AUTHOR(s): Czarniawska-Joerges, Barbara TITLE(s): Swedish management: modern project, postmodern implementation. Summary: Organizational design in Sweden has evolved into an ultra-modern concept amid an environment characterized by strict informal control, legal pragmatism and managerialism. The significance of consensus and reform is underscored, particularly planned change or reorganization in the private sector and reform in the public sector. The image that emerges from these perceptions is a Sweden that is a kind of special modern project wherein systems are built and modified using managerial reason. The country is a representation of one big organization where everything is manageable. Although the transaction-cost theory is not directly spoken of, some general cultural themes that comprise a background to the subsequent theoretical and empirical contributions are spelled out. International Studies of Management & Organization p13(15) Spring 1993 v23 n1 DESCRIPTORS: Economic policy_Models Management_Sweden Sweden_Business and industry Sweden This article begins with a brief characterization of those aspects of the present sociopolitical climate in Sweden that seem of particular relevance in a management context (history will be called in when appropriate). The paper then attempts to describe certain of the important features of organizational life within the two economic sectors: the public (i.e., state, county, and municipal administrations) and the private. Finally, the thesis hinted at in the title is examined--that Sweden is a country where organizational design is highly modern and where organizational performance tends to be based on knowledge of a postmodern type. Europa ante portas As the 1991 elections approached, one topic dominated the media: Sweden was to join the European Economic Community. Two issues this raised were whose idea it was (who is responsible); and who was to carry the burden of the consequences. There are no simple answers to these questions. The idea of joining the EEC came originally from the non-socialist parties. Although the major socialist party, the Social Democrats, first opposed the idea, they later enthusiastically espoused it. The picture regarding the consequences is more difficult to fathom. Veterans of Swedish politics speculate that, even though the Social Democrats lost the elections, they may still be considered responsible for the decision, but that the consequences (which one may expect initially to be negative) will be attributed to the winning coalition. Now, after voting out the Social Democrats, the Swedish citizens seem more ready for socialist measures, as is usually and paradoxically the case when a nonsocialist coalition comes to power. (In the same vein, the continuing campaign against the wastefulness of the public sector and for corporatization of public services was initiated by the Social Democrats.) Regarding the EEC, the Swedish media, like mass media in general, took up the spectacular task (Edelman, 1988) of painting two opposing pictures of "Sweden after EEC": one of hell and the other of paradise. There has been little mention of the individual actively shaping his or her fate, the reader is given the impression that the signing of the agreement will seal the fate of Sweden forever, producing either a paradise of cheap booze and of the creativity of a free market, or crowds of unemployed women weeping at the sorry remnants of what were once the beautiful Swedish forests. Contacts with executives of private and public organizations do not reveal any such extreme conceptions. Most of them expect no dramatic changes as a direct result of Sweden joining the EEC. Rather, they look forward to the opportunities it may create, and foresee the need for active representation of local interests. The opportunities and challenges that will result from coming closer to the continent are seen as being more in know-how markets than in such traditional industries as those of paper and pulp, cars and trucks, and shipbuilding. The kunskapsforetag--or knowledge-producing company, a term coined by Sveiby and Risling (1986)--plays an important role in thinking about the future of Sweden. This small country (with its population of upward of 8 million, nearly 1 million of whom are immigrants) actively participates in international education programs and sells knowledge-based services throughout the world. "Will it be competitive without the shelter of the internal market?" ask the pessimists. "How can it become even more competitive in the new situation?" ask the optimists. The demise of the Swedish model The Swedish public sector experienced a long period of economic expansion that finally came to a halt in the late 1970s. Since then, there has been a campaign to make it more effective. In 1990 there was a government crisis, something as alien on the Swedish political scene as it is normal on the Italian, due to failure of the inflation-control program. Wildcat strikes and difficult labor negotiations were termed a "legitimacy crisis." The partners in what is called "historical compromise" (an agreement signed in 1938 in the town of Saltsjobaden after a long and bitter fight between employees and labor) are changing their positions. The Swedish Employers' Federation has announced a retreat from the practice of collective bargaining. Its chairman, Ulf Laurin, has declared that "After a long-term illness, the 'Swedish model' is dead" (SAF-tidningen, February 16, 1990). A five-year interdisciplinary research program entitled the Study of Power and Democracy in Sweden could be seen as having performed the task of peaceful burial of the "Swedish model." In the final report of the program (1990), the Swedish model was given a definite form (as Luhman [1986a] points out, a period can only be properly characterized when it has ended) and farewell treatment. The basic argument was that a half-century-old package of solutions cannot be expected to function unchanged--and that new solutions are in sight, together with new problems. One of the basic assumptions of the Swedish model was the interplay between the parties on the labor market--free from state intervention. Nevertheless, industrial relations practice was strongly influenced by the fact that the state and the municipalities are among the major employers. One could add in passing that although the state and the municipalities are major employers, they are not major owners: jointly, they own only 5 percent of the stocks in Sweden (Demokrati och makt i Sverige, 1990 [hereafter cited as Demokrati]). The free play on the labor market arena earlier was supported by specific institutions. The various parties were represented centrally by a few homogeneous organizations. Nowadays, however, "organizations are neither few, centralized nor homogenous" (Demokrati, 1990, p. 390). Local negotiations on pay became legitimate, even within public sector organizations. These changes reflect the fading of the "historical compromise." The Swedish wage-earner funds, an initiative proposed by the Congress of the Trade Union Confederation in 1971 aimed at increasing employee participation in capital formation, led to a strong polarization of political opinion. According to the original proposal of Rudolf Meidner, large private companies were to transfer annually a certain percentage of their profits to "wage earner investment funds" (Asard, 1980). A ten-year-long fight between the protagonists cast a shadow on the consensus culture, proudly presented earlier as a "Swedish characteristic." Consensus continues to be a pragmatic technique for handling difficult interactions, but its normative value, as viewed by public opinion, which prefers more critical attitudes nowadays, has changed. Consensus seeking has been dubbed "conflict avoidance," and the striving for equality as "pressure to conform." There seems to be a general feeling that a half-century-old national image, however positive, has inevitably reached a point where it is no longer adequate, useful, or even flattering. According to the report referred to, a new identity is needed and, is being sought. The problems of women and of immigrants, together with the labor problems in general, growing differentiation in terms of economic standards, perceived influence, and uneven access to knowledge of different groups are potential sources both of rebellion and of a new model or models. It is not so much a question of a crisis as of a turning point. Besides, current practices still cultivate the old virtues, especially in the private sector, which (thus far) is not under direct attack. The Swedish quality: Reason, consensus, and reform A "Swedish management style"? Is there something that can be called "the Swedish style of management?" As perceived by executives in multinational companies, the structure of Swedish corporations is ambiguous. This is sometimes interpreted as a preference for matrix structures, and it is sometimes simply perceived as being chaotic (Forss et al., 1984). Decision-making processes are slow (Axelsson et al., 1991). This, again, is interpreted by some authors as the result of a striving for technical perfection and by others as a routine aimed in effect at preventing action (Brunsson, 1985). Control processes are experienced, paradoxically enough, as informal but tight (Forss et al., 1984). Also, although the importance of consensus is obvious, this is variously interpreted as a cultural trait ("conflict avoidance," Hofstede !1980^), or as a conscious choice of democratic procedures (Lawrence and Spybey, 1986). The ambiguity of such perceptions can perhaps best be described as oscillating between ritualistic and rationalistic explanations. A visitor to Sweden often encounters one of these aspects first and believes this is all there is to the country. "No bureaucracy at all," sighs an Italian who has just made an important deal in a telephone conversation. "Why don't these people say what they mean?" wonders, in turn, an American who participated in a typical consensus-reaching meeting where everyone was speaking around the matter and the meeting ended at apparently the same point where it began. Were I forced to describe typical organizational practices in Sweden in a single word, the term I would choose would be "pragmatism," by which I mean the balancing of rituals with rational choices, the rituals thus acquiring instrumental uses (see, e.g., Olsen, 1970), and the rational choices or instruments expressing important values (Czarniawska-Joerges and Jacobsson, 1989). One crucial element, however, is lacking in such a characterization: the value of change. The change of doctrine A series of studies conducted in leading Swedish companies concluded that there has been a change of doctrine in management thinking (Beckerus et at., 1988): TABULAR DATA OMITTED SAS, Ericsson, and Eka Nobel are examples of the change in orientation from production to markets, of the shift in attention from inside to outside the organization, and of focusing on customers' needs as defined by the customers themselves. Volvo provided an illustration of how the changed attitude toward markets influenced the production process as such: In relation to their business strategy, both Volvo companies !under study^ demonstrate a move from a relatively simple notion of efficiency to a holistic view of effectiveness, better fitted to a situation characterized by many incompatible demands and with a strong imprint of variability. [Beckerus et al., 1988, p. 83] In terms of the new doctrine, consultants play an important role in the production of knowledge, and leaders in top management (Percy Barnevik from Asea Brown Boveri, Jan Carlzon from SAS, and Pehr G. Gyllenhammar from Volvo are good examples) provide charismatic performances in the media. The importance of large companies is balanced out to a considerable extent by the increasing attraction of small companies and of entrepreneurship in general. In addition, there is a clearly formulated demand for a balanced life, due both to women's attainment of increasingly demanding positions and to men's wishes to participate in family life. Is this "change in doctrine" anything new and is it something specific to Sweden? Compared with the picture of Sweden sketched earlier by Forss et al. (1984), the present doctrine seems to contain many traits similar to the old--such as a flexible service orientation rather than an orientation toward a highly structured organization of production. It seems possible that the "new doctrine" is an emerging picture of processes that have been taking place for quite some time. Is the doctrine specifically Swedish? One can find a very similar "doctrine" in any issue of the Harvard Business Review. Could it be that Sweden is catching up with the business Zeitgeist--or is it the Zeitgeist that is catching up with Sweden (see also Collin and Larsson in this issue)? Without excluding any of those interpretations, I would like to concentrate on one meta-phenomenon: the value assigned to change. The wonderland of reforms I have borrowed the title of this section from an article of my own (Czarniawska-Joerges, 1989) which concentrates on the myriad of reforms in the Swedish public sector. The reform phenomenon, however, is typical of the whole of Swedish organizational life. Change is considered highly important, as is keeping up with the times. Traditionally, it was the idea of planned change, called "reorganization" in the private sector and "reform" in the public, that was viewed as most attractive. The attraction lay in the possibility of control implied by planned change and the intentional shaping of history this involved. At the same time, other kinds of change--spontaneous change and revolutions--were seen as threatening (Brunsson and Olsen, 1990). It has been pointed out that change often starts--and seemingly ends--with a change in rhetoric (Rombach, 1986). Swedish organizations are very sensitive to fashions and to trends that affect the metaphors and labels used for organizational ideas and ideologies (Czarniawska-Joerges, 1990). Some denounce this as "illusory change," whereas others praise it as representing a preference for "soft solutions." There are definite rules for introducing change, and organizational change is strongly institutionalized. This provides room for new ideas at the same time that it protects organizations from extreme swings. The reformers (usually administrators) continually become irritated at "organizational inertia," whereas the performers (typically professionals) are able to protect their work against the occurrence of too many whimsical changes. If it seems that I am describing the best of all possible worlds here, two caveats should be noted. First, the professionals do not always manage to protect themselves against overzealous reformers, and second, the reformers are not always wrong. In addition, the process is much less balanced within the public sector than it is within the private. The Swedish public sector: In search of an identity At the end of the 1970s the public sector in Sweden was placed in a kind of pillory where it has remained ever since. The public (as represented in and by the media) constantly criticizes and advises it. This situation is not unique: the Swedish public sector fell victim to an attitudinal climate, likely having its source in the United States, critical toward public sectors in general. The Grace report (an investigation ordered by President Reagan in 1984) claimed "(1) that the private sector is far more efficient than the public sector and is the repository of all management wisdom, (2) that the public and private sectors are similar enough that the former can be dramatically transformed by techniques imported from the latter, and (3) that the reform efforts of the past have little to teach present-day reformers" (Downs and Larkey, 1986, p. 219). In political terms, there is talk of a legitimacy crisis, but in connection with public administration it is perhaps better to speak of an identity crisis. The old identity of public authority as having the right to control and the public sector being permitted to be a sometimes wasteful spender is rejected. In search of a new identity, the private sector represents one source of inspiration, although not the only one. An organizational identity In accordance with Meyer (1986), I assume that individual identity is a modern Western institution, supported and complemented by two other modern institutions: the state and the market. The focal elements of modern individuality are self-respect, efficiency, internal locus of control, and a labile commitment, which provides for creativity and flexibility (Meyer, 1986). All these elements are important for the citizen and buyer and seller roles, which represent the building stones of the state and the market. In line with such a major institutional pattern, organizations are given the attribute of individual identity as well. Organizations as "super-persons" that learn, make decisions, are born and die, populate both organization theory and popular thinking. It is a modern identity of this sort for which public organizations in Sweden are searching--once again. The legitimacy of their previous identity has been lost: self-respect has been revealed as self-righteousness, efficiency as an urge for control, internal locus of control as breach of communication with clients, and flexibility as political opportunism. New contents for organizational identity need to be found. The problem is that not only the identities of public organizations but practically all the relevant institutions are in turmoil. At the same time, organizations are burdened with "old identities," the very identities that put them in the pillory but which they still feel to be their "true selves." There is also not much help from the outside since the whole institutional field has become blurred. Tentative identities in a blurred field In the structuration of an organizational fields (DiMaggio, 1983; DiMaggio and Powell, 1983), the process of building new identities involves a repetitive performance of certain actors, performance recognized as consistent by other actors and therefore invoking consistent reactions of the latter. A typification comes about, creating the basis for an institution; that of actors of type X usually performing and being expected to perform actions of type A (Berger and Luckmann, 1966). Although the process tends to be mutual (acts create identities, and identities stabilize interactions), there is usually some part of an organizational field that is more stable than others and therefore helps particularly the ongoing structuration. Most studies in the area analyze cases of new actors creating new fields or of new actors entering already existing fields (March and Olsen, 1989; Meyer et al., 1987; Olsen et al., 1989; Sahlin-Andersson, 1989). In the present case, the situation is complicated by the old identities that may lurk from behind attempts to obtain new identities, and by the uncertain rules in the whole field. Actors can create their identities through an internal process of negotiation of meaning. However, such a newly constructed identity must also be recognized and be confirmed in concrete interactions in the field. Let us take as an example the process of "corporatization" (bolagisering) which is now occurring in many Swedish municipalities. In this process, some part of a municipal activity (usually a part involving technical services) acquires the status of a company, one owned wholly by the municipality. From the beginning, such a company assumes a double identity: that of a business enterprise, but one that is at the service of the local community. This leads to the choice of different identifies on different occasions, but also to a confused identity. The municipal "companies" tend to be treated as administrative units when they want to appear "business-like," and vice versa. They acquire their physical equipment from the local government at outrageous prices ("economic thinking" wins the upper hand with the local politicians) and yet, despite being a "company," they are treated in the next round of the budgeting process as any other department and told to cut their budget according to municipal instructions. In the long run, the "company" tends to exaggerate its "business-like" image. This creates internal conflict and does not do much to promote it on the open market (Czarniawska-Joerges, 1991). In addition, there are no clear rules as to what is acceptable and what is not, and even more important, what is legal and what is not. A pragmatic attitude toward the law (as emerging from accumulating precedents) makes the situation very risky for those who are first in the field. Several directors of municipal finances have found themselves in court charged with illegal stockmarket speculations. The illegality did not involve any personal gains; rather, it was decided that speculating with taxpayers' money was illegal, but only in case severe losses were suffered. Apparently, municipal executives remarked ironically, it was legal to make profits with taxpayers' money but not losses. The state has created room for experiments, but the rules of the game only become known when the game has been played for a while. I took these examples as illustrating the ongoing process of identity change and not as presenting any final conclusions about it. It is very difficult to foresee what identities will emerge and what structure the rejuvenated field will have. Also, all the changes are taking place on a visible stage and, while watching, the public is not exactly supportive. Nevertheless, there seem to be good chances that the Swedish public sector will emerge with a new set of identities and new patterns of interactions. Let me support my optimism with a historical example. "Informalization" of Sweden There is a general feeling that the 1990s are bringing on a reformalization of social relationships in Sweden. Salespeople are beginning to address customers in the second person plural (the polite form of address), and it is no longer shameful to put the title "Professor" before one's name. Since a new epoch is at the gates, it appears to be a proper time to describe the era that is ending. Such a task has been undertaken by a group of Swedish ethnographers who have described the "informalization" that took place in Sweden in the 1970s. Jonas Frykman (1988) defines informalization as a cultural renewal that became a symbolic capital for a whole generation of people (those born in the 1940s). This was the generation that dominated the public sector organizations during the period between 1965 and 1981, when the number employed there grew by 800,000: Those who now write to you with a familiar form of address from your social insurance office are people who grew up in times when the society put a strong emphasis neither on junior/senior relationships nor on ascribed or acquired social identities. Their childhood was spent in a society where authority relations or other properties of a societas were not taken for granted. [Frykman, 1988, p. 30] These were the children of an earlier generation that decided "to set life right," as Yvonne Hirdman (1989) calls it in her book on the "people's home" ideal of the 1930s. Informality, claims Frykman, became the strategy of the new generation and their way of marketing their own life-style as a model for everyone else. Coming in such large numbers, they were able to prevent the reproduction of old institutions. They stabilized the highly modern project of their parents and went even further--trying, in fact, to "set life right" not only for those around them but for the whole world (what I mean here is Sweden's visible presence in the international arena and in various development programs in the 1970s). Why, then, is there now this tendency to reformalize? To a certain degree it is part of a much broader phenomenon. Those born in the 1950s and 1960s tend to address people formally today, to cut their hair short and to wear double-breasted suits. This is often interpreted as neo-conservatism, but much of it can simply be seen as camp. However, the rebellion of the younger generations against the "1940 generation" is quite strong in Sweden. It has been pointed out that, parallel with an increasingly lighter tone used by authorities in their exchanges with citizens, their presence was felt more and more. Martensson (1988) indicates that when "informalization" came about, two quite different things became confounded: simplification and intimization. What started as a campaign against bureaucratic language ended as lack of respect. I see this historical anecdote, however, in optimistic terms. It shows that it is possible to reform institutions--and create a new identity--during the lifetime of a generation if there is a collective will to do so--a will expressed not in terms of yet another project, with its formal plans and decisions, but as expressed and developed in everyday routines. A museum of modernity or a pragmatist paradise? To those who are observing political trends in this Northern Kingdom it may look as if the Swedish model is now changing, that the era of modernity and the rule of Social Democracy welfare state is terminated. "Being modern" is, however, not only a simple attitude that may change with the new fads and fashions. It is a matter of existence beyond political trends, especially if it has been a form of life for generations. It then turns into a condition deeply rooted in human mentality. In the Swedish case, modernism is closely linked to a special kind of mentality we may call "managerialism." [Guillet de Monthoux, 1991, p. 27] Guillet de Monthoux continues the line of reasoning just quoted, claiming that the traditional picture of "peaceful interorganizational cooperation," on the one hand, and the dramatic contradiction between the public and the private sectors on the other, is no longer relevant. The key to an understanding of contemporary Sweden, according to him, lies in the managerial mentality permeating Swedish organizations, which in turn permeate the whole of Swedish society. Sweden represents, as he sees it, one big firm where everything can be managed. This tradition is so strong that no "legitimacy crises," he feels, can affect it: "Sweden ... will probably become a cute little island of modernity in the European post-modern ocean" (Guillet de Monthoux, 1991, p. 40) There may be a great deal to this, especially since the Swedish brand of modernism has proved to be extremely successful, in spite of all pessimistic prophecies. "How bright are the Northern Lights?" asks Mancur Olson (1990) and answers comfortingly that "a society can, if its policies and institutions are intelligent, prevent destitution and even make fairly generous provision for its least fortunate citizens, yet still remain a prosperous and dynamic society." Both Olson and Guillet de Monthoux see Sweden as a modern project through and through; the difference in their views lies in whether they see this as a reason for optimism or for pessimism. Still another way of considering the matter is to look for reasons for the survival and success of the modern project in its postmodern practices. The postmodern condition, as Lyotard (1979) describes it, is characterized not by disappointment with the modern project (in fact, it can be seen as an inseparable part of the latter), but by skepticism toward modernism's legitimizing its meta-narratives: that of a functional system designed by experts and that of emancipation created by a political consensus. People who populate organizations are well aware of the fact that experts represent only one voice in a polyphony, not to say a cacophony, of voices, and that a final consensus can never be reached. Moreover, there is no greater danger to the system than its efficiency (Antonio, 1979; Lyotard, 1979). Thus, consensus can be seen as a condition for dialogue rather than as the purpose of dialogue. One wonders whether the fact that Sweden is so well known for certain of its inventions (dynamite, ball bearings, milk packs, AXE telephone exchanges) has to do with the understanding that a consensus facilitates the search for creative solutions but does not replace it. In more conflict-oriented cultures, achieving consensus is so trying that it may be rare that one continues to look further--for innovative solutions. This feature can be seen as applying to Swedish organizations in general, although the role of collective policies and collective action within Swedish trade unions has been emphasized far more than the unique capacity for collective action revealed by Swedish business organizations (Pestoff, 1991). Swedish management as a rational project lends itself beautifully to analyses in the spirit of transaction theory. What can be more tempting than considering the present tendency to "corporatization" in municipalities as a passage from hierarchies to markets? Interestingly enough, such attempts clearly show the inadequacy of the model as the only analytic tool in this context (see Collin, 1991). It misses what seems to be the central point: the social--sometimes called political or cultural--aspect of not so much transactions themselves, as the context that is formed by them and forms them in turn. Pragmatism and consensus seeking are action patterns suited to the needs of actors who are not so much individual decision makers as creators and products of a social net in which and through which they live. The author is Professor of Business Administration, University of Lund, Box 7080, 220 07 Lund, Sweden. An earlier version of this article was published in D. Hickson (ed.), Management in Western Europe: Society, Culture and Organization in 12 Countries (Berlin: de Gruyter, 1992).