A Contagious Concept: Explaining the Spread of Privatization in the Telecommunications Sector

Abstract

Qualitative studies suggest that the spread of privatization of public utilities is due to a change of the economic paradigm and institutional isomorphism pressures. However, current quantitative studies mostly account for domestic factors. These factors can explain differences in national privatization trajectories but cannot explain the large trend. Based on a quantitative analysis of privatizations in the telecommunications sector in 21 OECD countries, the article argues that emulation pressures can explain the trend toward privatization. The analysis suggests that privatization gained legitimacy as more and more governments emulated privatization policies they observed in countries they perceived as similar. However, the article finds no evidence of cross-sectoral diffusion. Thus, according to the analysis, telecommunications privatization diffused within the same sector between countries, but not within the same country between different sectors.

The Diffusion of Privatization in Europe: Political Affinity or Economic Competition?

“…As hypothesized, leftist parties do indeed privatize less than right‐wing parties. In line with Fink (), empirical evidence is not found for the assumption that diffusion processes occur across sectors within countries. The coefficient is close to zero and statistically insignificant.…”

“…In recent years, several studies have analysed the role of diffusion in the privatization of public enterprises and have overcome the previously exclusive focus on national and international determinants for privatization pathways. Nearly all these studies have found empirical evidence for the existence of diffusion (Henisz et al ; Levi‐Faur ; Fink ; Jordana et al ). The assumption that governments do not react independently of each other when it comes to the privatization of public utilities is deemed non‐controversial.…”

“…Research on privatization focusing on interdependencies concluded that privatization has ‘diffused rather than [been] reproduced independently as a discrete event in each country and sector’ (Levi‐Faur , p. 28). Governments emulate the strategies adopted by similar countries (Fink ; Schmitt ), succumb to international coercive pressure of their reference group (Henisz et al ), or learn from regional experiences (Meseguer , ).…”

The Political Economy of SOE Privatization and Governance Reform in the MENA Region

“…Fink [33] presents a similar argument. Important as they are, political orientation and the "public choice" theory's view of politicians and bureaucrats as malevolent agents immersed in their parochial concerns, have not been the sole factors.…”

Conceptualising European Privatisation Processes After the Great Recession

“…They maintain that privatisation has “diffused rather than [been] reproduced independently as a discrete event in each country and sector” (Levi‐Faur :28). Governments emulate similar countries’ strategies (Fink ; Schmitt ), are coerced by international pressure from their reference group (Henisz et al ), or learn from relevant regional experiences (Meseguer , ), with ideology favouring privatisation also playing a role in such processes (Lee and Strang ; Schneider and Häge ). Recent research seeks to identify the precise international and domestic variables that influence and condition the diffusion of privatisation.…”