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9thEuroFM Research Symposium EFMC2010, Madrid, Spain

Outsourcing and Facility Management as strategies forcomprehensive public sector reforms

Knut BogeAkerhus University College

[email protected]

Telephone 47-64 84 91 07/47-45 06 52 61

ABSTRACT

The aim of this paper is to elucidate how outsourcing and Facility Management (FM) have beenused as strategies to accomplish comprehensive public sector reforms in Norway. This paper is

based on the comparative case study method, and founded on so-called neo-institutional theory.

The case examined is public sector reforms after the neo-liberal shift, and how these reformspaved the way and provided growth and expansion opportunities for Norways emerging FM-

industry. The findings are first that NPM inspired public sector reforms have paved the way for

outsourcing of FM services in Norway from several former public administrations. Secondly,second wave NPM reforms that transformed several former public administrations to joint stock

companies increased the total size of the Norwegian FM market. These reforms also helped

develop the Norwegian FM market, among others through joint ventures between former public

administrations and the FM suppliers. Finally, these public sector reforms have made at leastthree of Norways major FM-suppliers more similar. They all aim for integrated FM. Their

similarities can be a result of institutional isomorphism.

Keywords

Facilities Management, Outsourcing, Public Policy, Norway.

1 INTRODUCTION

The aim of this paper is to elucidate how outsourcing and Facility Management (FM) have been

used as strategies to accomplish comprehensive public sector reforms in Norway. This paper is

based on the comparative case study method, and founded on so-called neo-institutional theory.The case examined is public sector reforms after the neo-liberal shift, and how these reforms

paved the way and provided growth and expansion opportunities for Norways then emerging

and infant FM-industry. This paper elucidates an almost symbiotic relationship between some of

Norways recent public sector reforms and the emerging Norwegian FM-industry. There havealso been examples of close and partly unintended interaction between some of Norways recent

public sector reforms and the emerging Norwegian FM-industry.

FM as a professional discipline came to Norway in the late 1960s and early 1970s almost as aby-product of Norways then emerging oil industry. The first actors in Norwegian oil industry

were American oil companies. They brought with them routines and procedures for offshore

exploration and later also offshore production of oil. These American oil companies were global

players that often based their operations on standard operating routines and procedures for oil

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exploration, production, refining and distribution, and for management of facilities all across the

globe; i.e. from Texas plains, via Louisianas marshlands, the Mexican Gulfs offshoreinstallations, to the Middle Easts deserts, and finally to the North Sea and Norways coastal

waters. Many of the American oil companies that began to operate in Norway in the late 1960s

and early 1970s bought several services from specialized service companies. The oil companies

had in other words outsourced several tasks to external suppliers. Many of these servicecompanies were then and are still global players in the oil service and/or in the FM-industries.

2 INSTITUTIONALIZATION, PUBLIC SECTOR REFORMS AND

OUTSOURCING

Institutionalism is a central approach to research within for instance economics, political science,sociology, history and organizational sciences, because institutions, according to Scott (2001:51)

constrain and regularize behavior. Institutions are thus significant for how societies, systems of

organizations, individual organizations and their sub-units develop during time, and even howindividuals adapt according to the incentive structures which very often is determined by the

institutional configurations.

Selznick (1949) introduced the concept of institutionalized environment. In an institutionalized

environment many persons consider particular ways of reasoning, organizing or doing thingsmore correct than others during a particular period of time. Some ways of organizing or doing

things are thus considered efficient, modern or progressive, while others might be labelled

inefficient, obsolete or even reactionary (cf. Rvik 1998:13). What is considered modern,efficient and progressive or the opposite may vary across time, place and contexts.

One of the characteristics of modern societies and their organizations are highlyinstitutionalized contexts, namely that organizations adopt practices and procedures []institutionalized in the society (Meyer and Rowan 1983:41). An organizations success is often

dependent of more than efficient coordination and control of production activities, because

organizations in institutionalized environments need to become isomorphic with theseenvironments in order to achieve the desired legitimacy and resources necessary for the

organizations survival (Meyer and Rowan 1983:53). Even DiMaggio and Powell (1983:66-67)

claimed that isomorphism have made organizations within a field more similar. Doing the jobproperly seems thus to be only half the job. Convincing and pleasing important stakeholders are

in many instances equally important. One way of pleasing important stakeholders is to adapt and

implement ways of organizing or doing things considered modern and fashionable.

Ways of organizing or doing things can be labelled institutionalized standards (Rvik 1998).Institutionalized standards travel in time and space such as shown in Table 1. Some ideas travel

farther than others, and some ideas last longer than others. Some ideas become commonly

accepted across national borders and cultures and might last for centuries. Others become localfads, and are soon forgotten.

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Table1:DiffusionofinstitutionalizedstandardsinspaceandtimeThe receipts area of validity as

institutional standard

Local Global

Long Business-

/organizationspecific long term

arrangements

- Bank sector

structure

Institutionalized

mega standards

- Capitalism

- Bureaucracy

The receipts

duration asinternational

standard

Short Local fads

- Centralization

- Decentralization

- Downsizing

International

super standards

- Corporative

system

- NPM

- The Value Chainmodel

- Privatization- Outsourcing

- FM

Source: Cf. Rvik (1998:23 Figure 1.1)

New Public Management (NPM) is not one particular reform, but rather a collection of public

sector reforms, or a mindset (Olsen and Peters 1996:13). The mix and relations between thevarious elements in NPM have varied between countries and during time. NPM was developed

in an Anglo-American context from the second half of the 1970s and early 1980s, and diffused to

rest of the world through OECD, the The World Bank/International Bank for Reconstruction and

Development (IBRD), the International Monetary Fund (IMF) and a large number of consultancyfirms (Kickert 1997:15; Olsen and Peters 1996:1,13,18-20; Pollitt 1995:133-135).Today, there

are elements of NPM reforms and policies in most countries that have market based economies.

NPM provided a global diagnosis for perceived faults and problems in the public sector, andprescribed a universal medicine founded on micro economic theory, belief in management and

leadership, and with private sector enterprises as ideal for the public sector. The main ideas were

a smaller and more efficient government, and value for the taxpayers money (Olsen and Peters1996:13). The so-called second wave of NPM, which became manifest from the second half of

the 1980s, is of particular interest for this paper, because the second wave of NPM promoted

replacing direct governance with indirect controls (Hood 1996:41; Pollitt 1995:133-135; Rouse1993:59-64, 66-73; Walsh 1995:xiv). Indirect controls are usually achieved through replacing

hierarchy with market mechanisms. Another mean is outsourcing production of goods and

services to external suppliers, which can be other public administrations, private enterprises,

joint ventures between public administrations and private enterprises or non-profit organizations.

One of the ideas promoted through second wave NPM reforms were Porters (1985) Value Chain

model, which distinguishes between primary activities or core business and support activities.

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The support activities facilitate the organizations accomplishment of its mission, or core

activities. The Value Chain model very soon became an international super standard that diffusedthrough business schools and consultancy firms. The distinction between core business and

support activities, and arguments for emphasising the core business was further advocated by

Prahalad and Hamel (1990) in their seminal article.

Figure i: Porters (1985) Value Chain model has facilitated diffusion anddevelopment of FM (illustration downloaded from www.themanager.org)

Infrastructure

Several second wave NPM reforms led to introduction of ideas about FM in some Norwegian

public administrations or former public administrations.

FM is usually defined as Integration of processes within an organization to maintain and

develop the agreed services which support and improve the effectiveness of its primary activities

(EN 15221-1 October 2006). The definition of FM is thus founded on Porters (1985) ValueChain model, which has promoted the distinction between support and primary activities, and is

also indirectly propping up Prahalad and Hamels (1990) claims about emphasizing the corebusiness. FM services can be provided in-house by the private enterprise or the public sector

administrations own employees, or through outsourcing of one or more supporting services.

Human Resource Management

Technology Development

Procurement

Inbound

SupportMargin

Activities

MarketingOutbound

Logistics and Sales ServiceLogistics Margin

Operations

Primary Activities

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FM-services are often divided into five segments. The first is real estate services (hard FM),

such as real estate management, heating and ventilation, energy optimization, security and alarmsystems, janitor services, landscaping, etc. The second segment is workplace services (soft

FM), such as cleaning, canteen and catering services, reception, security guards, mail

management, archive services, etc. The third segment is production services, such as component

service, industrial cleaning, waste management, etc. The fourth segment is back office services,such as HR management and payroll services. The last segment is ICT services (Coor Service

Management 2010a). Some FM suppliers cover all five market segments, either themselves or

through subcontracting. Others cover only one segment or one or more sub-segments within themain segments.

Single service suppliers provide single services such as cleaning, catering, reception and security

staff, etc. Bundled service suppliers provide two or more usually related (single) services, in

order to fulfil the customers requirements and to facilitate economies of scale. Integrated FM(IFM), total FM (TFM) or service management (SM) suppliers are responsible for coordinating,

delivering and developing multiple FM-services on the customers behalf, in order to achieve

economies of scale and scope beneficial for the supplier as well for the customers. Theoutsourced services can be produced on-site at the customers premises or offshore outside the

customers premises (Coor Service Management 2010b).

Outsourcing can create new organizational patterns, and can therefore change entire businesses,

business sectors or industries. However, discussions about whether to outsource or to providesupporting services in house have created several heated debates. Debates which in many

instances boil down to whether you actually believe outsourcing is an effective strategy (Pitt

2005). Incognito (2002) claims that outsourcing has been recognized as the most powerfulmanagement strategy since the Industrial Revolution. This is quite a claim. But outsourcing has

according to Incognito (2002) made it possible to delegate responsibility for production ofsupport services to the best in class providers. This kind of arguments recognizes Prahalad and

Hamels (1990) idea about emphasis on core business. However, there is often a divergence

between FM clients and FM suppliers, according to Usher (2004), who found that FM; clientsdemanded more but with less risk, while FM suppliers on the other hand demanded more for

delivering less. This divergence has to be solved among others through contracts and relationship

building between FM clients and FM suppliers. Brchner et al.s study (2002) of outsourcing ofFM services in Swedish and British process industries found that outsourcing was more common

in Great Britain than in Sweden. Swedish organized labourers were far less willing to accept

outsourcing than British labourers. There are also good reasons to assume that many Norwegian

workers, particularly public sector employees, question outsourcing, because in house production

of support services have been more common in Norway than in most Anglo-Saxon countries.

3 RESEARCH QUESTIONS

This paper investigates how outsourcing and FM have been used as strategies for comprehensive

public sector reforms in Norway. This high-level question is attempted investigated andanswered through examination of the following three research questions:

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Firstly, has some Norwegian NPM inspired public sector reforms paved the way for outsourcing

of FM services from the former public administrations?

Secondly, how has Norwegian public sector reforms affected the FM-suppliers marketconditions?

Finally, how has these public sector reforms affected three of Norways major FM-suppliers

strategies and structures?

4 RESEARCH METHODOLOGY

This paper is a comparative case study. Case studies are based on an experimental rather than a

statistical logic. The researcher can seldom control the stimulus in case studies such as in actual

experiments, but experiments and case studies can answer how and why questions (Yin(1994:6). Case studies facilitate studies of explanatory mechanisms and contexts in detail, andare therefore excellent for development of plausible explanations and insights about complex

phenomena, such as public sector reforms and the emergence of the Norwegian FM-industry.

The study is first and foremost based on archive studies of printed or electronic primary sources,such as documents, reports and accounting data. But the study is also based on informal

discussions with several major players within the Norwegian FM industry. Some secondary

sources and literature have been used for research economic reasons to provide backgroundinformation. The printed primary and secondary sources have been examined and analyzed

according to so-called critical examination (See for instance Tosh 1991).

5 FINDINGS

The political climate in Norway gradually shifted from the post war corporative system towards

deregulation and liberalization in the second half of the 1970s and early 1980s. Several

deregulations and structural reforms were then long overdue. Similar reforms had beenaccomplished decades earlier in many other western industrialized countries. One example is

capital rationing; i.e. that Bank of Norway and later the Ministry of Finance allocated quotas of

credit to the banks and almost instructed the banks how to spend these quotas within the differentbusiness sectors. The Norwegian governments credit rationing was fist abolished in 1983. Even

the governments broadcasting monopoly was abolished during the term 1981-1985.

The policy shift towards deregulation and liberalization was largely a response to the economic

downturn after the 1973-1974 and the 1979-1980 oil price shocks, which often are known as theOPEC1 and OPEC2 crises. The Conservative Party government that came to power in Norway

after the 1981 general election, and replaced the Labour Party (social democratic) which had

governed most of the time since 1945, introduced several policy ideas inspired by those days

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NPM-reforms in Great Britain and USA. The Conservative government resigned spring 1986

after having lost a vote of confidence in the Parliament. But later Labour Party governmentsfurthered most NPM reforms initiated by the Conservative Party government. Several of

Norways most radical NPM reforms actually took place during Labour Party rule. Norway was

governed by non-socialist coalition governments from the fall 1989 until the fall 1990, from the

fall 1997 until spring 2000 and from the fall 2001 until fall 2001. Several NPM reforms from thelate 1980s until the turn of the century facilitated strong growth opportunities for Norways then

emerging and infant FM-industry.

ISS Facility Services, Coor Service Management and NEAS are three of Norways major FMsuppliers. These enterprises differ both concerning size measured in revenue and number of

employees, age and geneses, but they have all utilized the growth opportunities provided by the

Norwegian governments NPM-inspired public sector reforms in the 1990s and after the turn of

the 20th

and 21stcentury.

5.1 Some Norwegian NPM reforms

Significant structural reforms within Norways public sector began in the second half of the

1980s, when many public administrations where transformed to more autonomous agencies and

in some instances even to joint stock companies. Some of these joint stock companies are stillowned by the responsible ministry. Others have been partly or completely privatized and listed

on Oslo Stock Exchange. Some of the joint stock companies were sold directly to private

investors.

Both the Royal Electric Telegraph (Televerket) and the Norwegian State Railroads (NSB) were

divided between the responsible authorities and the traffic operators before they were graduallytransformed to joint stock companies. Parts of the former Royal Electric Telegraph and theDirectorate of Telecom Services (Teledirektoratet) were merged to the current Norwegian Post

and Telecommunications Authority (Post- og teletilsynet) which supervise the Norwegian postal

services (Posten Norge) as well as the telecom operators. The remaining parts of the RoyalElectric Telegraph became the current joint stock company Telenor, which is listed on Oslo

Stock Exchange. The Norwegian State Railroads were in divided in two fractions, namely the

Norwegian National Rail Administration (Jernbaneverket) which became responsible for railroadinfrastructures such as rails, signals and station buildings, and the traffic operator NSB BA. In

2002 NSB BA was transformed to a joint stock company NSB AS, owned by the Ministry of

Transport and Communications. The railroads properties not related to traffic were in 1998

gathered in a subsidiary owned by NSB BA. The other properties were in 2001 gathered in a newproperty company named ROM Eiendomsutvikling (real estate development) (ROM

Eiendomsutvikling 2002). See also Jensen et al. (2008:152-158) for further discussions about

management of the Norwegian railroads real estate properties.

5.2 ISS Facility Services

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ISS Facility Services is Norways major FM supplier measured in revenue as well in number of

employees. In 2008 ISS Facility Services had 14.000 full and part time employees. The revenuewas 6,3 billions NOK, or approximately 788 millions Euros (ISS Facility Services 2009b). In

2002 ISS Facility Services had 7462 employees and revenue of 3,34 billions NOK or

approximately 417,5 millions Euros (ISS Facility Services 2007). A significant part of the

growth and expansion since the second half of the 1980s have been a result of mergers andacquisitions, but even organic growth. ISS Facility Services most important business areas are

cleaning, canteen and catering, security and office support services. These services are either

sold separately (single services) or in packages (bundled services). ISS Facility Services wasestablished as a single service supplier, but has gradually developed towards a bundled service

supplier and thereafter towards an integrated FM supplier. ISS currently also offer hard FM

services (ISS Facility Services 2007). ISS Facility Services began with blue collar services, buthas recently also introduced typical white collar services, such as Human Relations and office

support services.

Outsourcing of support activities to among other ISS Facility Services has been part of the

reform process in several public administrations and utilities, such as the Norwegian MailServices (Postverket), the national telecom operator and the Norwegian State Railroads. In 1998

ISS and Norway Post established a joint venture, Posten Renholdspartner, which delivered

cleaning and canteen services to Norway Post (ISS Facility Services 2001:3). In 2002 PostenRenholdspartner became a fully owned subsidiary of ISS Norway AS, and was renamed Procuro

ServicePartner AS (ISS Facility Services 2002:3; 2003:3). In 2001 ISS also established a joint

venture with the Norwegian State Railroads, NSB Traffikservice AS, which became responsible

for cleaning of the Norwegian State Railroads rolling stock (ISS Facility Services 2002:3). In2003 ISS Norge AS bought 28 percent of the shares in Grdegaard AS, formerly known as

Statens kantiner, which until then had been a de facto monopoly provider of canteen and cateringservices for Norways armed forces, ministries and directorates.

The agreements and joint ventures with the government clearly facilitated ISS Facility Services

development towards an integrated FM supplier. That was also the case with the agreement withRaufoss Nringspark, an industrial park located approximately 150 kilometres north of Oslo,

and the agreement with Siemens (ISS Facility Services 2003:3; 2004:4; 2005). ISS Norwegian

subsidiary in 2005 acquired Grdegaard AS, the ministries, directorates and the armed forcesformer internal supplier of canteen services, in addition to Personalhuset (recruitment and

outplacement services), Bedriftsinterne Posttjenester (mail handling) and Aker Kvrner

Industrielt Vedlikehold (maintenance services for the shipbuilding and oil service industries)

(ISS Facility Services 2006:47). These and several others mergers and acquisitions from 2004 to

2005 doubled ISS number of employees.

However, ISS Facility Services top management was not happy with the Norwegian public

sectors outsourcing. This was clearly evident in the 2005 annual report (my translation):

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Within public sector the outsourcing is slow. It seems that exposure to competition has levelled

and that internal suppliers are preferred. Where outsourcing is carried out, the scale is limited, and

best price is often the most important parameter. There is still political and bureaucratic resistance

against permitting external suppliers to operate as cooperative partners with the public sector (ISS

Facility Services 2006:47).

Outsourcing as strategy for public sector reforms in Norway was thus not uncontroversial in

2004 and 2005, cf. Brchner et al.s (2002) study, even if those days non-socialist government

pursued a policy aiming for increased outsourcing. The governments careful moves, despite ISSand others within the FM industrys intense lobbying indicate opposition from among others

trade unions and others representing the public sector employees.

In 2006 ISS became responsible for among others Aker Kvrner (ship building and oil services),

Rolls Royce (ship building) and Ringnes (brewery) support services. ISS also managedintegrated FM contracts for the gas projects Snhvit and Ormen Lange, where they through their

subsidiary ServeringsPartner ran hotels and canteens during these megaprojects most intenseinvestment and construction phases (ISS Facility Services 2007:31, 41, 45, 54).

The Rolls Royce, Snhvit and Ormen Lange contracts increased ISS competence as an

integrated FM supplier. In 2008 ISS identified Norways 500 major corporations as possible

customers for integrated FM contracts (ISS Facility Services 2009c). ISS Facility Services has

thus from the turn of the 20th

and 21stcentury partly been transformed from a supplier of loosely

coupled single and bundled soft FM services towards a supplier of integrated FM services (IFM).

The contracts with Norway Post and the Norwegian State Railroads have been crucial for gaining

momentum in this process. The government on the other hand used FM suppliers such as ISS

Facility Services as a lever for transforming several former public administrations. But ISSFacility Services and others have so far not succeeded with their lobbing for outsourcing of the

Norwegian health sectors and particularly the hospitals support activities. Most of thehospitals support activities are still provided by internal suppliers.

5.3 Coor Service Management

Coor Service Management differs somewhat from ISS Facility Services. Firstly, Coor Service

Management Group AB was established in Sweden in 1998 as a subsidiary of the multinational

construction company Skanska. Secondly, Coor Service Management Group AB was establishedas an integrated FM supplier that provided both hard and soft FM services. In 2000 Coor Service

Management Group AB acquired Ericssons service company, one of the largest takeoverswithin Nordic support services until then. In 2001 Coor Service Management Group AB

expanded to Denmark. In 2002 Coor Service Management Group AB became responsible for the

support activities in several pharmacy and biotech corporations, and also expanded to Finland. In2003 Coor Service Management Groups AB won their first contract for delivery of support

services for the manufacturing industry. In 2004 Coor Service Management Group AB won their

first contract with the public sector, namely delivery of support services to hospitals. In 2004 theprivate equity (PE) fund 3i bought Coor Service Management Group AB. 2004 was also the year

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when Coor Service Management Group AB established its Norwegian subsidiary. In 2005 Coor

Service Management Group AB bought Volvos service company. In 2005 was Det NorskVeritas Eiendom (property) spun out from Det Norske Veritas and merged with Coor Service

Management Group ABs Norwegian subsidiary, Coor Service Management AS. Early in 2006

Coor Service Management AS won FM contracts with the formerly government owned Arcus-

Gruppen AS (liquor distiller) and ROM/NSB Eiendom, the Norwegian State Railroads propertycompany. In 2007 Coor Service Mangement Group AB was sold to another investment

company, Cinven Ltd (Coor Service Management 2006a; 2006b; 2009a; Jensen et al. 2008:152

ff.).

Coor Service Management AS contract with ROM/NSB Eiendom AS in 2006 opened doors

anywhere in Norway with a railroad connection (Coor Service Management 2007). This contract

paved the way for a new contract with Oslo S Utvikling, which is responsible for further

development of Oslos Central Station area. It even paved the way for contracts with theNorwegian Tax Administration (Skattedirektoratet) and Ericsson in Norway (Coor Service

Management 2008). In 2008 Coor Service Management AS acquired SAS Facility Management

AS, and won FM-contracts with Telenor Eiendom, the cell phone operator NetCom and theConfederation of Norwegian Enterprise (NHO). The contract with ROM/NSB Eiendom AS was

renewed (Coor Service Management 2009b; 2009c; 2009e:5). Coor Service Management AS has

grown significantly from 2004 to 2008, both with regard to number of employees and revenue.In 2004 Coor Service Management AS was staffed by hired personnel from Skanska AS. In 2005

the number of employees increased to 59 due to the merger with Det Norske Veritas Eiendom.

At the end of 2008 Coor Service Management AS had 370 employees. Add also the

subcontractors employees. Coor Service Management AS annual revenues increased from 19,4to 616 millions NOK, or from 2,43 to 77 millions Euro (Coor Service Management 2005a;

2005b; 2009d).

Coor Service Management aim for delivery of complex and integrated FM services to major

private corporations and in public sector, often through taking over the responsibility for support

services in complex manufacturing organizations, such as the automotive industry. Coor ServiceManagements core competencies are IFM and change management (Coor Service Management

2009e:9). The FM services are provided by Coor Service Managements own employees, the

customers former employees who have become Coor Service Management employees, and evenemployees from subcontractors of miscellaneous FM services.

5.4 NEAS

NEAS AS was established in 1988 as a real estate management company. In 2000 NEAS AS

acquired Park Eiendomsservice, a hard FM supplier. In 2001 NEAS AS bought parts of Norsk

Brannconsult (fire security). These acquisitions came in addition to several others, even if someof these acquisitions were far from successful. The remedy was a significant restructuring in

2002 and 2003 to regain NEAS AS profitability. The fall 2003 NEAS AS won Norways hitherto

largest FM contract with Norway Post about managing the Posts properties all across Norway

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(NEAS 2007a; 2004). Even for NEAS AS an outsourcing contract with a former public

administration facilitated the big leap forward.

NEAS AS later got other major clients or customers, such as Aberdeen Property and ICAEiendom that housed one of Norways major national chains of grocery stores. In 2006 NEAS

AS established a new business area, Facility Services (NEAS 2007b:3). At the end of 2007

NEAS ASA, which became the name after listing on Oslo Stock Exchange in spring 2007,managed 1600 properties (NEAS 2008). NEAS Facility Services is currently one of Norways

leading suppliers of office support services, and operates almost as Coor Service Management,

by taking over the responsibility for their customers office support services (NEAS 2009a).Even outsourcing to NEAS was used as a mean for changing the public sector. The contract with

Norway Post made a difference for NEAS.

NEAS ASAs revenues in 2008 were 414,6 millions NOK, compared to 69,5 millions in 2000, or

approximately 51,83 and 8,7 millions Euros. The number of employees has similarly increasedfrom 171 in 2001 to 369 in 2008 (NEAS 2002; 2009b). Even NEAS has experienced significant

growth, even if NEAS is smaller than ISS Facility Services and Coor Service Management.

6 CONCLUSION

Have some NPM inspired public sector reforms paved the way for outsourcing of FM services in

Norway from the former public administrations? The answer is yes. Outsourcing of supportservices has been crucial for transforming and improving the railroads, postal services and the

national telecom operator and several others public administrations effectiveness and efficiency.

It is remarkable that these reforms have taken place with a minimum level of noise, despite the

trade unions and many public sector employees official scepticism to outsourcing.

Secondly, how has public sector reforms affected the market conditions for Norwegian FM-suppliers? Norways second wave NPM reforms that transformed several former public

administrations to government owned or partly privatized joint stock companies have increased

the total size of the Norwegian FM market. These NPM inspired public sector reforms have alsonurtured a national marked for integrated FM services. An interesting observation is that

Norwegian civil servants in some instances acted like business persons when outsourcing and

privatizing some of the public administrations support activities. The public administrations

internal service suppliers were in many instances first partly outsourced and privatized throughjoint ventures with ISS or other professional FM suppliers. When the staff in the joint ventures

had become sufficiently efficient, then some of the joint ventures were sold off to private sector

FM suppliers. In this way the Norwegian government usually achieved a far better price for theirformer internal service providers than if they had been privatized directly. This indirect

privatization thus also facilitated development of the Norwegian FM market.

Finally, how has these public sector reforms affected three of Norways major FM-suppliers

strategies and structures? ISS Facility Services was established as a single/bundle service

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supplier specialized on soft FM services but have developed towards an integrated FM supplier

which currently also offers hard FM services. Coor Service Management was established as anintegrated FM supplier that provided both hard and soft FM services. NEAS was established as a

single/bundle service supplier specialized on hard FM services, particularly real estate

management. NEAS have currently developed towards an integrated FM supplier providing both

hard FM and soft FM services. Isomorphism (cf. Meyer and Rowan 1983; DiMaggio and Powell1983) might explain these three FM suppliers development towards integrated FM service

suppliers. Isomorphism has clearly made these three suppliers more homogenous or similar, even

if their initial positions and strategies were rather different.

ACKNOWLEDGMENTS

Thanks to the anonymous reviewers. Their suggestions and recommendations clearly improved

this paper.

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