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The Swedish Model of Corporate Ownership and Control in Transition

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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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  • Henrekson, Magnus & Jakobsson, Ulf, 2003. "The Swedish Model of Corporate Ownership and Control in Transition," SSE/EFI Working Paper Series in Economics and Finance 521, Stockholm School of Economics, revised 15 Apr 2003.
  • 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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    Cited by:

    1. Almas Heshmati & Dan Johansson & Carl Magnus Bjuggren, 2010. "Effective Corporate Tax Rates and the Size Distribution of Firms," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 297-317, September.
    2. Palpacuer, Florence & Gibbon, Peter & Thomsen, Lotte, 2005. "New Challenges for Developing Country Suppliers in Global Clothing Chains: A Comparative European Perspective," World Development, Elsevier, vol. 33(3), pages 409-430, March.
    3. Henrekson, Magnus & Jakobsson, Ulf, 2011. "The Swedish Corporate Control Model: Convergence, Persistence or Decline?," Working Paper Series 857, Research Institute of Industrial Economics.
    4. Roine, Jesper & Waldenstrom, Daniel, 2008. "The evolution of top incomes in an egalitarian society: Sweden, 1903-2004," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 366-387, February.
    5. Mastroeni Michele, 2013. "Engaging the evolution of varieties of capitalism: a two-tier approach to examining institutional change," Business and Politics, De Gruyter, vol. 14(4), pages 1-30, January.
    6. 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, vol. 93(4), pages 653-669, June.
    7. Magnus Henrekson & Dan Johansson, 2010. "Gazelles as job creators: a survey and interpretation of the evidence," Small Business Economics, Springer, vol. 35(2), pages 227-244, September.
    8. Karin Jonnergård, 2012. "Quality Control through Venetian Blinds: Regulating the Swedish Auditing Industry," European Accounting Review, Taylor & Francis Journals, vol. 21(1), pages 51-85, February.

    More about this item

    Keywords

    Corporate control; Corporate governance; Corporatism; Entrepreneurship; Ownership policy; Ownership structure; Swedish Model.;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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