Deregulation, Institutional Change, and Entrepreneurship in the Swedish Education System: Intended and Unintended Effects of Competition

Abstract in English

In this dissertation, I study organizational behavior primarily at the macro level using organizational institution theory to explain how organizations emerge and compete over time and in proximal space. The empirical setting is the deregulation of the Swedish education system in 1992 and the ensuing development of schools over the following two decades. This dissertation consists of four separate papers in which I look at factors both within and outside organizations to understand how they influence and are influenced by market and non-market forces. My studies are based on detailed school-level panel data including all Swedish schools constructed from multiple data sources. I focus specifically on high schools, which are more susceptible to competition for students. The studies use both quantitative and qualitative methods. A central approach to these studies is the use of multiple levels of analysis in order to understand the consequences of competition among organizations following the deregulation of a former public sector entity. Institutional organization theory broadly seeks to explain organizational behavior based on the framework of regulation, norms, and culture (for a comprehensive review see, Scott, 2013), using—among others—theories of organizational isomorphism (DiMaggio & Powell, 1983) and rationalized myths (Meyer & Rowan, 1977). In the context of this dissertation, institutional organization theory helps develop an understanding of school development beyond economic and regulative factors. For instance, one aim of the deregulation was to break the public monopoly by allowing private firms to establish schools, which was expected to improve the overall efficiency of the school sector by reducing costs, enhancing school choice, and improving educational services. However, the period after the deregulation has been marked by increased public expenditure1, segregation among students across schools, and declining student test scores2. To understand this development, I go beyond evaluating competition in economic terms to explore how socially held norms affect competition among schools. Organizational research on education and the study of social norms provide the foundation for understanding the early effects of competition, whereas economic-oriented research on education has found effects only in late stages of post-reform development (Böhlmark & Lindahl, 2015). To probe the relationship between norms and school organizations’ behavior (i.e., how organizations adhere to socially accepted practices among key stakeholders), I use various measures of internal school dissatisfaction and working environment as well as external public opinions on schools and political factors. For instance, I show that conformity to norms may enhance the legitimacy of organizations, which grants them access to resources, but may also have adverse negative effects for the organizations in the long run (e.g., see Study 2 of this dissertation). I also show how dimensions of institutional demands are multifaceted and operate at various levels, which in turn makes it difficult for some school organizations to adapt (see Study 1, Study 2, and Study 4 of this dissertation). There is interorganizational competition between schools for students but also competition for external resources at the local community level as well as demands from organizational members. In this situation, demands by stronger stakeholders may overshadow demands by weaker stakeholders and yield negative spillover effects on the latter when organizations solely adapt to the former. As such, this dissertation studies both intended and unintended
consequences of competition. This dissertation sets out to answer the following general research question: What are the consequences when schools are made to compete? The goal of this dissertation is to enhance our understanding of some of the larger societal consequences of organizations that are made to compete. The dissertation is organized as follows. First, in Chapter 2, I briefly present previous school research primarily related to the Swedish voucher reform as studied by economists and sociologists. Since there is a lack of macro organizational studies on the Swedish school sector, I primarily present previous research conducted on US charter schools. In Chapter 3, I extend the discussion on macro organizational behavior and explain its usefulness for understanding institutional change. In Chapter 4, I briefly summarize my four research studies, and in Chapter 5, I present my intended research contributions. The four research studies constituting this dissertation are fully presented in the appendix.