European market integration and the political economy of corporate adjustment: OTE and Telecom Italia, 1949–2009

Abstract

Despite the common challenges posed by European market integration and liberalisation, the behaviour of telecommunications operators across Europe suggests a variety of modes of adjustment and paths to privatisation. The article examines the puzzle of divergent responses to liberalisation by OTE and Telecom Italia (TI), casting light on their distinct paths to privatisation and internationalisation. The cases are considered in the context of the Varieties of Capitalism frame, which challenges the perspective that global market integration will lead to convergence in strategies and structures. Thus, the article suggests that the observed differences are largely explained by the domestic actors' preferences, and to a much lesser extent attributed to the globalising forces of technological change and competition.

Keywords::

• European Union (EU)
• liberalisation
• telecommunications
• privatisation
• Varieties of Capitalism

Acknowledgements

I wish to thank George Pagoulatos, Waltraud Schelkle, Marco Simoni and Mark Thatcher for their comments on earlier drafts. I also wish to express my gratitude to the two anonymous reviewers for their incisive comments, and to Kevin Featherstone, Christa van Wijnbergen, and Vassilis Monastiriotis for their comments and support. Any remaining errors are my own.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. John, “Telecommunications”; Millward, Private and Public Enterprise.

2. Clifton, Díaz-Fuentes, and Revuelta, “The Political Economy”; Schneider, “Institutional Reform in Telecommunications.”

3. Clifton, Comín, and Díaz-Fuentes, “Privatizing Public Enterprises”; Millward, Private and Public Enterprise.

4. see Alonso, Clifton, Diaz-Fuentes, Fernandez-Gutierrez, “The Race.”

5. Jones and Miskell, “European Integration,” 114.

6. Binda and Colli, “Changing Big Business,” 14.

7. Mahoney, “Comparative-Historical Methodology.”

8. Millward, “Business and the State,” 550.

9. Jacoby, The Embedded Corporation; Strange, “The Future.”

10. Dore, Lazonick, and O'Sullivan, “Varieties of Capitalism”; Rinaldi and Vasta, “The Italian Corporate Network,” 380.

11. King and Wood, “The Political Economy”; Rubery, “The British Production Regime”; Whitley, “US Capitalism.”

12. Sluyterman and Wubs, “Multinationals”; Wilkins, “Multinational Enterprises.”

13. Hall and Soskice, “An Introduction”; Herrigel and Zeitlin, “Alternatives to Varieties.”

14. Polanyi, The Great Transformation.

15. Zysman, “How Institutions Create.”

16. Streeck, “Beneficial Constraints.”

17. Hall and Soskice, “An Introduction.”

18. Börsch, “What Happens after Privatization?”; Thatcher, Internationalisation and Economic Institutions.

19. Schmidt, “European Political Economy.”

20. Molina and Rhodes, “The Political Economy.”

21. Amable, The Diversity.

22. Hall and Soskice, “An Introduction.”

23. Molina and Rhodes, “The Political Economy.”

24. Amable, The Diversity.

25. Schmidt, “European Political Economy.”

26. Molina and Rhodes, “The Political Economy.”

27. Humphreys and Simpson, “Globalization,” 851; Thatcher, Internationalisation and Economic Institutions, 765.

28. Humphreys and Simpson, “Globalization.”

29. Katz and Woroch, “Introduction.”

30. “Converge or else: the future for the industry lies in the convergence of products and services” Business Europe (The Economist Intelligence Unit), 1 July 2004, 2.

31. Millward, Private and Public Enterprise, 295–296.

32. Millward, “Business and the State.”

33. Thatcher, Internationalisation and Economic Institutions, 169.

34. Humphreys and Simpson, “Globalization,” 851.

35. Schneider, “Institutional Reform in Telecommunications.”

36. Ibid., 64.

37. Conway and Nicoletti, “Product Market Regulation.”

38. Clifton et al., “The0 Political Economy.”

39. Alonso et al., “The Race,” 223.

40. “Siemens: a century of experience in transactions” Ethnos, 14 June 2008.

41. Constantelou, “Liberalizing Telecommunications,” 435.

42. “Overview of OTE Group” Kathimerini, 26 September 2007.

43. “OTE jumps out of the ashes of the civil war” Kathimerini, 12 July 2008.

44. Michalis, “Whither Greek Telecommunications,” 447.

45. Constantelou, “Liberalizing Telecommunications,” 437; Michalis, “Whither Greek Telecommunications,” 443.

46. Constantelou, “Liberalizing Telecommunications,” 437.

47. Michalis, “Whither Greek Telecommunications.”

48. Constantelou, “Liberalizing Telecommunications.”

49. The same extension until January 2001 was also granted to Ireland and Portugal, see “Down to the Wire” Business Europe (The Economist Intelligence Unit), 24 September 1997, 4.

50. Clifton, Comín, and Díaz-Fuentes, “From National Monopoly,” 765.

51. “Telecoms Liberalisation: Bear with me, please…” Eleftherotypia, 6 August 2001.

52. “2000–2009 The decade of telecoms' liberalisation” Weekly Telecom, Issue 48/2009, available at: http://www.weeklytelecom.gr/?action=newsletter&disp_issue=295 [Access date: 24/12/2013].

53. OTE, Annual Report, 2001, 23.

54. Pagoulatos and Zahariadis, “Politics, Labor, Regulation.”

55. “The curse that haunts New Democracy: How did the Mitsotakis government fall” To Vima, 27 April 2008

56. Pagoulatos and Zahariadis, “Politics, Labor, Regulation.” 3.

57. “The chronology of privatisation of OTE”, OME-OTE, Unpublished Manuscript.

58. “The chronology of privatisation of OTE”.

59. “The chronology of privatisation of OTE”.

60. “The political adventure of OTE” To Vima, 20 April 2008.

61. “Minority Shareholder Rights” Capital.gr, 19 February 2008. Avalable from: http://www.capital.gr/law/articles.asp?id=452398 [Access date: 6/7/14]

62. “«No» to hostile takeover of OTE” To Vima, 28 September 2007.

63. “We are seeking transparency and proper corporate governance for OTE” Marfin Investment Group Press Release, 10 December 2007.

64. “«No» to hostile takeover of OTE” To Vima, 28 September 2007.

65. Ibid.

66. “OTE towards full privatization” Patris, 18 March 2008.

67. “Deutsche Telekom in €2.5bn Greek buy” Financial Times, 17 March 2008.

68. Clifton et al., “From National Monopoly,” 766.

69. OTE, Annual Report, 2001, 10.

70. Newbery, “What are the Issues.”

71. Forsgren, “The Concept of Learning.”

72. OTE, Annual Report, 2001, 56-59.

73. OTE, Annual Report, 2009, 9.

74. In fact, SIP stands for Società Idroelettrica Piemontese, the name of the company before becoming Società Italiana per l'Esercizio Telefonico.

75. Negrelli, “Italy,” 296–297.

76. Schneider, “Institutional Reform in Telecommunications,” 68.

77. Ibid.

78. Negrelli, “Italy,” 297–299.

79. Schneider, “Institutional Reform in Telecommunications,” 297–299.

80. Ibid., 69.

81. Graziosi, “Telecommunications in Italy,” 308.

82. Ibid., 302; Thatcher, Internationalisation and Economic Institutions, 193.

83. Thatcher, Internationalisation and Economic Institutions, 194–195.

84. Baroncelli, “Telecom Italia.”

85. Sacripanti, “Liberalizing Telecommunications.”

86. Telecom Italia, Annual Report, 2006, 42–43.

87. Thatcher, Internationalisation and Economic Institutions, 195.

88. Florio, “Telecom Italia,” 3.

89. Walker, “Telecom Italia.”

90. Kruse, “Ownership.”

91. Walker, “The Sack”

92. Oddo and Pons, L' Affare Telecom.

93. Florio, “Telecom Italia,” 6.

94. “Italian banks win control of Telecom Italia” New York Times, 29 April 2007.

95. The author(s) thank one of the anonymous referees who raised this point.

96. Clifton et al., “From National Monopoly,” 766.

97. Telecom Italia, Annual Report, 2000, 4.

98. The author(s) thank one of the anonymous referees who raised this point.

99. Telecom Italia, Annual Report, 2000, 62–68.

100. Telecom Italia, Annual Report, 2000, 62–68.

101. Telecom Italia, Annual Report, 2006, 6.

102. Telecom Italia, Annual Report, 2009, 37–41.

103. Mucchetti, Licenziare I Padroni?.

104. Alonso et al., “The Race”; Börsch, “What Happens after Privatization?”; , “Varieties of Capitalism” and Internationalisation and Economic Institutions.

105. Amable, The Diversity; Molina and Rhodes, “The Political Economy”; Schmidt, “European Political Economy.”

106. Pagoulatos and Zahariadis, “Politics, Labor, Regulation”; Thatcher, Internationalisation and Economic Institutions.

107. Fligstein and Merand, “Globalization or Europeanization?”.

Additional information

Funding

This work was supported by the Bodossaki Foundation in the form of a scholarship grant.

Notes on contributors

Andreas Kornelakis

Andreas Kornelakis is a Lecturer at the Department of Business and Management, University of Sussex. He received a PhD degree from the LSE and his research interests include comparative political economy, varieties of capitalism and industrial relations. His work has been published in various journals such as Work Employment & Society, European Journal of Industrial Relations, Relations Industrielles, Human Resource Development Review.