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Abstract

The importance of managerial autonomy for organizational performance and accountability is increasingly acknowledged in municipally owned corporations (MOCs) operating within competitive environments. However, few studies have examined the factors enabling or restricting chief executive officers' (CEOs') managerial autonomy in companies reliant on local and central governments. Using the public agency autonomy perspective, we investigate the subjective perceptions of MOCs’ executives concerning three intertwined political and bureaucratic mechanisms. The results of our 18 semi-structured interviews with CEOs of such corporations in various Israeli municipal authorities identified three factors on the micro, meso and macro levels affecting their autonomy. These findings reveal a pattern whereby local political and bureaucratic actors try to engage in framed autonomy, in contrast to the administrative bureaucracy model of the central government that curtails the CEOs’ autonomy substantially. Consequently, this dynamic impedes MOCs from achieving their goals. This interplay of micro, meso and macro factors explains how tensions between local and central governments are reflected in the managerial operations of MOCs.

Points for practitioners

Leverage Supportive Political Relationships to Navigate Constraints: Building trust-based ties with supportive political actors can help mitigate regulatory burdens and enable more adaptive decision-making within bureaucratic constraints.

Balance Board Governance with Managerial Discretion: Practitioners should remain alert to how political appointments may influence operations and develop strategies to preserve managerial discretion while maintaining accountability.

Promote Two-Way Engagement with Central Authorities: Public executives should advocate for more reciprocal relationships with central agencies, encouraging support-oriented oversight that acknowledges on-the-ground realities.

Keywords

municipally owned corporations chief executive officers managerial autonomy local government qualitative study

Introduction

Managerial autonomy, meaning ‘the extent to which sub-central governments have decision-making competencies delegated from the center regarding the choice and use of inputs’ (Organisation for Economic Co-operation and Development, 2015: 9), is regarded as crucial to the management of municipally owned corporations (MOCs). At the micro-managerial level, granting discretion and managerial autonomy to executive managers, along with other dimensions of autonomy (Organisation for Economic Co-operation and Development, 2015), is essential for improved performance in such corporations (Bezes and Jeannot, 2018; Yang 2023).

A sense of autonomy encourages managers to promote meaningful change, giving them the feeling that they can tailor programmes to meet their clients’ needs (Holm, 2018). Public administration scholars have increasingly advocated for expanding this autonomy as a means of depoliticizing administrative decision-making, arguing that insulating senior civil servants from political interference allows them to make more effective managerial and professional judgements (Pollitt and Bouckaert, 2017; Van de Walle, 2019). This perspective emphasizes the technical and administrative benefits of granting managers greater independence from their political superiors in organizational management. However, fully understanding variations in managerial autonomy requires moving beyond these technical explanations to examine the underlying political dynamics that fundamentally shape how autonomy is granted, constrained and exercised in practice (Rouban, 2015).

Managerial autonomy operates within a complex web of external influences and constraints. Managers must navigate various stakeholder demands ranging from political bodies to regulatory agencies, oversight committees and community groups. These stakeholders shape managerial autonomy through their influence on organizational decisions, resource allocation and strategic direction. Thus, autonomy functions as a dynamic capability rather than merely a formal authority (Moynihan et al., 2012). In the context of municipal service delivery, local governments often opt for MOCs rather than complete privatization, seeking to maintain public governance and political control while delegating operational authority (Van Genugten et al., 2020). Although administrative reform movements emphasize autonomy as a crucial element (Bezes and Jeannot, 2018), and Western nations increasingly advocate for increased operational autonomy for public managers (Bjørnholt et al., 2022), the goal of complete depoliticization and autonomy remains unrealistically idealistic (Voorn and Van Genugten, 2022; Voorn et al., 2023: 475–497). Autonomy in MOCs is shaped by a complex interaction of legal, organizational and relational factors. Understanding the complexity of these interactions is necessary to move beyond a simplistic binary view to a more nuanced, realistic representation of managerial freedom and constraints (Verhoest et al., 2007; Voorn and Van Genugten, 2022). The existing literature tends to treat MOCs like any other corporations owned by public authorities in the sense that they are regarded as agencies operating without political interference.

Despite increased research on MOCs, our understanding of the factors influencing variations in chief executive officers' (CEOs') autonomy remains limited, particularly from the CEOs’ own perspectives (Cambini et al., 2011; Lidström, 2017; Torsteinsen, 2019; Voorn et al., 2020). Additionally, prior research has primarily examined such corporations as an executive arm of the local government. It has paid insufficient attention to the centrally imposed constraints and political mechanisms that affect autonomy.

Therefore, to fill this void, we investigate two questions. First, how do the executives of MOCs feel about their managerial autonomy in their routine work? Second, do these executives feel that they have managerial autonomy in their work? How does its presence or absence affect them?

To explore these questions, this study adopts politicization theory (Rouban, 2015) as a theoretical framework to analyse how political considerations influence managerial autonomy in MOCs across multiple levels of governance.

We focused on Israel, where, since the late 1990s, MOCs have gained momentum in local governments. We conducted an in-depth qualitative study with CEOs in these corporations, exploring the various factors that might affect their managerial autonomy. We analysed their responses to understand which interventions from the Ministry of the Interior, as representative of the central government, and local government actors the CEOs regarded as affecting their autonomy. Unlike previous research, our findings provide empirical evidence from the executives’ perspectives about the factors that promote or impede their autonomy. By integrating our results with the literature on the autonomy of public agencies, we can suggest practical ways to optimize the CEOs’ autonomy.

Literature review

Public agency autonomy and its main constraints

Agency autonomy refers to the degree of discretion that an agency possesses in carrying out tasks and making decisions within the framework of control and oversight mechanisms established by external entities (Maggetti and Verhoest, 2014; Voorn et al., 2020). As noted by Aars and Ringkjøb (2011), MOCs as semi-autonomous bodies operate with varying levels of independence depending on the type and intensity of external constraints, representing a continuum rather than a dichotomous condition. This conceptualization recognizes an agency's relative ability to convert its own preferences into authoritative actions while operating within institutional frameworks and oversight arrangements that govern its operations (Krause et al., 2023; Maggetti, 2007). In the context of MOCs, Olsen et al. (2017) emphasize that these hybrid organizations function at an ‘arm's length’ from central municipal administration, maintaining operational discretion within the mandates and governance structures established by their municipal owners while being subject to various forms of input, throughput and output controls. Granting a public agency greater organizational autonomy entails the devolution of power or the delegation of tasks, as it shifts decision-making authority from external actors such as ministers and government departments to the agency itself (Wynen and Verhoest, 2016).

Verhoest et al. (2004) distinguished between two types of agency autonomy: policy-oriented (determining what to do); and managerial (determining how to implement objectives). Policy autonomy involves strategic decisions about goals and content, while managerial autonomy focuses on operational decisions regarding resources, processes and personnel management without ministerial interference (Espedal, 2017; van Triest and Williams, 2022). This study focuses on managerial autonomy, because Israeli municipal corporations function under strict policy guidelines from the Ministry of the Interior and municipal councils, and have limited policy-making authority. Their primary purpose lies in delivering services efficiently outside local bureaucracies (Ferry et al., 2018; Krause and Swiatczak, 2020; Tavares, 2017). Achieving this goal requires significant managerial flexibility in resource and personnel management. Success is measured through operational efficiency rather than policy innovation, making managerial autonomy more relevant to this core function.

Scholars conceptualize managerial autonomy as the degree of discretion managers possess in making decisions within the constraints and oversight mechanisms established by external stakeholders (Verhoest et al., 2016). Such exogenous constraints are structural, financial, legislative and interventional (Verhoest et al., 2010). For example, structural constraints are concerned with the role of the agency's hierarchy, its head, or its supervisory board in influencing decisions. Financial constraints encompass possible budgetary reductions in influencing agency decisions. Legal constraints may be imposed through changes in the agency's legal status (Bouckaert, 2015). Finally, interventional constraints include the imposition of reporting requirements, evaluations, and audits, as well as sanctions or direct governmental interventions (Verhoest et al., 2016). Politicization theory provides a framework for understanding how these seemingly technical constraints serve as instruments of political control. Rather than viewing constraints as neutral administrative mechanisms, politicization theory explains how political actors strategically employ these tools to maintain influence over organizational behaviour and limit executive autonomy (Maggetti and Verhoest, 2014; Verhoest et al., 2016). This perspective reveals that managerial autonomy is fundamentally a political phenomenon, shaped by power relationships rather than purely technical considerations.

In the context of MOCs, politicization operates through a multi-level framework where CEO autonomy depends on relationships with three key actors: central government; local government; and boards (Verhoest et al., 2010). This multi-level approach reflects the understanding that autonomy is inherently relational, emerging from complex interactions between different governance levels rather than existing as an isolated organizational characteristic (Voorn et al., 2023).

The laws applying to MOCs are uniform throughout Israel. Therefore, we did not consider legal constraints in this analysis.

Municipal corporations, politization and the level of autonomy

Municipally owned corporations require significant operative flexibility to establish cooperative agreements with public and private partners (Voorn et al., 2017), making managerial autonomy crucial. MOCs also engage in public−private partnerships as well as inter-municipal cooperation (Razin and Hazan, 2023). Unlike typical public agencies that have a top-down, hierarchical management style, they use a business-like approach, with greater flexibility in decisions regarding policy, the utilization of organizational resources, staff recruitment and fund allocations (Bezes and Jeannot, 2018). At the same time, the Organisation for Economic Co-operation and Development (2021) has emphasized the importance of a strong legal and regulatory framework, guaranteeing the state-owned enterprises’ independence and autonomy in improving the performance and efficiency of the managerial board. Similarly, given that MOCs can theoretically respond better to local communities’ priorities, the result should be better decision-making and resource allocation (Voorn et al., 2017).

Nevertheless, structural, organizational and behavioural challenges to managerial autonomy may arise from concerns that autonomy could lead to problems from executive managers who adhere to bureaucratic red tape, or from a desire to preserve bureaucratic micromanagement. Furthermore, the autonomy in these corporations may vary depending on the specific operating context. In some cases, MOCs may be subject to more control and oversight from the municipality or other external entities and may have less autonomy (Krause and Van Thiel, 2019). A high degree of autonomy can also diminish accountability and make the corporations less likely to coordinate with the municipality and other external stakeholders.

Political influence on municipal corporations may also affect them in various ways, including the choice of managers, resource allocation and policy implementation (Rouban, 2015). Politicization of the civil service refers to the influence of political considerations in the decisions and actions of public organizations and officials (Peters and Pierre, 2004). While politicization can help to ensure alignment with elected officials’ priorities, it may lead to decisions based solely on political considerations rather than professional judgement or the public's interests and needs (Rouban, 2007, 2015). Politicization theory explains how both economic and political motives drive the establishment of MOCs, including political appointments and interest group support (Van Genugten et al., 2020). When political considerations override public interests, this can result in delayed action and inefficient resource allocation (Voorn et al., 2020). Evaluating politicization's impact on managerial autonomy requires examining how executives perceive political actors’ involvement as either supportive or constraining (Peters and Pierre, 2004; Verhoest et al., 2010). Reducing negative politicization effects requires the autonomy necessary for professional decision-making and transparent governance (Rouban, 2015).

The Israeli context

Israel's government structure is historically highly centralized, with local governments operating under limited autonomy and ultra-vires principles, guided by the Ministry of the Interior (Razin and Hazan, 2014; Uster and Cohen, 2023). Despite neo-liberal reforms in the 2000s, central control remains dominant (Ben-Bassat et al., 2016), evident in strict fiscal regulations imposed by the Ministries of Finance and of the Interior (Uster et al., 2018). Economic crises in local governments during the 2000s (Ben-Bassat and Dahan, 2009) led to increased central control by the Ministry of the Interior. At the same time, local governments were pushed toward financial independence (Uster and Cohen, 2023). The result of this need for additional income in local governments was the creation of MOCs (Levy and Sarig, 2014). Despite the State Comptroller's emphasis on corporate governance principles and requests from the CEOs of these corporations for decentralized control based on performance, the Ministry of the Interior maintains centralized control over these organizations.

The system represents a hybrid model combining neo-liberal trends with centralized policy (Eshel and Hananel, 2019). However, it creates tension between the national ‘regulatory state’ concept (Levi-Faur, 2005) and the local ‘strong mayor’ model (Dery, 1998; Dror and Zehavi, 2022), both of which operate within an environment of ‘alternative politics’ (Galnoor, 2011; Uster et al., 2022). Unlike other countries, Israeli MOCs are strictly limited to the control of a single municipality and operate within its territory. These approximately 500 municipal corporations, governed by the Ministry of the Interior's guidelines rather than primary legislation, have boards comprising local authority council members, senior municipal staff and public representatives. In Israel, each MOC is subject to the governance of its own board of directors. Certain MOC actions require the approval of both the City Council and the Ministry of the Interior. The mayor is designated to serve as the chairman of the company's board of directors by virtue of their position. However, in instances where a local authority oversees a minimum of three municipal corporations, the local authority council is permitted to elect an alternative chairman for the board of directors, commencing with the fourth corporation (Ministry of Interior, 2025).

Method

Sampling, participants and procedure

The qualitative methodology we used is based on a social constructivist philosophical perspective positing that individuals actively construct their own conceptions of reality. Reality is therefore subjective and multifaceted (Adom et al., 2016).

We conducted the study using information about MOCs from Israel's largest cities and other cities of varying fiscal standing. We first conducted a preliminary survey to identify the types of public services that the corporations delivered and various organizational parameters such as number of employees, year of establishment and financial status. To investigate the factors involved in the CEOs’ sense of managerial autonomy, we conducted 18 open-ended interviews with executives in MOCs in local authorities, each of whom had been active in the field for at least two years. On average, participants were 51.6 years old and had 10.8 years of experience in the field. Among the participants, 17 held master's degrees and one had a BA degree. The characteristics of the participants appear in Table 1.

Table 1.

The characteristics of the participants.

	Age	Education	Tenure	Municipally owned corporations’ number of employees	Business cycle – annual national insurance services, new Israeli shekels
1	37	MA	3	17	250 million
2	58	MA	25	80	545 million
3	46	MA	7	44	Billion
4	35	MA	7	50	100 million
5	43	MA	3	300	40 million
6	52	MA	6	30	600 million
7	56	MA	9	15	100 million
8	69	MA	6	20	50 million
9	62	MA	13	17	170 million
10	52	MA	16	200	300 million
11	43	MA	7	5	25 million
12	55	MA	7	6	10 million
13	46	MA	15	5	50 million
14	45	MA	15	15	100 million
15	55	BA	7	5	9 million
16	55	MA	15	7	60 million
17	69	Two MA	28	33 (5 + 28)	None
18	51	MA	6	17	250 million

Sampling is an important component of a qualitative research design. Our approach to sampling accords with that of Robinson (2014: 26), who noted a four-point approach to qualitative sampling: (a) setting up and defining a sample – the target population; (b) selecting a sample size; (c) devising a sample strategy; and (d) sample sourcing. As suggested in point (a), to define a sample universe, we established a set of both inclusion and exclusion criteria for the sample. Participants were selected based on the following inclusion criteria: (i) voluntary participation; (ii) their core occupation included at least two years of experience as a CEO in a MOCs; and (iii) they constitute ‘information-rich’ and analytically useful sources for answering the research questions (Forman et al., 2008: 766). We also ensured that our sample was sufficiently heterogeneous so that our findings might be applicable to other contexts (Robinson, 2014). The participants were employed only in municipally owned companies. The common characteristic of these companies is that they all act as an entrepreneurial and executive arm of the municipality to create long-term business projects that have a social, commercial and environmental impact and simultaneously help the local authority to raise money to support itself.

As point (b) focuses on a decided on sample size (Robinson, 2014: 26), we used a broad perspective. Initially, the sample size was guided by the principle of reaching ‘data satisfaction’, namely, when ‘the number of required subjects usually becomes obvious as the study progresses, as new categories, themes or explanations stop emerging from the data’ (Marshall, 1996: 523). In the further consideration that, beyond saturation, various factors can affect sample size, we expand our view by integrating the analytical tool as proposed by Mthuli et al. (2022): DEJA − define, explain, justify and apply. This tool was not employed to predict ‘an “appropriate” or “perfect” sample size.’ Rather, it was used to help us to elucidate the thought processes and rationale behind selecting a sample size that aligns with our research objectives and methodology (Mthuli et al., 2022). The decision regarding sample size is consistent with the notion that qualitative research is ideographic in nature, not nomothetic (Pearse, 2021). Idiographic researchers focus attention on the individual, with the objective of describing and delineating patterns or themes that typify their lived experience. Our goal is to investigate the subjective experiences of CEOs regarding their managerial autonomy within the dynamics of the interactions between their corporations and the government.

Following point (c) regarding the steps of devising a sample strategy we selected a purposive sampling strategy to specify the categories of personnel to be included in the sample. Of the four most common forms of purposive strategies (Robinson, 2014), we used cell sampling. We did so because this method provides a series of a priori categories embedded in the inclusion criteria and allows cells to overlap (Miles and Huberman, 1994). As suggested point (d) focuses on the source of the sample − participants from the target populations were actively recruited. This step of sample sourcing included advertising, incentivizing participation and avoiding bias.

Data collection

We collected data from 18 semi-structured individual interviews in which we asked the CEOs about their experiences in MOCs. During the interaction between the interviewers and the participants, the interviewers displayed awareness of the participants’ lexicon and their experiences and asked probing questions to clarify the participants’ thoughts (Kvale and Brinkmann, 2009). The interviews ranged between 45 and 90 min in duration, averaging 50 min. The participants were interviewed on single occasions by Zoom, or in the CEOs’ office. The interviewers took notes on a computer during the sessions. To encourage free expression, the interviews were not recorded.

Data analysis

We analysed the data using thematic analysis. This technique is helpful in identifying recurring themes and providing insights into the social reality being investigated. The process involves coding the data, exploring its meaning and generating descriptive themes that reflect the participants’ experiences (Vaismoradi et al., 2016). Thus, we immersed ourselves in the data, coded the statements in the interviews, classified them into categories and identified the resulting themes (see Creswell and Poth, 2018). Our analysis considered previous studies concerning managerial autonomy in changing local contexts, where municipalities maintain contractual relationships to ensure local public service delivery (Van Genugten et al., 2020). Given our research question about how intertwined political and bureaucratic mechanisms affect the CEOs’ perceived autonomy in managing MOCs, the coding was initially based on the public agency autonomy perspective. Therefore, we focused on the three key constraints on agency autonomy − financial, interventional and structural. Within the Israeli context, the structural constraints originate primarily from two local sources: the mayor, who serves as head of the board; and the municipal council, which has significant influence over board composition and decision-making. The board structure consists of three equal components: one-third municipal council members; one-third municipal employees; and one-third citizens chosen by the municipal council members. This tripartite composition ensures that the municipal council maintains substantial control over MOC governance, both through direct representation and through its authority to select the citizen representatives. Additional interventional and financial constraints are imposed by the Ministry of the Interior, which represents the central government.

Findings

Using established qualitative research methodology (Blackstone, 2018), we divided the findings into three categories. The first is the micro or individual level. Included in this category are the personal relationships between the CEOs of the municipal corporations and the mayors. The second category is the meso level. Included in this category are the relationships between the CEOs and other groups such as their boards. The third category is the macro or government level. Included in this category are the relationships between the CEOs and the central government, in the form of the Ministry of the Interior. Figure 1 illustrates these findings across the three levels. Three major themes emerged about each level. The first is the importance of a strong, supportive mayor. The second is the role of the MOCs’ board as a political but ambivalent actor. The third is the strong degree of regulation by the central government. This multi-level approach provides insights into the impact of various factors, from one-on-one relationships to group dynamics on a board and oversight by the central government, on the sense of autonomy that CEOs of MOCs’ feel they have in their work (see Table 2).

Figure 1.

Illustration of the findings.

Table 2.

Multi-level analysis of constraints on managerial autonomy in municipally owned corporations – summary of findings.

Level of analysis	Main actor	Main constraints	Key findings	Supporting quotes
Micro level	Mayor	Structural (paradoxically positive)	The mayor acts as a bulwark against central government constraints, increasing autonomy through involvement	‘I get a lot of help from the mayor in terms of consultation and knowledge. On the other hand, he gives me a lot of freedom of action in the corporation and doesn’t try to be involved in the day-to-day management’
			Mayoral support enables chief executive officers (CEOs) to navigate regulatory bureaucracy	‘When the central government creates problems, I immediately turn to him [the mayor] … and he advances the issues with the ministry or tries to find alternative ways to obtain resources’
			Mayors facilitate bureaucratic processes through personal connections	‘The mayor has good relationships with the people in the Ministry. They stay in regular contact. When some rule is unclear or a deadline is difficult to meet, he can contact them to ask for realistic timelines and ask for help when needed’
			Strategic decision-making requires mayoral involvement	‘I can’t make strategic moves without him and that's true. When I need the municipality as a partner and funder, I have him by my side. In the day-to-day I have about 90% autonomy’
Meso level	Board of Directors	Structural (through politization)	Boards generally provide limited oversight, acting as ‘rubber stamps’	‘Basically, I have full autonomy within the supervision of the board of directors … The oversight of the board is quite low’
			Board members intervene primarily for political and personal interests	‘Regarding political involvement, there are nine directors on the board. Those who try to exert political pressure are the city council members, each one with his personal interest’
			Politicization deriving from structural constraints	‘The board tries to promote political interests and things that are important to them. Try to take care of the people they care about. My message to the employees − we are a professional company and politics does not enter into it’
Macro Level	Central Government (Ministry of the Interior)	Interventional and Financial	Multiple inconsistent requirements	‘The Ministry of the Interior is our regulator. I have a credit line that I have to renew every six months and that the corporate division has to approve. Each time they have new requirements for granting approval’
			Lack of understanding of local needs	‘Central government approval processes can take 3–6 months for decisions that require immediate action at the local level, such as hiring seasonal staff for summer programmes or responding to emergency facility repairs’
			Delays in administrative processes	‘Since January I’ve been waiting for an update of the organizational structure and I can’t move on because they don’t have time to manage it. They are an unreasonable delaying factor’
			Financial constraints limiting talent acquisition	‘I have a certain standard in the corporation that I am limited to and I am limited in the salary that I can pay the employees. This makes it difficult to recruit from a secretary to an engineer. There is no way to get quality and talented personnel’
			Restrictive salary structures	‘My salary is 16,000 (new Israeli shekels) national insurance services (NIS) net. The CEO of a company with a similar turnover in the private market earns over 100,000 NIS. All of the above affects my ability to manage a company professionally’
			Cumbersome hiring processes and restrictive salary structures	‘I am recruiting for an accountant at a salary of NIS 9000. I must publish a tender, then interview him or her and accept him or her. After that, the Ministry of the Interior controls the process for me and checks everything we did’

The micro level: a strong, supportive mayor

Most of the respondents see the mayor as a pivotal figure who wields considerable influence over their autonomy. They view the mayor as a bulwark against the interventional and financial constraints imposed by the central government, shielding them from bureaucratic challenges that impede their organizations’ progress. Respondents distinguished between intervention and the mayor's involvement. They noted that, paradoxically, increased mayoral engagement enhances their autonomy, enabling them to navigate the regulatory bureaucracy more effectively. They believed that the mayor's knowledge, experience and authority helped resolve complex issues without encroaching on their administrative autonomy.

The CEOs noted that the mayor's help and support were welcome even if she or he was very involved and dominant. In several cases the participants described seeking the mayor's intervention as a partner who could help realize strategic projects. For example:

The dynamic is the opposite. I get a lot of help from the mayor in terms of consultation and knowledge. On the other hand, he gives me a lot of freedom of action in the corporation and doesn’t try to be involved in the day-to-day management.

I can't make strategic moves without him and that's true. When I need the municipality as a partner and funder, I have him by my side.

Moreover, the respondents indicated that the mayor could help mediate the constraints imposed by the intervention of the central government in several ways. First, the mayors could leverage their personal relationships with ministry officials to expedite bureaucratic processes. Second, the mayors could find alternative resources within existing regulatory frameworks:

When the central government creates problems, I immediately turn to him [the mayor] … and he advances the issues with the ministry … when I didn’t have a coordinator, he allowed me to use the existing resource in the municipality.

When I feel that the processes are delayed …, I ask the mayor to contact the head of the corporate division at the Ministry of the Interior directly. Only after their personal conversations, was I successful in promoting some of the processes.

The meso level: the board as an ambivalent actor

Boards of directors play a central role in MOCs in many countries, providing oversight of senior management, long-term strategic planning processes and organizational performance. Their functioning varies significantly based on factors such as conditions in the country, type of organization, characteristics of the sector and legal frameworks. Boards shape their role in the triangle between three stakeholders: owner; company; and external stakeholders (Olsen et al., 2017). Actual implementation often differs from formally prescribed structures, particularly when boards exceed their mandates or face political override (Van Thiel, 2015). About the position and the role of the board in the Israeli structure, one should bear in mind that it is typically composed of one-third council members, one-third local authority employees and one-third public representatives. The members of the board of an MOC who are representatives of the local authority will be selected by the local authority council (Ministry of the Interior, 2025). Our findings revealed that CEOs are ambivalent about the degree to which board members limit their managerial authority. On the one hand, they may not be involved in managerial and policy activities, acting as rubber stamps. The CEOs described them as passive actors who do not interfere with the routine management of the corporation unless it concerns political and personal interests:

The oversight of the board is quite low.

Regarding political involvement, there are nine directors in the board. Those who try to exert political pressure are the city council members, each one with his personal interest.

The board tries to promote political interests and things that are important to them. Try to take care of the people they care about. My message to the employees − we are a professional company and politics does not enter into it. The pressures are there but I don’t let them affect us.

The macro level: substantial regulation by the central government

The interviewees explained how specific regulations reduce their autonomy, which, in turn, limits their ability to manage the corporation. The CEOs described many experiences in which regulations encumbered their work and impeded the corporation's autonomy and overall functioning.

They highlighted bureaucratic hurdles stemming from the multitude and inconsistency of guidelines and requirements. They argued that regulators within the central establishment lack both a connection to the field and a deep understanding of its operations, severely constraining their ability to act and make decisions. Moreover, they criticized the slow pace of other government offices. For example, central government approval processes can take three to six months for decisions that require immediate action at the local level, such as hiring seasonal staff for summer programmes or responding to emergency facility repairs. Thus, the decisions of the central government often do not align with the demands of local realities:

Companies require the approval of the Ministry. Where you need flexibility, they don’t know that much. They are quite square [slang]. In the end, we compromise, but there is a lot of wasted time, forms and more, which I think can and should be shortened, but this is from my point of view.

The CEOs maintained that the bureaucracy of the Ministry of the Interior limits their managerial autonomy in terms of hiring quality employees and financial and policy autonomy. One solution they described is the creation of informal relationships with the bureaucratic actors in the Ministry. For example:

I asked the Ministry of the Interior to change its organizational structure and increase to the standard of three engineers, but the Ministry of the Interior approved only one, claiming that the budget was cut. I have to fight with them and in the end they will only approve two. The perception of the Ministry of the Interior is old … . All of the above affects my ability to manage a company professionally. This hinders the company's day-to-day operations.

Discussion

This study explored how executives of MOCs perceive their managerial autonomy and identified the factors that influence these perceptions. The investigation examined the effects of three main types of constraints: structural; financial; and interventional. Through the lens of politicization theory, the analysis reveals how political considerations translate into concrete managerial constraints across multiple governance levels, demonstrating that CEO autonomy operates as a relational phenomenon shaped by interactions between central government, local government and boards (Verhoest et al., 2010; Voorn et al., 2023). Our findings revealed three levels of actors whose involvement has a major role in the CEOs’ managerial autonomy. At the local level, the CEOs noted that both the mayor and the board of directors are important actors affecting their managerial autonomy in terms of structural dimensions. Interestingly, however, they differentiated between the mayors’ influence and that of the board members, calling mayoral action ‘involvement’ rather than a ‘constraint.’ While the CEOs described both actors as enablers of their managerial autonomy, they regarded the mayor as a more positive actor who resolves the regulatory requirements that the central government imposes on them. The mayors do so by leveraging their personal relationships with ministry officials, helping municipal departments to navigate complex compliance demands, and finding alternative resources within existing regulatory frameworks.

There appears to be a paradox regarding managerial autonomy here. The respondents saw the regulatory mechanisms of the Ministry of the Interior as interventions and the financial constraints imposed on them as limiting their managerial autonomy substantially. In response, they looked to the mayor to intervene to overcome these obstacles to their autonomy. Furthermore, a key element appears to be the trust and support between the mayors and CEOs, even though to some extent the former has authority over the latter. Thus, creating these personal relationships is easier than dealing with the distant, bureaucratic central government establishment. Indeed, one method that the mayors use to resolve regulatory challenges is by cultivating personal connections with central government bureaucrats.

These findings on the mayor's role correspond with the strong mayor model in local government. Here, the mayors often have executive powers that extend beyond ceremonial duties, allowing them to make key decisions about local policies and administration (Mannier, 2006). Since 1975, the strong mayor model has prevailed in Israel, in contrast to other models where decision-making authority may be more decentralized among council members or other officials. Therefore, mayors exercise significant influence within Israel's public administration, which is characterized by ‘alternative politics’ (Uster and Cohen, 2023). In this context, decision-makers try to blur the distinction between legal and illegal actions. The contradictions between support from the mayor, the possible interference of the board, and the red tape of the central government create fertile ground for informal partnerships and grey-area autonomy at the local level (Dror and Zehavi, 2022). This culture of alternative politics encourages a bypassing of formal rules and the traditional system of government services (Golan-Nadir et al., 2020). As a result, these conditions could threaten democratic values and the ability of public agencies such as MOCs to act effectively in an accountable and autonomous way.

On the other hand, the respondents rather cautiously portrayed the board members as potentially manipulative and driven by personal and political agendas. This view of the board correlates with the literature documenting that boards may sometimes exceed their formal mandates or face political overrides even when operating within their prescribed boundaries (Van Thiel, 2015). This finding exemplifies how politicization operates through structural constraints, where politically appointed board members create inherent conditions for political influence over ostensibly autonomous agencies (Krause and Van Thiel, 2019; Van Genugten et al., 2020). While their interventions stem from personal and political motives, they are not regarded as directly hindering the CEOs’ managerial autonomy. Rather, the CEOs’ concerns arise from the board's lack of professional expertise and discretion, potentially complicating decision-making processes. Managers may encounter delays or additional complexities in navigating these political manoeuvres, rather than direct structural constraints on their professional decision-making abilities. One possible explanation lies in the board members’ general indifference towards corporate policy and functioning, which may give CEOs a false sense of autonomy. However, this indifference is not rooted in a professional assessment of the corporation's needs but rather in the board members’ personal perspective of the corporation to further their political interests. This finding aligns with the negative implications of the politicization of the civil service. It should serve as a caution against the personal interference of political actors such as boards in the professional considerations of public agencies (Rouban, 2015; Van Thiel, 2015). In the context of municipal corporations, boards face the fundamental challenge of balancing organizational autonomy with public accountability and strategic development, requiring them to maintain transparency and effective governance in an increasingly complex public service landscape (Olsen et al., 2017). As Peters and Pierre (2004) argued, politicization in public organizations is frequently embedded within formal governance structures. Having politically appointed individuals as members of the boards of MOCs creates an inherent structural condition for political influence (Van Genugten et al., 2020). This arrangement is rarely coincidental. It is often deliberately designed to maintain political control over ostensibly autonomous agencies (Krause and Van Thiel, 2019). Simultaneously, politicization functions as a tool through which structural constraints are imposed. In our case study, the composition of the board in terms of who they are directly influences how structural constraints operate in practice. This situation reflects Rouban's (2015) observation that political actors utilize their formal positions within governance structures to advance political agendas, particularly in decisions about appointments and resource allocation.

It is important to note that boards in MOCs exhibit a dual nature, functioning simultaneously as formal institutional governing bodies and as arenas where individual member interests and political agendas intersect (Voorn and Van Genugten, 2022). This duality reflects the hybrid character of MOCs, where formal governance structures coexist with informal behavioural dynamics that may diverge from institutional expectations (Cornforth, 2020). This duality illustrates the complex reality of hybrid governance where multiple institutional logics and individual interests must be balanced within formal organizational structures.

Nevertheless, the CEOs pointed to the macro level factor of the bureaucracy of the central government as the most significant in limiting their managerial autonomy. According to the CEOs, while having a strong mayor is beneficial, their dependence on the central government harms their autonomy and functioning. The managers stated that the regulator (in the form of the Ministry of the Interior) uses interventional constraints that limit their administrative capabilities and ignores the CEOs’ management issues and problems. It is evident that there is the lack of ‘a sympathetic ear’ and professional support for the CEOs that hampers their autonomy.

In sum, our findings highlight the importance in the CEOs’ perceived autonomy in the functioning of MOCs. This context includes relational interdependence, and a sense of support and assistance from supervisors, both direct and indirect. These factors can affect the CEOs’ perceptions of intervention as supportive or interfering (Lauring and Kubovcikova, 2022). Our findings show that when managers sense that their relationship with supervisors such as the mayors is based on mutual support and reciprocity, they feel that they have autonomy. In contrast, when they sense that their relationship is a one-way street, as is the case with the central government, which imposes interventional controls on their decision-making (Gilardi, 2008; Lægreid et al., 2008; Verhoest et al., 2010, 2016) without providing support or assisting in managerial and policy issues, the CEOs feel they have limited autonomy. The same holds true regarding the sense that the political pressure that board members exert simply promotes personal interests without helping the CEOs with managerial issues. Thus, we provide a more nuanced picture of the managers’ sense of autonomy depending on their reciprocal connections and interdependence. These findings contribute to politicization theory by demonstrating that managerial constraints operate not merely as technical barriers but as relational instruments that can either support or undermine executive autonomy depending on the nature of political actor engagement across governance levels.

Conclusion

This research makes a significant contribution to the literature by examining the perceived autonomy of CEOs, particularly within the context of a central government that plays a prominent role in local affairs, thus adding complexity to managerial autonomy. More precisely, the findings reinforce the contradictory context and resulting bureaucratic tension in which the local government functions in which the substantial power of the head of the local authority mediates the regulatory control of the central government. One political actor, the mayor, tries to strike a balance between promoting the MOCs’ goals and giving them managerial autonomy. Another political player, the Ministry of the Interior, acts in ways that limit their managerial autonomy (Vigoda-Gadot, 2007).

Another explanation for the considerable regulations originating in the ministry comes from Levi-Faur's (2005) concept of the regulatory state. According to this concept, the state's increased monitoring of agencies can have both positive and negative consequences. Levi-Faur (2011) refers to this mechanism as ‘regulatory capitalism.’ He maintains that the capitalist system is based on regulation and that the requirement for regulation is, in fact, created by capitalist ideology. Highly centralized bureaucratic regulatory systems foster relationships of dependency within local government structures, prompting them to seek sources of support and assistance. In such scenarios, corporate directors also seek support, often turning to the mayor for assistance. When these centralized systems fail to provide adequate support, managers are compelled to rely on local support mechanisms, making these levers of support appear more favourable when compared to restrictive regulatory measures. One policy consequence of the strong mayor model lies in the concentration of power in the hands of one individual who is relatively unhampered by bureaucratic hurdles or the need to obtain consensus from a larger group. While the strong mayor model can lead to more efficient decision-making processes, the resulting limited oversight also raises concerns about the potential abuse of power.

Limitations and future research

Our study has several limitations that open the door for future research. First, our sampling strategy, while ensuring the representation of a variety of participants, used a procedure that did not entail ongoing follow-up interviews. Second, future studies could juxtapose how different types of autonomy (macro-level versus micro-level) affect the performance of MOCs. For example, while macro-level autonomy might benefit managerial decisions, micro-level autonomy in politically sensitive decisions might have unfavourable implications. Third, research could explore how the preferences of CEOs regarding autonomy vary between sensitive policy areas such as education, requiring closer public scrutiny, and profit-oriented sectors such as business development where extensive autonomy might be preferred. Finally, future studies could employ mixed methods approaches or comparative analyses of different institutional contexts, potentially including various municipal organizational forms, to generalize our findings.

Footnotes

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was supported by the Research Authority of Max Stern Yezreel Valley College.

ORCID iD

Anna Uster

Author biographies

Anna Uster, PhD, is a Senior Lecturer and Head of the Political Science Department and the Public Administration and Public Policy (MA) programme at The Max Stern Yezreel Valley College, Israel. Her research focuses on local collaborative governance, central–local relations, and co-production between public professionals, citizens and nonprofit organizations.

Hedva Vinarski Peretz, PhD, is a Senior Lecturer in the Department of Political Science, MA programme of Public Administration and Public Policy, and faculty member at the Department of Health System Management and at the Max Stern Yezreel Valley College. Her studies on public management have appeared in reputable publications such as the Journal of Vocational Behavior, European Management Journal and Public Management Review. Her paper gained the SIG Best Paper award at the EURAM 2021 Conference (Public and Non-Profit Management Strategic Interest Group) and the Best Paper award at the AOM 2024 (Social Issues in Management SIM).

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Factors affecting chief executive officers’ managerial autonomy in municipally owned corporations: a qualitative study

Abstract

Points for practitioners

Keywords

Introduction

Literature review

Public agency autonomy and its main constraints

Municipal corporations, politization and the level of autonomy

The Israeli context

Method

Sampling, participants and procedure

Data collection

Data analysis

Findings

The micro level: a strong, supportive mayor

The meso level: the board as an ambivalent actor

The macro level: substantial regulation by the central government

Discussion

Conclusion

Limitations and future research

Footnotes

Declaration of conflicting interests

Funding

ORCID iD

Author biographies

References