YES, NO, MAYBE: THE AMBIGUOUS RELATIONSHIPS BETWEEN STATE-OWNED ENTERPRISES AND THE STATE

Carole Rentsch and Matthias Finger

Annals of Public and Cooperative Economics, 2015, vol. 86, issue 4, 617-640

Abstract: Liberalization and the introduction of sector-specific regulators has caused the position of State-owned enterprises (SOEs) of network industries to change not only within national economies, but also vis-a-vis their respective States. In response, many SOEs are pursuing ambiguous strategies, simultaneously seeking autonomy and State protection. In turn, States, particularly in their roles as owners and regulators, have to rethink their relationships with SOEs. In French, German, and Swiss cases, both States and SOEs have motives to simultaneously maintain a close (˜yes) and a distant (‘no’) relationship with one another. SOEs favour a close relationship to secure subsidization for the provision of public services, reduce financial risks, and build trust within collaboration. However, a distant relationship is more suitable for entrepreneurial autonomy and getting rid of the universal service obligation. From the State's perspective, a close relationship is desirable to ensure the stable provision of universal services, control politically and strategically important sectors and critical infrastructures, implement policy objectives, meet geopolitical objectives, and receive dividends as return on investment. A distant relationship is required to avoid bearing risk and to ensure freedom in regulating the public sector.

Date: 2015
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