STOCKHOLM SCHOOL OF ECONOMICS Examination for a MSc in Business and Economics Specialization in Management Master Thesis 30 ECTS Operational challenges of marketization A case study of the Swedish municipal elderly care sector Eke Brandt Forsius (20912) Monika Molander (21340) December 9, 2013 Department of Management and Organization Tutor: Staffan Furusten Challenges of marketization Brandt Forsius & Molander, 2013 Abstract The ageing population has led to a growing demand for elderly care services. To tackle the need for more care, the Swedish elderly care sector has undergone multiple reforms, the most notable being marketization. Reports show that this reform has been challenging for the municipalities to handle (Anell et al, 2011). Marketization has implied that the municipalities have received multiple roles; they are both market actors and welfare producers. The purpose of this thesis is to study why the municipal providers of elderly care face operative challenges in carrying out their multiple roles. We study the operative function of the municipal providers by examining the management control systems (MCSs) used. A qualitative methodology is applied and interviews are conducted in five different municipal providers of elderly care. We find that the municipal elderly care providers generally have a weak and unbalanced use of MCSs. Moreover, we find that the control systems do not fully support the strategies of the municipalities. These findings can be explained by weak boundaries and resulting institutional confusion of the municipal providing organizations. The challenge of handling the multiple roles of marketization is thus related to institutional confusion. As a result, we suggest that the discussion for the future should focus on how to increase autonomy of the providers, in order to improve the use of welfare resources. Our study contributes to the public management literature by exploring the MCSs applied in municipal providers of elderly care in the light of marketization and institutional confusion. Keywords Elderly care, Management Control Systems, Levers of Control, Marketization, Institutional confusion, Municipal providers i Challenges of marketization Brandt Forsius & Molander, 2013 Acknowledgements We would like to express our gratitude towards everyone who has helped us during the process of writing this thesis. First of all, we would like to thank our supervisor, Staffan Furusten, for the valuable support and help he has given us during the work process. Furthermore, we would like to thank Nordic Health Care Group and the expert team for sharing their invaluable experience and knowledge with us. Finally, would like to thank the five municipalities that have been subject of our study. This thesis would not have been possible without their engagement and cooperation. We would especially like to send our gratitude to the participating respondents who have taken the time to talk to us. Thank you! Stockholm, December 9, 2013 Eke Brandt Forsius Monika Molander ii Challenges of marketization Brandt Forsius & Molander, 2013 Table of Contents Abstract ............................................................................................................................... i Acknowledgements ......................................................................................................... ii Table of Contents ........................................................................................................... iii List of tables and figures ............................................................................................... v Abbreviations & Definitions ....................................................................................... vi 1. Introduction .................................................................................................................. 1 1.1 Problem………. ...................................................................................................... 2 1.2 Purpose……….. ..................................................................................................... 4 1.3 Research question ................................................................................................... 4 1.4 Expected contribution ............................................................................................ 4 1.5. Delimitation….. ...................................................................................................... 5 2. Background .................................................................................................................. 6 2.1 Elderly care in Sweden ........................................................................................... 6 2.2 Marketization of elderly care ................................................................................. 7 3. Theoretical foundation .............................................................................................. 9 3.1 Market creation.. ...................................................................................................... 9 3.2 Link to the analytical framework ........................................................................ 11 3.3 Analytical framework ............................................................................................ 12 3.4 Summary of theoretical foundation .................................................................... 21 4. Methodology .............................................................................................................. 22 4.1 Qualitative research ............................................................................................... 22 4.2 Research approach ................................................................................................ 23 4.3 Case study…….. .................................................................................................... 23 4.4 Presentations of case example organizations .................................................... 25 4.5 Data collection… .................................................................................................. 27 4.6 Outline of analysis ................................................................................................. 30 4.7 Quality aspects… .................................................................................................. 33 5. Empirics ...................................................................................................................... 35 iii Challenges of marketization Brandt Forsius & Molander, 2013 5.1 Nacka………… .................................................................................................... 35 5.2 Österåker………................................................................................................... 37 5.3 Sundbyberg…… ................................................................................................... 40 5.4 Sundsvall……… ................................................................................................... 42 5.5 Östersund…….. .................................................................................................... 45 6. Analysis ........................................................................................................................ 48 6.1 Within-case organization analysis ....................................................................... 48 6.2 Cross-case organization analysis ......................................................................... 55 6.3 Summary of analysis ............................................................................................. 61 7. Discussion ................................................................................................................... 63 7.1 The importance of market actor creation .......................................................... 63 7.2 Handling the multiple roles ................................................................................. 65 7.3. Alternatives for solving the problem ................................................................. 68 7.4 Discussion for the future ..................................................................................... 69 8. Conclusion .................................................................................................................. 70 8.1 Theoretical implications ....................................................................................... 72 8.2 Practical implications ............................................................................................ 72 8.3 Limitations……. ................................................................................................... 72 8.4 Outlook………. .................................................................................................... 73 9. References ................................................................................................................... 75 10. Appendices ................................................................................................................ 83 Appendix 1 – Interview protocol .............................................................................. 83 Appendix 2 – Interview participants ........................................................................ 86 Appendix 3 – Expert team ......................................................................................... 87 Appendix 4 – Description of municipalities ...........................................................