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The Swedish Model of Corporate Ownership and Control in Transition

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  • Henrekson, Magnus

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Jakobsson, Ulf

    ()
    (The Research Institute of Industrial Economics¸ IUI)

Abstract

We analyze the development of the Swedish ownership model after WWII. The controlling ownership in Swedish firms is typically concentrated to one or two owners. Often, but not always, the controlling owners are Swedish families. Thus, the model resembles the typical corporate control model of Continental Europe. A distinguishing feature of the Swedish model is, however, that control is typically based on a smaller capital base than in other European countries. This feature is a result of a seemingly paradoxical policy when it comes to private ownership. Tax policy has consistently disfavored the accumulation of private wealth, but at the same time corporate law has greatly facilitated the wielding of control based on a small equity base. Our analysis shows that the large gap between ownership and control makes the Swedish corporate control model both politically and economically unstable. The major political threat to date has been the proposal of the Swedish TUC and the Social Democratic Party to introduce a scheme that would result in the gradual takeover of the Swedish corporate sector by union-controlled wage-earner funds. After the political defeat of this proposal economic policy was changed in a more market liberal direction. This policy change has uncovered the economic instability of the model. The weak financial base of the controlling owners makes it difficult for them to take an active part in the current international restructuring of the corporate sector. Two forces are now seen as the major threat to the Swedish ownership model: A rapidly increasing foreign takeover of Swedish firms and the large state and corporatist pension funds. Their financial assets are far larger than those of today’s dominant control owners and extensive mandatory and/or tax-favored systems for pensions saving ascertains that their relative financial strength will continue to grow sharply.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 521.

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Length: 55 pages
Date of creation: 10 Mar 2003
Date of revision: 16 Apr 2003
Publication status: Published in Who Will Own Europe? The Internationalisation of Asset Ownership in Europe, Huizinga, Harry, Jonung, Lars (eds.), 2005, chapter 7, pages 207-246, Cambridge University Press.
Handle: RePEc:hhs:hastef:0521

Note: This paper was presented at the conference Who will own Europe? The internationalization of asset ownership in the EU today and in the future, arranged by the European Commission (DGECFIN), Brussels, February 27–28, 2003.
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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Phone: +46-(0)8-736 90 00
Fax: +46-(0)8-31 01 57
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Keywords: Corporate control; Corporate governance; Corporatism; Entrepreneurship; Ownership policy; Ownership structure; Swedish Model.;

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References

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Cited by:
  1. Palpacuer, Florence & Gibbon, Peter & Thomsen, Lotte, 2005. "New Challenges for Developing Country Suppliers in Global Clothing Chains: A Comparative European Perspective," World Development, Elsevier, Elsevier, vol. 33(3), pages 409-430, March.
  2. Henrekson, Magnus & Johansson, Dan, 2008. "Gazelles as Job Creators – A Survey and Interpretation of the Evidence," Working Paper Series, Research Institute of Industrial Economics 733, Research Institute of Industrial Economics.
  3. Stefan Tengblad & Claes Ohlsson, 2010. "The Framing of Corporate Social Responsibility and the Globalization of National Business Systems: A Longitudinal Case Study," Journal of Business Ethics, Springer, Springer, vol. 93(4), pages 653-669, June.
  4. Almas Heshmati & Dan Johansson & Carl Magnus Bjuggren, 2009. "Effective Corporate Tax Rates and the Size Distribution of Firms," TEMEP Discussion Papers, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) 200923, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
  5. Roine, Jesper & Waldenstrom, Daniel, 2008. "The evolution of top incomes in an egalitarian society: Sweden, 1903-2004," Journal of Public Economics, Elsevier, Elsevier, vol. 92(1-2), pages 366-387, February.
  6. Henrekson, Magnus & Jakobsson, Ulf, 2011. "The Swedish Corporate Control Model: Convergence, Persistence or Decline?," Working Paper Series, Research Institute of Industrial Economics 857, Research Institute of Industrial Economics.

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