Intermunicipal Cooperation And The Choice Of Organizational Form: Independent Joint Ventures Versus Contractual Agreements

Abstract

This article investigates the choice of organizational form in the context of intermunicipal cooperation on fire and rescue services in Norway. The choice of corporate or contractual form is expected to be affected by two main dimensions of transaction costs: horizontal and vertical. It is expected that factors increasing the horizontal transaction costs will increase the benefit from formalizing the collaborative agreement through corporatization. However, establishment of an independent company can also be argued to increase vertical transaction costs related to indirect ownership. Employing survey data from all Norwegian municipalities, this study analyzes possible factors explaining the choice of organizational form. It aims to answer whether the organizational form can be explained mainly in response to vertical or horizontal transaction costs. The findings indicate that vertical transaction costs are more central than horizontal to the choice.

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