Bureaucracy, economic regulation, and the incentive limits of the firm
Article Abstract:
Regulated firms are often unsuccessful in their attempts to diversify into unregulated business sectors. This is largely attributable to the influence of the bureaucratic legacy inherited by unregulated subsidiaries from their highly regulated parent companies. A survey of 54 privately-run, highly regulated electric utilities confirms the effects of organizational bureaucracy on the performance of unregulated subsidiaries. The survey uses transaction cost analyses to illustrate the incentive limits of regulated parent firms. Three general patterns revealed by the survey are that the profitability of subsidiaries decreases with increasing regulation of parent companies, the profitability of subsidiaries increases with the subsidiary's size relative to the parent firm, and the profitability of subsidiaries is higher if they operate within a multidivisional structure.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1992
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Power plays: regulation, diversification, and backward integration in the electric utility industry
Article Abstract:
A study was done to investigate the influence of economic regulation on a company's plans to diversify and integrate upstream. A model of the effects of regulation on these two strategic decisions was tested involving 49 electric utilities for the period 1974-1986. The results of the study supported the hypotheses that the regulatory agency's monitoring effort is directly proportional to the firm's diversification effort, and that greater monitoring effort by regulators leads to reduced presence of companies upstream.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1992
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Deregulation and environmental differntiation in the electric utility industry
Article Abstract:
The analysis of the effect of economic deregulation, on the productive efficiency and environment quality in the electric utility industry, is presented.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 2007
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