating a joint understanding of the intended strategy and operations seems more promising than creating excessive bureaucratic burdens.