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Our purpose is to critically discuss the quality of governability and scrutiny of, as well as insight in, enterprises owned by local government. Our analysis is empirically grounded in an in-depth case study of one of Sweden’s 10 largest municipalities. The ambition is to highlight troublesome areas and danger zones when it comes to public owning of corporations. We have consulted diverse types of material: conducted document studies, as well as semi-structured in-depth interviews. In addition, we have conducted a survey directed to 156 individuals (which is the total population of councillors and members of municipal corporation boards in the municipality we have studied).

From an in-depth study of Sweden, we show that corporatising parts of local governments’ operations have serious implications for accountability. Our study therefore adds to the knowledge about hybrid organisations and the challenges dual logics of the private and public sector imposes on political governance as well as management. The result of this study is based on one single case study in one specific hybrid context. No empirical generalisation is aspired to. Instead the aim has been to – by way of an explorative approach – make an analytical contribution to our knowledge about hybrid organisations. Further studies are thus necessary in order to deepen our understanding of the hybrid context and the situations under which hybrid organisations operate and develop.

This study increases our knowledge regarding the challenges of governing hybrid organisations in general and enterprises owned by local government in particular. Therefore, the findings of this study are considered to be of support to politicians as well as civil servants involved in and responsible for the governance of hybrid organisations. We argue that it is important to carefully supervise this development in local government. As corporations owned and operated by local governments have increased in numbers, they are responsible for large values and services that are crucial for the modern society (water, waste management, energy, IT). Consequently, they are becoming ever more important players in their respective local economies. At the same time, concerns have been raised regarding how to govern hybrid organisations in order to secure accountability and to protect public sector values.