Institutional theory and local economic development policies: A case study of Stockholm municipality’s new Business Policy

Abstract: The explorative case study aims to understand how the reform of business support and development undergoing in Stockholm municipality addresses existing institutions, and to what extent does the institutional context have the potential to adopt and sustain the change. Two case studies, Högdalen industrial area and Årsta wholesale center, illustrate how local economic development is organized in practice. A new policy document, Näringslivspolicy, is analyzed, along with interviews with key public and private agents. Two institutional theoretical frameworks are used: a dynamic perspective on the interaction between regulations and institutions and the concept of institutional thickness. Findings indicate that the examined reform is an example of institutional policymaking as it addresses institutional foundations underlying behavioral practices. Furthermore, empirical evidence shows that the City of Stockholm intends to adopt a place- and problem-based approach to local economic development, but its organizational forms are not specified at this stage. Findings illustrate (not exhaustively) factors of efficient external collaboration that reflect those in recent literature and can be used in future policy revisions. The success of the initiated reform might provide the fundament for improvements in future local economic development initiatives.