Business Perspectives on German and British Regulation: Telecoms, Energy and Rail

Regulation of network industries is very different in Germany and the UK, not least because privatisation started earlier in the UK and has gone much further. This paper uses research among regulatory officials and senior executives in both incumbent and new entrant firms to compare and contrast the changing strategic relationships between regulators and firms in the two countries. It also discusses interaction between national regulatory processes and EU regulatory processes. The authors conclude that whilst the passage of time after privatisation/liberalisation is likely to reduce the amount of conflict and recourse to law, national and cultural differences will continue to dominate.     

The impact of privatisation on procurement management: evidence from seven privatised companies in the UK

A major argument in favour of privatisation is that it prompts the companies involved to increase efficiency in order to survive in their new environment. This implies, inter alia, a reconsideration of external resource management with a view to maximising its contribution to the bottom line. This study provides evidence on procurement changes in seven UK privatised companies based on a questionnaire completed by procurement managers of these companies and semi-structured follow-up interviews. The results suggest that, in general, there have been some substantial changes in procurement since privatisation. However, in the main these were driven initially by cost-cutting pressures. More recently, the companies have begun to adopt what may be viewed as a more “strategic” approach to external resource management.     

Privatization and Strategic Fit: Evidence from Rumania

This article is a contribution to the growing body of research on the privatisation process in Central and Eastern Europe (CEE). It reports on a study of enterprises in Rumania which sought to establish whether privatisation there improves performance and, if so, whether ownership by managers and employees is beneficial and whether smaller enterprises perform better than larger ones. Broadly, the authors conclude that the answer to all three of these questions is "yes". The article then outlines the implications for CEE policy-makers, in particular that they should speed up the process of privatisation, (even if foreign investors are not available) and split up large enterprises, whether state-owned or privatised.     

Where Are the Utilities Going Next?

This provocative article suggests that the utilities in countries where restructuring has been succesfully completed are poised to steal a march on many companies in more glamorous industries. Partly for historical reasons, utilities are exceptionally strong in particular competencies. With successful competitive strategy increasingly based on competencies, and because privatisation and liberalisation were such a baptism of fire,the author argues that utilities are "way ahead of their time".     

The new regulatory politics of electricity in India: embryonic ground for consumer action

Newly created regulatory bodies in India are the site for emergent consumer politics around electricity. Forged as a means of attracting private capital, these bodies have nonetheless become potential spaces for consumer and citizen engagement around electricity. The nature of this emergent space is examined by developing three narratives around emergent regulatory institutions—apolitical and independent regulation, regulation as captured by the state, and regulation as contested political space. Recent examples of consumer and citizen action on electricity, and particularly protests over a tariff hike following privatisation in Delhi, suggest that regulation as an institution is poised between being absorbed into politics as usual and creating a genuinely new space for consumer action and political engagement in India.     

Book Reviews

Rail privatisation was a controversial, widely unpopular policy whose implementation was not inevitable. This article employs counterfactual history methodology to examine whether the move to rail privatisation in Britain might have failed. It places the privatisation proposals in context by examining opposition within the Conservative Party and British Rail. The paper then focuses on three key counterfactual questions, including the significance of New Labour's reversal of its commitment to renationalise rail under its ‘third way’ policy and the possible consequences had the move to privatise rail failed. Based on the historical evidence available, it concludes that the move to rail privatisation could have failed, and that performance would have been better had rail remained an integrated, nationalised industry.     

“Do frogs jump as a result of privatisation?” Impact of privatisation on buyer–supplier relationships

As the cornerstone of the Conservative Government between 1979 and 1996, privatisation has undoubtedly had an enormous impact on the UK economy. On the whole, privatised companies have improved their performance in an ever increasing competitive environment by focusing on, among other things, a drive to reduce costs through bought-out goods and services. Research into Japanese companies, meanwhile, has highlighted the key role that supplier relationships play in their success. It has stressed the advantages of co-operative over adversarial relationships with suppliers, and evidence shows that an increasing number of Western companies are adopting this practice. This has raised the profile of purchasing in these companies with a change towards `better practice’ and improved management of the supplier base. From this new research a model of Feature and Construct Evaluation and Aggregation (FCEA) has been developed, in the search for a link to support the proposition that privatisation has an influence on purchasing strategies concerning supplier relationships. The research has shown that only a very limited link exists. Whilst Purchasing as an activity has increased in its importance and control, it has not become strategic. Purchasing strategies have not evolved or supported the business strategy as a result of privatisation, nor does privatisation encourage the development of purchasing strategies towards closer relationships with suppliers. This is compounded by the EC Directives that reflect an `open tender’ model of procurement, particularly evident in the emphasis on formal competitive tendering procedures and maintaining an `arms-length’ relationship with suppliers.     

Rhetoric versus Reality: the Privatisation of Telekom Malaysia

Telekonl Malaysia (TM) was floated as a private enterprise in 1990 as part of the country's overall privatisation programme. The programme included the usual privatisation goals of competition, reduced state involvement, growth and efficiency, but also a redistributional goal to enhance the Bumiputra community. This paper discusses whether the Malaysian government has been able to reconcile all its stated objectives, and suggests that the Bumiputra redistributional goal has been favoured at the expense of the other objectives. It is concluded that the privatisation of TM was cosmetic and that the government has used TM to implement its strategy, mainly through internal control of its corporate affairs, which runs contrary to the most widely accepted views of privatisation.     

Politicking and Privatisation

This article charts the privatisation process in a Hungarian firm. It was a long, complicated and high profile journey, typifying what the author calls a "struggling through" scenario, as distinct from "going through" and "muddling through". The case underlines the fact that privatisation in Central and Eastern Europe (and elsewhere) needs to be considered in the context of a political view of organisations, as a complement to the dominant economic model based on agency theory.     

Privatisation: politics,institutions, and financial markets

This paper presents evidence on privatisation processes in 49 countries for the period 1977–1996. The empirical analysis shows that the decision to privatise and the choice of privatisation method appear to be influenced by the governing political majority and public-sector budget constraints, while the success of privatisation in terms of revenues and stakes sold requires suitable legal institutions and developed capital markets.     

Western privatisation assistance in the Russian Federation

The provision of assistance in the privatisation process is a key element of Western technical aid for Russia. The first part of this article describes the influence the largest Western donors have in Russia and the activities they have performed in connection with the provision of privatisation assistance. It then outlines the stage reached in the privatisation process by the middle of 1997. Finally, it discusses a number of ways in which privatisation consultancy by Western donors may develop in future. The article is a revised version of a speech delivered in Eschborn on 9th July 1997; at the GTZ Workshop on “The Provision of Privatisation Assistance in Central and Eastern Europe”.     

‘A highly successful model’? The rail franchising business in Britain

A crucial feature of rail privatisation in Britain was franchising. Passenger services were franchised in competitive bidding processes to train operators which were meant to function with declining subsidy. The article adopts the framework of social cost-benefit analysis to examine rail privatisation’s impact on three key groups; consumers, producers and the government. It establishes that privatisation did not achieve all the supposed benefits. Further, franchising only appears to be profitable through the use of calculative accounting practices, whereby franchised train operators are portrayed as discrete business entities, whereas they are supported by very substantial, ongoing direct and indirect government subsidies.     

Environmental Performance and U.S. Exports

U.S. industries have reduced their releases of toxic chemicals in recent years. These publicly reported environmental improvements can increase the demand for U.S. products abroad by increasing the perceived quality of these products in countries that are concerned about the environmental impacts of manufacturing. This article examines this possibility. It presents an analysis of the changes in the environmental performance and exports of 19 U.S. industries to 128 countries between 2002 and 2010.     

The North–South politics of necessity: regulating for basic rights between national and international levels

The paper explores three key initiatives at the international level in relation to access to water that demonstrate a convergence between consumerism, markets and a right of access to basic goods and essential services. It argues that these initiatives are an instance of a regulatory politics that is increasingly the common coin of debates about providing basic necessities in the context of a strong policy preference for market-based systems of provision. The paper begins with an overview of some key contemporary policy issues relating to access to water, followed by a conceptual analysis of how these issues link regulation, markets and rights. The second half of the paper draws an empirical map of current developments in the area, focusing in particular on the political implications—both explicit and implicit—of the global politics of necessity for relationships between developed and developing countries.     

New rules – old games? Social capital and privatisation in France, 1986–1998

This article focuses on social capital among the French business elite, the period under study coinciding with the implementation of privatisation programmes in France from 1986 to 1998. The Chirac government (1986–1988) sought to change the rules of the economic game, the political aspirations invested in privatisation centring on the free play of market forces and competition, to which the programme purported to reconcile the public at large. The article reveals how privatisation, far from breaking with the past by widening participation in economic life, strengthened the ties that bind the French establishment elite through the concentration of power in ‘hard cores’ of stable investors in newly privatised firms. High levels of social capital within the French national business system ensured that members of the ruling elite, united by multiple ties and similar backgrounds, connived, as before, to manipulate institutions and situations in their perceived collective interest.     

Czech privatisation 25 years later

Privatisation is still a hot political topic today and divides economists as well as politicians and the general public. The paper aims to capture the Czech privatisation in its historical, economic and political contexts. The first part explains the difference between transitional privatisation and standard privatisation. The second part examines the interests in the privatisation process. The third part discusses the privatisation methods used in the Czech Republic. The fourth part offers an international comparison.     

经济全球化中发展中国家实现可持续发展的对策研究

经济全球化趋势不可避免,它在促进发展中国家经济增长的同时,也影响到发展中国家的可持续发展。对于发展中国家而言,应当充分利用全球化的有利条件和机遇,要在国际政治经济秩序、环保产业、技术创新和金融可持续发展方面制定相应的对策,实现可持续发展的目标。     

Regulation and Competition Policy in Britain and Europe

John Redwood MP, Minister for Corporate Affairs in 1991, spoke at the inaugural LSE Business Performance Lecture about regulation and competition policy in Britain and Europe and the importance of the United Kingdom's programme of privatisation and liberalisation of its markets. These policies - harnessing private capital, opening up markets to competition, breaking monopolies, lowering taxation and encouraging inward investment - have succeeded in changing the fortunes of several crucial industries in Britain. Ultimately however, while government can create the climate, it is up to business to compete, back the right ideas, invest, train its people and know what its customers want.     

Potential Market Opportunities in Hungary,Poland and Bulgaria

Central European economies are undergoing radical reforms changing from central planning to free market economies. If these changes are to be successful, there is a need for their govemments to liberalise legislation to allow privatisation to take place and to allow and encourage foreign investment in the countries. Potentially the most effective form of foreign investment is the participation of Western companies in the business of the country enabling development of the market and the local understanding of the methods of business in free market economies. Whether and to what extent this participation takes place depends on the macro-environmental climate and the specific market environments in the countries. This paper addresses both of these issues and is based on a twelve month study of marketing conditions in Hungary, Poland and Bulgaria. In the first part the macro changes taking place are explored and the overall attractiveness assessed by comparison with the published literature on the market entry strategies. The conclusion is that Hungary is the most attractive of the three countries concerned for Western company investment in terms of political stability, economic development and performance, cultural unity, and lower legal and geo-cultural similarity.     

Cultural and recreational industries in the United States

This article focuses on cultural and recreational industries in the United States. Cultural industries are defined as arts, entertainment, and recreation, as well as components of education, the information sector, wholesaling and retailing, manufacturing (for example, musical instruments), and accommodation and food services. Consumption patterns of cultural industries are shown to have changed significantly over the past 40 years in the United States. This change has been associated in part with changing information technologies, and in part by changes in policies permitting new types of recreation, especially gambling. The study documents the changing level of employment in these industries by state, using data for both employers and proprietors. Some sectors are highly concentrated spatially, while others are distributed widely.