Energy turnaround, civic participation, transparency, profitability, viability – during decision-making processes, key players in municipal utilities must meet up with numerous requirements.

Making those managerial decisions are closely tied to ecological, economical and social aspects that in turn, are also characterized by divergent interests.

To reach balanced decisions, the “municipal utilities” organizational type is confronted with the challenge of balancing the conflicts of interest arising through community and economic needs. To create this balance during decision-making, the background factors resulting from these paradox situations must be sounded out.

The organization as a social system

A possible explanatory model for the phenomena observed in Municipal Utilities is provided by the work of the renowned social scientist and founder of the new system theory, Mr. Niklas Luhmann. Luhmann construes organizations as self-organizing social systems that create suitable solutions for selected social problems outside of themselves, and thus, find reason for their existence. The successful processing of these social problem statements requires an organized collaboration of different types of expertise. Luhmann further assumes that during the course of new-age development right up to modern society autonomous, social function systems have, to the greatest possible extent, further differentiated themselves into certain particular aspects of social reproduction. In their development they are solely oriented to their own logic and no longer follow comprehensive steering principles. Amongst other things, Luhmann includes politics, the economy, science and law to these function systems. Even though some of these functions systems have a central role attributed to them, none of these social sub-systems actually take on a central role, neither politically nor economically. According to Luhmann, the function systems are alternately self-governing and not substitutable. However, there are certain exchange relationships – for example between law and economics one can identify property and contracts as the trade-offs.

Paradoxes within a “Municipal Utilities” type of organization

In general, organizations are created within these function systems and follow their own respective logic. The communication also follows its own code that is only adaptable within its respective function system and can be used as a medium for distribution of information and decision-making. The extraordinary of a “municipal utilities” type of organization is that it isn’t classifiable to one individual function system. Municipal utilities stand on the borderline between various function system – essentially securely between the sub-systems of economy and politics. This knowledge presents the opportunity of setting off suitable developmental impulses for successfully managing these paradoxes and the challenges connected to them.

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