Thursday, April 14, 2016
Rhapsody (DoubleTree by Hilton Philadelphia Center City)
The wave of state interventionism triggered by the financial crisis renewed scholar’s interest in a long overlooked theme: industrial policy. However, industrial policy has been a constant feature among EU member states even before the crisis. This paper looks at the role played since the late 1980s by the Italian and Spanish state in favouring the emergence of competitive domestic firms in the telecommunications sector. The telecom sector provides an interesting angle for the study of industrial policy as it underwent a process of EU-led liberalisation and market integration. Hosting two domestic firms – Telecom Italia and Telefonica – that lagged behind their European counterparts, the Italian and Spanish governments had to engineer a restructuring of their national champions in order to prevent foreign takeovers and make them internationally competitive. I explain how and why the two countries chose radically different strategies to achieve the same end. While Spain privatised Telefonica at a slow pace, forming a hardcore of domestic shareholders, and succeeded in influencing managerial appointments even after privatisation; Italy sold Telecom Italia’s shares in a shorter timespan, without giving the firm stable shareholders, and later failed to have an impact on its corporate strategy. As a result, Telefonica is nowadays one of the most successful telecommunications enterprises in the world, while Telecom Italia is a small firm potential target of foreign bidders. The paper then seeks to justify this puzzling divergence of industrial policy strategies in most similar countries by empirically testing a partisan and a coalitional explanation.
