Governance challenges of different institutional logics and modes of organising: a Norwegian case study of municipal water supply

This article explores how agencification, in terms of increasing arm's length governance, may influence governance control with municipal service-provision if the principal and the agent develop different institutional logics. The basic expectation is that structural separation between principal and agent will challenge the principal’s control of the agent, and that this challenge will be accentuated if the structural change also leads to cultural separation, conceptualised as different institutional logics. Our findings lead to the conclusion that the relationship between formal structure and institutional logics is reciprocal; structural separation creates a separation in culture and identity, thereby accentuating the perceived distance between principal and agent, which stimulates their sense of belonging to different types of organisations. Still, development of appropriate control mechanisms is in its infancy. Formally, output control exists, but receives scarce political attention. Informal control may also work depending on adherence to a common community logic.