The return of the hierarchy: SOEs in marketisation

Abstract

Purpose – The purpose of this paper is to contribute to the conceptualisation of state-owned enterprises (SOEs) as a mode of governance in marketisation via the perspective of historical institutionalism. Design/methodology/approach – The paper is based on a qualitative case study of the marketisation of Danish passenger rail from the 1990s to date where marketisation has been set on hold since 2011 due to the activities of the SOE. Findings – The paper shows that market governance was layered on the hierarchal governance of the SOE that was later turned into a hybrid governance mode through corporatisation. This layered set-up provided the state with a double governance grip that drove marketisation until 2011. However, the SOE as a hybrid created ripple effects between the market and the hierarchy that hampered the marketisation. The hierarchical governance turned towards centralisation and market governance was put on hold. The hybridity of the SOE was endogenously displaced via closing down of commercial activities, leading to a re-conversion of the SOE towards the hierarchical mode. Originality/value – The paper contributes to the discussions about hybridity and re-centralisation in post-NPM era. It presents a case on how hybridity is altered and evolves in SOEs as a hybrid mode of governance between hierarchy and market in marketisation and how this can lead to re-centralisation.

The gradual corporatization of transport infrastructure: The Danish case

“…The SGM has developed gradually as a new public‐management model for individual mega infrastructure projects, as an alternative to traditional private‐finance models (ITF, 2018), at a time where most countries, in light of NPM, have turned to private finance for infrastructural development ( Christensen & Greve, 2018). Consequently, the Danish SGM represents a gradual corporatization alongside and outside the existing governmental agencies and corporatized utilities ( Christensen, 2015). The longitudinal case study makes it possible to contribute to the literature on corporatization with analytical generalizations (Eisenhardt, 1989; Flyvbjerg, 2006) on gradual corporatization and outcomes thereof, and a rich and detailed exploration of corporatization (Bruton et al, 2015; Daiser et al, 2017) while, on a more conceptual note, the article contributes to the literature on gradual change with a case study from the infrastructure sector that shows new perspective on the interplay between the mechanisms next to sequence.…”

Institutionalization to internationalization

“…On the one hand, these policy reforms have had helped governments to gain the efficient market information and correct the market irregularities, through adopting governance mechanisms and improving the financial performance of large-scale and medium-scale SOEs. It should be noted that marketization process and governance systems have been gradually improved with different goals, yet uneven and yield different outcomes in different countries (Megginson and Netter, 2001;Boubakri et al, 2013;Christensen, 2015;Meckling et al, 2015;Van Thiel, 2015;Bachiller, 2017;Boubakri et al, 2017;Chen et al, 2017; for example, China: Nolan and Xiaoqiang, 1999;Aivazian et al, 2005;Li et al, 2006;Tipton, 2009;Xu et al, 2014;Liu et al, 2016;Zhou et al, 2017;India: Ramamurti, 1992;Ramaswamy and Renforth, 1996;Gupta, 2005;Brazil: Paz, 2015;Silvestre et al, 2018;Russia: Abramov et al, 2017;Greece: Lampropoulou, 2017). It is also important to view that disinvestment process and corporatization strategy are two different policy instruments of the governments, while both policies have been adopted simultaneously by governments but not the one after the one.…”

Corporatization and internationalization of state-owned enterprises

“…The result assumes the form of a hybrid organization that hybridization of corporate governance in the reforms of SOEs in Sweden (Alexius and Cisneros Örnberg, 2015). In another example, Christensen (2015) found corporatization to provide the state with a hybrid, hierarchical governance that drove the marketization of the Danish railways. However, as any other institutional reform, corporatization affects firms' dynamics within the domestic economy, despite SOEs may operate abroad, even worldwide.…”