Implications of Regulation Policy Incentives for Strategic Control: An Integrative Model

Abstract ** : This paper proposes an internal management perspective of the company, as a complement to longstanding principal‐agency theory, for understanding the interchange between regulator and company. It draws from a longitudinal research project on understanding the implications of regulation policy incentives for strategic control in the management of UK monopoly network utilities and the management implications of regulatory policy making. This paper reports on how two utility companies have managed regulatory objectives alongside organizational ones in electricity distribution and gas transportation and suggests a new integrative model of strategic control for understanding utility management. It concludes if regulation policies are to be effective then regulators should understand the internal management of the companies if performance targets are to be attained .