Something left to lose? Network preservation as a motive for protectionist responses to foreign takeovers

Abstract

International market integration reduces the overlap between economic and political borders, but what, exactly, does that imply? According to some rational choice accounts, it means that globalization will eventually undermine itself by triggering protectionist backlashes. Previous scholarship has highlighted flaws in the underlying assumption that elected politicians prioritize local stakeholders over anonymous shareholders. The present article adds that, regarding foreign takeovers, levels of protectionism would vary even if governments did prioritize local stakeholders, because stakeholder preferences vary across corporate governance regimes. Where, as in the UK, coordination relies more on market mechanisms than on networks, foreign acquisitions are less disruptive, and political mobilization against them is weaker. To the extent that the internationalization of corporate ownership spreads outsider governance by destroying networks, resistance therefore declines as the market expands. Quantitative correlational evidence is supplemented by case studies of bids for three British companies that provoked unusual levels of political mobilization.

Keywords:

• economic patriotism
• international trade
• globalization
• cross-border mergers
• corporate governance
• Britain
• France
• Varieties of Capitalism
• capitalist development

Every week, a bland announcement confirms the sale of another major British institution to a foreign predator and, bizarrely, no one is complaining.

Tom Bower, The Guardian, 9 February 2007

1. INTRODUCTION

International market integration reduces the overlap between economic and political borders (cf. Clift/Woll, 2012: 307), but what, exactly, does that imply? With regard to corporate takeovers, some rational choice accounts suggest it implies that globalization may eventually undermine itself, by triggering protectionist backlashes (Coffee, (1999: 656), see also Hellwig (2000: 124); Roe (1993: 332–3); Romano (1987: 140)).¹ This argument rests on two assertions. First, politicians are assumed to favor local stakeholders over anonymous shareholders because the former vote in well-defined constituencies. Second, the stakeholders supposedly favored by politicians are said to dislike outside owners because the latter disrupt network-based coordination. As Hellwig (2000: 130) explains, informal coordination is attractive because it saves transaction costs, but it requires repeated interaction in a context where everybody knows how to punish defectors.

At first glance, recent empirical evidence seems to support this argument. While the vast majority of cross-national mergers and acquisitions pass without protest, many governments still intervene in high-profile cases, either by blocking the takeover directly or by promoting ‘patriotic’ mergers as an alternative to foreign acquisition (see Kim, 2007; Hill, 2010). Since 2005, several OECD countries – including Germany, France, Japan, Canada and the US – have even strengthened the legal instruments available for the defense of ‘strategic sectors’ (see Brown and Kilby, 2011; Hill, 2010). Such trends led the Economist Intelligence Unit (2007) to register concern that the gradual lowering of barriers to foreign takeovers around the world might be going into reverse.

However, some governments are more willing than others to embrace cross-border trade of corporate control. As documented below, Britain in particular is exceptionally open to foreign takeovers. With only minor variations, a welcoming attitude toward foreign-owned transnationals has characterized British industrial policy throughout much of the post-war period (see Jones, 1990; Sugden, 1990; Capie, Wood and Sensenbrenner 2005). Hirst and Thomson speak of ‘globalization in one country’ and call contemporary Britain an ‘over-internationalized economy in an under-globalized world’ (Hirst and Thompson, 2000: 335).

Political scientists have offered many convincing explanations. Most of them challenge the first part of the simple rational choice model, by showing that politicians do not always and everywhere respond to electoral incentives. First, interest groups also play a role, and their size, resources, and channels of access differ significantly across countries. Second, governments vary in their capacity to respond to protectionist demands, because their state apparatuses furnish them with different instruments for intervention. Third, electoral incentives differ, depending inter alia on the size of electoral districts relative to the scope of jurisdiction (see Miller, 1998: 70–5): The geographical area affected by a foreign takeover does not usually span an entire country. Even if local politicians push protectionism on behalf of their constituents, it need not affect government policy.

Without calling any of the above into question, the present article shifts the focus onto the second part of the simple rational choice model, which, I submit, is also flawed. Outcomes would differ even if politicians everywhere were willing and able to prioritize local stakeholders, because stakeholder preferences vary across corporate governance regimes. Insider- and outsider-oriented corporate governance regimes differ with regard to their reliance on network-based coordination, and this affects attitudes to foreign bids. Where, as in the UK, coordination takes place mainly through market-based mechanisms, managers have little scope to ‘hold reserves to smooth over potential future difficulties and delay or sweeten needed adjustments’ (Hellwig, 2000: 124) regardless of the owners' nationality. Foreign acquisitions are thus less disruptive of business-as-usual, and this reduces the political incentives to mobilize against them.

Why does this matter? I am not proposing an encompassing mono-causal explanation of protectionist intervention, or even of attitudes to foreign bids. The vast and rich literature on the political economies of Britain, Germany and France has identified more historical, institutional and cultural differences indispensable to a full understanding than can be summarized in one article,² or included in one model. Instead, the article highlights a mechanism that explains why globalization does not engender growing resistance. To the extent that foreign takeovers spread outsider governance by destroying networks, resistance to further internationalization of corporate ownership declines over time. In other words, the expanding market for corporate control gradually eliminates its opponents – not because everyone is happy, but because some have nothing left to lose.

The article proceeds as follows: Section 2 explains how the degree of reliance on network-based coordination shapes political incentives to oppose foreign takeovers. Section 3 discusses methods and case selection. Section 4 documents cross-national variation in political opposition by comparing British, French and German government action regarding foreign takeovers from the 1970s onward. Section 5 provides quantitative measures of network-based coordination in Britain, Germany and France, and case studies supporting a causal connection. The conclusion discusses theoretical implications and offers suggestions for further research.

2. THEORY

Comparative research on corporate governance systems commonly distinguishes between insider and outsider systems (Vitols, 2001). Both address the principal–agent problems that arise where companies are not managed by their owners, but they do so in different ways. In insider systems, large, stable blockholdings represent the dominant form of corporate ownership. Large blockholders have strong incentives to devote time to monitoring managerial decisions. They also wield the necessary voting power to recompose company boards if incumbent managers fail to meet their performance targets. Network-based monitoring devices such as interlocking directorships, corporate cross-shareholdings and personal ties among industrial managers and financial elites are widespread under these conditions.

In outsider systems, by contrast, ownership is less stable and more dispersed. As a result, individual shareholders have weaker incentives and fewer instruments to directly control managerial decisions. Instead, they rely mainly on arms-length market mechanisms to monitor and punish. The share price serves as the main indicator of managerial performance. Perceived under-performance is punished by a drop in market value and increased threat of hostile takeover, as dissatisfied owners sell their shares.

Outsider systems are less conducive to informal, network-based coordination because their reliance on exit rather than voice reduces the likelihood of repeated interaction between managers and owners; channels for informal communication are less developed, and their lack of transparency is frowned upon as market-distorting; and, most importantly, managers have less scope for building up reserves that could help protect jobs during temporary downturns, because they face a greater danger that ‘hit and run’ investors will pocket such reserves.

As a result of these differences, both the means and the incentives for opposing foreign takeovers vary across countries. Means differ in that strong networks help persuade target company owners to decline a bid, or owners and managers of other companies within the network to act as white knights. Incentives differ in that strong ties to incumbent managerial elites are more valuable where they serve a purpose. In outsider systems, where, regardless of the owners’ nationality, managers cannot commit to delivering their part of the bargain (e.g. maintain employment levels during economic downturns), politicians, workers and other local stakeholders have less reason to mobilize against foreign takeovers.

In essence, stakeholders everywhere dislike short-term investors, but such investors are more likely to be British than German or French, because of cross-national differences in corporate governance patterns.³ As a result, British opponents of short-termism can less plausibly mobilize anti-foreigner sentiments to advance their cause. Moreover, due to their longer-standing exposure to short-term investors, many British stakeholders have less reason to protest at all, because they have nothing left to lose. On the contrary, they may even stand to gain in the event of a takeover, if the bidder has a longer investment horizon than the incumbent owners.

3. METHOD AND CASE SELECTION

Before discussing tests for this theory, it is worth pointing out what it does not pretend to accomplish. First, it does not fully explain intervention. Intense stakeholder protest is no guarantee for government action; governments occasionally intervene even where no one takes to the streets;⁴ and, where local stakeholders distrust the state, their dislike of foreign takeovers may not even translate into calls for intervention. Second, it does not fully explain attitudes to foreign bids. Each takeover bid has its own story, actors, political context, socio-economic effects and industrial rationale. Network preservation is only one of many plausible motives for opposition, alongside monopoly concerns, threatened plant closures, emotional attachment to an iconic brand, etc. Therefore, protest or intervention may ensue even in the absence of networks. Conversely, strong arguments in favor of a cross-border merger do occasionally trump network considerations.⁵

Methodologically, the degree to which networks affect intervention is impossible to measure. Public pronouncements by politicians can at best provide clues regarding the motives for opposing a takeover. As shown below, even British politicians occasionally advance network considerations as a reason for opposition. However, quantitative comparisons of such statements across time and space are problematic because talk is cheap and often strategic. Network based intervention may well be a motive even and especially where it is not discussed - either because it is deemed illegitimate, or because it is so widely accepted that it ‘goes without saying’. Public pronouncements by managers vary not only because attitudes differ, but also because the penalties of being honest vary across corporate governance systems. Managers subject to market-based control risk stock market penalization if they admit that they oppose foreign bids on principle.

Instead, the present article pursues the more modest aim of highlighting one mechanism which – alongside other variables and mechanisms – contributes to explaining stakeholder attitudes to foreign bids. Based on the theory outlined above, I hypothesize that workers and other local stakeholders everywhere – including in outsider systems – are more inclined to rally against takeovers where they derive identifiable network-related benefits from keeping incumbent managers in their jobs. The present article focuses on managerial ‘paternalism’, broadly defined as a readiness to forego (short-term) share price maximisation to protect workers during downturns or otherwise improve working conditions. Other conceivable network-related benefits include nepotism and corruption.

Given that, at the aggregate level, ‘paternalist’ relationships are more common in insider systems, any meaningful test of the above hypothesis must extend to cases of exceptionally strong mobilization in the UK. A comprehensive test is beyond the scope of the present article. However, strong stakeholder reactions to bids for three ‘paternalist’ British companies – Rowntree, Pilkington, and Cadbury – offer anecdotal support. The bids are selected because they provoked unusually intense political reactions both within and outside parliament.

To construct a yardstick against which the intensity of political reactions to individual bids – both foreign and domestic – can be measured, I compiled a database of all debates in the British House of Commons between 1953 and 2011 in which the term ‘take-over bid’ or ‘takeover bid’ occurs at least once.⁶ Within that set of 582 documents, 150 texts feature at least 5 occurrences of the term ‘takeover’ or ‘take-over’, and 21 texts feature at least 30 occurrences. In five of them, the search terms occur more than 100 times, suggesting particularly intense debate. Figure 1, which maps the distribution of debates over time, includes all debates that feature at least 5 occurrences of the term ‘takeover’ or ‘take-over’. Debates featuring less than five occurrences were excluded because the reference to takeover bids, if relevant at all, was too fleeting.

Figure 1 Number of debates in the House of Commons that contain the term ‘takeover’ or ‘take-over’ at least 5 times.

Source: Author's count based on Digital Hansard (http://hansard.millbanksystems .com for debates prior to 2006, and http://www.parliament.uk/business/publications/hansard)

The bids for Pilkington (1986), Rowntree (1987) and Cadbury (2010) all provoked intense parliamentary debate.⁷ Based on the number of mentions of the term ‘takeover’, the debate on the ‘City and Industry’, where the Pilkington bid was discussed at length, was among the most intense in the entire database (featuring 156 mentions), second only to a debate on ‘Takeover Bids’ in 1954. The debate on ‘Rowntree plc’ in June 1988 was the seventh most intense overall (featuring 86 mentions), and the most intense ever devoted to a single bid. The debate on ‘Cadbury’ in January 2010, though significantly less intense (19 mentions), was among the most intense of the present millennium.

The 1986 bid for Pilkington was launched by BTR, a British industrial conglomerate, and hence does not qualify as an attempted foreign takeover. Nevertheless, the case is instructive for two reasons. First, due to the strong local identity of Pilkington, opponents of the takeover could still portray BTR as an outside intruder.⁸ Second, and more importantly, Nippon Sheet Glass (NSG) bought Pilkington in 2005, and the complete lack of mobilization against that Japanese takeover is worth investigating against the backdrop of political reactions to the earlier bid by BTR.

Before turning to the case studies, the following section will show that, at the country level, the degree of government intervention in foreign takeovers and in demand for intervention from opposition parties and stakeholder groups co-varies with corporate ownership structures in Britain, Germany, and France.

4. EMPIRICAL EVIDENCE

4.1 Contrast in government interventionism

Political intervention in the market for corporate control is difficult to measure, not least because it is often either covert or ambiguously cloaked. For example, the referral of a foreign bid to a monopolies commission may be motivated either by genuine competition concerns or by the desire to exclude foreigners, and even where competition concerns are subsequently dismissed, the delays associated with a referral can suffice to stall a bid. Moreover, the line between rhetoric and action is blurry, because the mere threat of intervention can deter potential bidders. As a result, the number of bids that failed is a misleading indicator of government activism, and bids that never happened are impossible to count. Conversely, instances of non-intervention are as hard to pin down as dogs that do not bark in the night, because there is no objective way of identifying cases that should have provoked a protectionist response.

Despite these difficulties, it is uncontroversial that British governments are exceptionally reluctant to intervene – which is all the more remarkable because foreign takeovers are more common in the UK than anywhere else except the US, and a greater proportion of bids is ‘hostile’.⁹ The following examples of direct government intervention, summarized in Table 1, are drawn from an extensive Lexis Nexis search of English-language news coverage from 1975 to 2013. Earlier years are not covered by Lexis Nexis. Given that the names of the companies concerned were not known in advance, the initial search terms were inevitably vague (for example, ‘foreign takeover’ AND [France OR Britain OR Germany]). Subsequent searches within the results, using terms such as ‘government,’ ‘politic*,’ ‘national,’ ‘protection*,’ and names of leading politicians (‘Mitterrand’, ‘Villepin’, ‘Thatcher’, ‘Lord Young’. etc.) may not have filtered out all the examples mentioned, and newspapers in the database may not have reported all actual instances of intervention. Nevertheless, Table 1 contains the most comprehensive list available to date.

Table 1 Examples of direct government attempts to prevent foreign takeovers

Year	Bidder (nationality)	Target	Sector	Means of intervention
France
1976	American National Distillers (US)	Chateau Margaux	alcoholic drinks	Veto^1
1977	British Petroleum (UK)	Rousselot	gelatine	Arrangement of a French counterbid^2 (ATO-Chemie, a subsidiary of ELF-Aquitaine and TOTAL)
1977	(Netherlands)	Gardinier^3	fertilizers	Not reported
1980	Thorn Electrical Industries (UK)	Locatel	consumer electronics	Arrangement of a French counterbid^4 (Thomson and Compagnie Générale d’Électricité)
1982	Occidental Petroleum	Pechiney's chemical assets	oil	Arrangement of a French counterbid^5 (Elf-Aquitaine, Rhone-Poulenc and CdF Chemie)
1988	Pearson (UK)	Les Echos	media	Veto on public interest grounds^6
1988	Nestlé (Switzerland)	French subsidiaries of Rowntree Mackintosh	food	Veto on competition grounds^7
1988	de Benedetti (Italy)	Epeda	car industry supplier	Arrangement of a French counterbid^8 (Peugeot and others)
1991	Nestlé (Switzerland)	Perrier	mineral water	(intervention ineffective)^9
1999	Ente Nazionale Idrocarburi (ENI) (Italy)	Elf	oil	Arrangement of a French counterbid (Total)
1999	Any foreign bidder	Crédit Lyonnais	banking	Expression of opposition^10
1999	Any foreign bidder	Canal Plus^11	media	Not reported
1999	Any foreign bidder	Cegetel^12	telecoms	Not reported
2003	Novartis (Switzerland)	Aventis	pharmaceuticals	Arrangement of a French counterbid^13 (Sanofi-Synthélabo)
2005	PepsiCo (US)	Danone	food	Expression of opposition; new legislation^14
2006	Mittal (India)	Arcelor	steel	Expression of opposition^15 (ineffective)
2007	Enel (Italy)	Suez	public utilities	Approval of a previously opposed Franco-French merger^16 (between Suez and Gaz de France)
2007	Siemens (Germany)	Areva	nuclear energy	Promotion of a Franco-French merger^17 (with Alstom) (unsuccessful)
2009	Toshiba (Japan)	Areva	nuclear energy	Arrangement of a Franco-French acquisition (by Alstom and Schneider)^18
2009	Any ‘aggressive investment fund’	Valeo	car industry supplier	Pre-emptive increase in government's share^19
2010	Danaher (US)	Ingenico	electronics	Government veto^20
2013	Yahoo (US)	Dailymotion	e-commerce	Threat of government veto^21
Germany
1983	Thomson-Brandt (France)	Grundig	consumer electronics	Veto on competition grounds^22
1992	Pirelli (Italy)	Continental	tyres	Arrangement of a counterbid at the subnational level^23
1997	Voest Alpine (Austria)	Preussag	steel	Acquisition by subnational government^24
2003	Any foreign bidder	MTU	defense	New legislation^25
2004	Any foreign bidder	Rheinmetall	defense	Threat of government veto^26
2006	Euronext	Deutsche Börse	stock exchange	Threat of veto by subnational government^27
20012	NYSE-Euronext	Deutsche Börse	stock exchange	Veto by subnational government^28
UK
1981	Any foreign bidder	ICL	computers	Expression of opposition^29,30
1982	Hong Kong and Shanghai Banking Corporation (HSBC)	Royal Bank of Scotland	banking	Government veto^31
1988	Kuwait Investment Office	British Petroleum	oil	Referral to Monopolies and Mergers Commission on public interest grounds^32
1988	Elders IXL (Australia)	Scottish & Newcastle Breweries	beer	Referral to Monopolies and Mergers Commission, officially on competition grounds^33

¹The Economist, 21 August 1976, p. 86; Spiegel, 23 August 1976.

²BusinessWeek, 3 October 1977, p. 56; Schrieber and Gareis 2007: 29.

³BusinessWeek, 3 October 3, 1977, p. 56.

⁴The Economist, 1 March 1980, p. 64.

⁵Spiegel, 16 August 1982.

⁶Sydney Morning Herald, 24 February, 1988, p. 46.

⁷BusinessWeek, 21 November 1988, p. 57.

⁸Ibid.

⁹The Economist, 1 June, 1991, p. 89; The Jerusalem Post, 6 March 1992.

¹⁰Daily Deal/The Deal, 14 July 2003.

¹¹Ibid..

¹²Ibid.

¹³The International Herald Tribune, 30 April 2004, p. 13.

¹⁴Daily Deal/The Deal, 9 January, 2006.

¹⁵The Economist, 1 July 2006.

¹⁶The Economist, 10 February 2007.

¹⁷The Guardian, 24 October 2007.

¹⁸Scottish Business Insider, 21 April 2010.

¹⁹just-auto global news, 27 February 2009.

²⁰Financial Times, 21 December 2010.

²¹Country Forecast Select, 1 August 2013.

²²Martinsen 2005: 405.

²³Baums 1993: 20.

²⁴The Independent, 18 November 1999, p. 22.

²⁵Flight International, 26 August 2003, p. 5.

²⁶Financial Times, 10 August 2004.

²⁷≤http://www.zeit.de/online/2006/26/Deutsche-Boerse-Euronext>.

²⁸http://forum.spiegel.de/f22/deutsche-boerse-und-nyse-euronext-hessen-kuendigt-nein-zur-boersenfusion-53259.html.

²⁹Financial Times, 6 May 1981, p. 7.

³⁰Campbell-Kelly (1989: 336) mentions three reasons for governmental support: ‘First, the government needed to protect its massive investment in ICL computers. Second, if ICL failed, then it would damage the entire UK information technology industry, many of whose products were ICL-related. Third, if ICL failed, then it would undermine the credibility of the newly formed Ministry of Informational Technology.’

³¹The Guardian, 4 July 2006, features p. 10.

³²The Toronto Star, 12 May 1988, p. D28.

³³The Times, 13 November 1988.

While French governments took direct action against foreign takeovers at least 22 times since the mid-1970s,¹⁰ and German national or subnational governments intervened at least seven times, the Lexis Nexis search produced only four reported instances of direct British intervention, all during Margaret Thatcher's time in office (see Table 1). British intervention seems to have ceased completely since 1989, when Nicholas Ridley, then Trade and Industry Secretary, announced that the government would henceforth refrain from blocking all non-defense-related bids unless there were competition concerns.¹¹ Recent British governments have even permitted foreign takeovers of defense-related companies, and of public utilities heavily protected in other countries.¹² In 2006, Tony Blair boasted that even 10 Downing Street sourced its water and electricity from French and German suppliers.¹³ Companies with strong symbolic value did not provoke intervention either. In 2006, the Blair government endorsed the sale of the London Stock Exchange to America's Nasdaq exchange after more than 300 years of British ownership.¹⁴ (LSE shareholders later rejected Nasdaq's offer as too low.)¹⁵ In early 2010, despite an impending general election, the Brown government permitted Kraft's takeover of chocolate-maker Cadbury.

Even more striking than the laissez-faire stance of British governments is the ‘lack of political hue and cry’.¹⁶ Except for the occasional exasperated commentator, ‘no one is complaining. […] The opposition is mute.’¹⁷ John Monks, a former leader of the Trades Union Congress, complained in 2006 that the Conservatives and UKIP had ‘a lot to say when there is the merest hint of a little more shared sovereignty at European level. But on the unfettered sale of our key national assets, they are dumb.’ Conservative shadow chancellor George Osborne assured the 2006 CBI conference that a Conservative government would never block foreign takeovers or shelter national champions,¹⁸ and Vince Cable, his liberal counterpart, declared in 2007 that ‘[t]here is no room for nationalism and protectionism in a modern economy.’¹⁹

Notably, support even extended to backbench Members of Parliament from constituencies affected by foreign takeovers. Upon news that TBI, the second largest company in Wales, would be bought by French investors, Plaid Cymru, the Welsh nationalist party, professed ‘no objections to any company takeover as long as they invest in our infrastructure and transport links’.²⁰ The 2005 takeover of Pilkington by its Japanese competitor Nippon met with a similarly pragmatic response from Labour MPs representing the constituency in which Pilkington was based.²¹ In 2010, senior Tory MP Bill Wiggin went even further to condemn protests against the takeover by Kraft of a Cadbury plant located in his Herefordshire constituency.²² The same bid did spark a debate, but it centered around the problem of short-termism, rather than on the nationality of the bidder.²³ As business minister Ian Lucas put it, ‘[t]he concern [was] not over who owns the company, but the nature of that ownership.’²⁴

The following section shows that these differences in attitudes toward foreign takeovers correlate with cross-national differences in the degree to which companies rely on network-based coordination.

4.2 Contrasting significance of network-based coordination in corporate governance

To measure the degree of network-based coordination, the present article relies on several different indicators, including ownership concentration, the proportion of shares held by long-term investors (families, the state, non-financial companies), and managerial ties to the state apparatus.²⁵ Ownership concentration matters because large blockholders are easier to coordinate with than are dispersed shareholders, not least because they often have direct access to government officials. Ownership stability matters because repeated interaction is essential for the credibility of commitments, allowing trust to build up over time and facilitating punishment in case of defection. Managerial ties to the state apparatus affect the willingness of corporate executives to share their expertise with and implement industrial policy measures devised by public officials. All these institutional features affect politicians’ incentives to oppose foreign takeovers, because network-based coordination with incumbent corporate elites is only worth preserving where it works.

Tables 2 to 5 show that cross-national variation in the importance of network-based coordination closely corresponds to the above-documented cross-national variation in political resistance to foreign takeovers. Systematic time series data are not available for many of the indicators, but while data for individual years can be difficult to compare over time due to variation in sampling techniques, the stark contrast between Britain and France [Germany] is evident in all studies.

Table 2 Proportion of listed companies where largest blockholder owns more than 50 [25] (20) percent of shares

	1976	1984	1986	1990	1996	2000	2005*
UK	>10	5		6 [16]	(>40)	2 [10]	7.3*
F	55			50 [80]	(86)	50 [70]	21.5*
G			59	50 [85]	(89)	50 [70]	23.6*

*2005 data refer to the mean size of the largest blockholding in the 20 largest corporations.

Sources: 1990 data: Becht and Mayer (2001: 2); 2000 data: Van der Elst (2004); 1976–1986 data: Berglöf (1990: 126). 2005 data: Alves (2010:6).

Table 3 Percentage of shares* owned by the public sector

	1975	1981	1989	1991	1993	1995	1997	1999	‘01	‘03	‘06	‘08	‘09	‘12
UK	3.6	3.0	2.0	1.3	1.3		0.1	0.1		0.1	0.1	1.1		2.5
F						4.1	6.3	8.1	4.1	4.9	8.5	10.6	8.6
G	8.9	8.5	4.7	5.4	4.6	4.2	5.2	3.5	1.8	3.2	2.2	2.7	2.3

*percentage of market value of domestic listed shares

Sources: UK data: Office of National Statistics (2012), table A; French data: DAI Factbook (2010), table 8.7 F 5; German data: DAI Factbook (2010), table 8.1-3.

Table 4 Percentage of shares* owned by private non-financial companies

	1975	1981	1989	1991	1993	1995	1997	1999	‘01	‘03	‘06	‘08	‘09	‘12
UK	3.0	5.1	3.8	3.3	1.5		1.2	2.2	1.0	0.7	1.8	3.0		2.3
F						25.5	20.0	21.0	21.0	21.3	15.2	13.8	13.7
G	42.09	46.5	37.2	42.3	40.8	44.0	37.6	35.6	39.7	36.6	34.8	39.5	41.2

*percentage of market value of domestic listed shares

Sources: UK data: Office of National Statistics (2012), table A; French data: DAI Factbook (2010), table 8.7 F 5; German data: DAI Factbook (2010), tables 8.1-2 (West Germany, prior to 1991) and 8.1-3 (from 1991 onward).

Table 5 Percentage of top managers** with career experience in high level public administration

	1981	1983	1986	1993	1996	1998	2002	2004	2006
UK		5.3				1.7
F	[37]	12.2	[34]	16.7	[50]	16.6	[46]	[44]	[46]

** Data for 1983 and 1993 refer to the CEOs of the domestically-owned members of the 100 largest industrial firms; data for 1998 refer to the entire population of main board members holding executive role in top 100 French and UK companies. Data in brackets refer to the CEOs of the 40 largest firms.

Sources: 1983 and 1993 data: Whittington and Mayer (2000: 114); 1998 data: MacLean, Harvey and Press (2007: 542, 544); 1981–2006 data in brackets: Dudouet and Grémont (2007: 11).

Ownership concentration of listed companies has been far lower in Britain than in France or Germany throughout the period under consideration (see Table 2). The proportion of British listed companies with a controlling blockholder at the 50 per cent threshold (in other words, a single shareholder owning at least 50 per cent of shares) was already below 10 percent in 1951 (Florence, 1961: 69) and has remained so ever since (Becht and Mayer, 2001:. 2; Van der Elst, 2004; Berglöf, 1990: 126). In 1990, only 16 percent of British listed companies had a controlling blockholder at the 25 percent threshold, compared to 80 [85] per cent of French [German] companies (Becht and Mayer, 2001: 2). In 1996, less than 40 per cent of British listed companies had a controlling blockholder at the 20 per cent threshold, compared to 86 [89] per cent in France [Germany] (Faccio and Lang, 2002: 379). In 2005, the mean size of the largest blockholding [or: mean size of combined blockholdings (in other words, the mean sum of all shareblocks above the 5 percent threshold)] in the largest 20 British companies was less than 7 percent, compared to 22 [24] percent in the 20 largest French [German] companies (Alves, 2010: 96). Moreover, blockholders of British firms are far more likely to be foreign than domestic, while the reverse applies to blockholders of French and German firms (Franks et al., 2012: 1688).

The proportion of long-term investors (families, the state, private non-financial companies) is lower in Britain than in France or Germany. Regarding family ownership: Britain in 1996 had by far the lowest level of familial concentration in Europe, while France had the second-highest level (exceeded only by Portugal). The top 15 families controlled less than 7 percent of the total market value of common equity on the British stock market, compared to nearly 35 [25] percent on the French [German] stock market. Families held only 24 percent of controlling blocks (at the 20 percent threshold) in British listed companies, compared to 65 [65] percent in French [German] listed companies (Faccio and Lang, 2002: 379, 393).²⁶ Since then, French family ownership has remained fairly stable. In 2006, 11 companies in the CAC40 still had a French family as the largest strategic shareholder, compared to 12 in 1997 (Auvray, 2010). According to newspaper articles published in 2008 and 2009, more than half of all listed French companies, and one-third of CAC40 companies, are still predominantly family-owned (Guegneau, 2009; Lachèvre, 2008).

Regarding state ownership: The percentage of shares owned by the British public sector (including by central and local government, and by other state-owned enterprises), barely exceeded 3 percent in 1981 and has been close to zero since the mid-1990s. In France, public sector ownership has actually increased since the mid-1990s, from 4.1 percent in 1995 to more than 8 per-cent since 2006 (see Table 3). In 1996, the state was a controlling blockholder (at the 20 percent threshold) in just 0.08 percent of British listed companies, compared to 5 [6] percent of French [German] listed companies (Faccio and Lang, 2002: 393). Some of the highest French performers continue to be partly state held. In 2006, 14 CAC 40 companies still had the state as largest strategic shareholder, up from 10 companies in 1997 (Auvray, 2010).

Regarding industrial cross-shareholdings: In Britain, the proportion of shares held by private non-financial companies accounted for just over 7 percent in 1981 and has declined further since then, to less than 3 percent since 2001. In France, industrial cross-shareholdings have also declined, from 26 percent in 1997 to 13 percent in 2009, but even after this decline, they remain significantly more widespread than in the UK. German cross-shareholding have exceeded 35 percent throughout the period under consideration (see Table 4).

Managerial ties to the state apparatus are also weaker in Britain than especially in France (see Table 5). In 1998, less than 2 percent of board members of the largest 100 companies had high level experience in public administration, compared to 16.7 percent in France (MacLean et al., 2007: 542). Among CEOs of French CAC40 companies, a career background in public administration is even more widespread, ranging between 34 percent in 1986 and 46 percent in 2006 (Dudouet and Grémont 2007: 11). In France, these ties are fostered and reinforced by a system of elite higher education in so-called Grands Ecoles, famously including the Ecole Nationale d’Administration (ENA), which is designed to train future civil servants. In 1998, 38 percent of CEOs in the 25 largest French companies had been trained at ENA (MacLean et al., 2007: 542). A revolving door between private industry and public service operates both ways, and at the highest levels. Edmond Alphandéry served as Minister of the Economy (1993–95) before becoming CEO of Electricité de France (EdF). Dominique Strauss-Kahn, finance minister from 1997 to 2000, had founded DSK Consulting, a corporate law firm specialized in lobbying Brussels, and the Cercle de l’Industrie, a group that united CEOs of the largest 35 companies in France. Thierry Breton, finance minister from 2005 to 2007, had previously chaired Thomson RCA and France Telecom.

In sum, the data presented above establishes a correlation between the degree of network-based coordination and political action against foreign bids. The following section turns to evidence for a causal connection. The focus is on how network-based coordination affects stakeholder preferences regarding foreign bids.

4.3 Evidence for the causal relevance of network-based coordination

Case studies of three takeover bids that provoked exceptionally intense British parliamentary debate – BTR/Pilkington (1985–86), Nestlé/Rowntree (1988) and Kraft/Cadbury (2010) – support the hypothesis that managerial ‘paternalism’, that is on the readiness to forego (short-term) share price maximisation to protect workers, is conducive to mobilization against bids by network outsiders.

All three bids provoked strong mobilization by local stakeholders. In St. Helen's, where Pilkington had its headquarters, ‘unions were drawn into an alliance with management and there was co-operation between local politicians of all parties’.²⁷ According to the company's website, Pilkington ‘mobilized employee, community, city and parliamentary opinion to back its long termist approach to running its business’.²⁸ In Yorkshire, a local newspaper with a circulation of 56,000 got more than 14,000 of its readers to return ‘Hands off Rowntree’ petition coupons.²⁹ Some 1500 Rowntree workers and supporters rallied outside the Houses of Parliament.³⁰ More than 60 Conservative MPs, including many from around Rowntree's base in Yorkshire, defied their own government by signing a Labour motion against the decision not to refer Nestlé's bid to the Monopolies and Mergers Commission.³¹ Crossbow, the publication of the Conservative Bow Group, accused the Thatcher government of ‘blatantly and shamelessly’ ignoring the regional dimension in merger policy.³² Stakeholders also turned out repeatedly to demonstrate against Kraft's bid – although, it seems, in smaller numbers. The Guardian reported ‘a few dozen rather than hundreds’³³ in Bournville, while the Associated Press reported ‘hundreds’ in London's Westminster area the following week.³⁴ Nonetheless, a parliamentary motion to debate Cadbury's future was tabled by local MPs.³⁵

All three target companies had a ‘paternalist’ tradition atypical of the British outsider system. Pilkington, founded in 1826, ‘was always a special case in the British context because of the involvement of the founding family, its provincial base in St Helens and the technical excellence symbolized by the company's invention of the float glass process …’(Froud et al. 2008: 176). Rowntree's and Cadbury's were both acquired by Quaker philanthropists in the nineteenth century and ‘shared a particular ethos concerning welfarism, formalized employment policies and social responsibility’ (Child and Smith 1987: 574). Rowntree's went public in 1987, but when Nestlé and Jacobs Suchard launched their bids the following year, ‘many of the traditions of the Rowntree family, including a strong concern for employee and community welfare, had been preserved; many of the current employees’ parents and grandparents had also worked for Rowntree’ (Hyde et al. 1991: 10). Cadbury's organizational transformation started earlier, after its merger with Schweppes in 1969 (see Rowlinson 1995), and this helps account for the weaker protest. However, ‘Cadburyism remained a strong ideology in the consciousness of family members, managers and workers…’ (Child and Smith 1987: 584). In 2007, workers angry at Cadbury investors’ plans to cut jobs protested by singing Christmas carols in which the words for ‘Oh Christmas Tree’ were changed to ‘George Cadbury George Cadbury is turning in his grave’.³⁶

In all three cases, this paternalist tradition was advanced as a motive for protectionist demands.³⁷ Examples include comments by members of parliament that:

Pilkington is probably the best employer in my constituency. Its contribution to the local community is important … In the best sense of the word, Pilkington is paternalistic. … (Barry Jones, Labour, Commons Hansard, 15 December 1986, column 884)

Rowntree has always encouraged its managers to participate in local affairs, whether in chambers of commerce, enterprise agencies or local schools. It maintains local charitable donations which are an example to any company. (Conal Gregory, Conservative, Commons Hansard, 8 June 1988, column 866)

[Cadbury] is a company with a sense of belief and commitment to its own community. It is a model company … (Tony Wright, Labour, Commons Hansard, 26 January 2010, column 787)

A fourth case study, of the successful 2005 bid for Pilkington by Japanese competitor NSG, lends further support to the argument that stakeholders defend network-ties to incumbent managers if and only if these ties yield benefits. The lack of mobilization regarding the Japanese takeover contrasts starkly with strong reactions to the 1986 bid for Pilkington discussed above. Froud et al. (2008) attribute the contrast to decisive changes in the composition of Pilkington's board,³⁸ and further case studies support their theory. In 1986, ‘family members and long-term employees were in the majority, and only four of the eleven were non-executives’. By 2005, non-executive directors (NEDs) filled five of eight seats, including the chair, and they had careers where ‘limited attachment to any one firm was demonstrated by movement between firms, distance from operation and closeness to the culture of the corporate deal’ (Froud et al., 2008: 180).³⁹ Between 1997 and 2007, similarly NED-dominated boards also approved the foreign takeover of all other firms in the British buildings materials sector, including several that were productively credible and financially viable on a stand-alone basis (Froud et al., 2008: 178). The Pilkington board at the time of the BTR offer was chaired by family member Anthony Pilkington. Rowntree chairman Kenneth Dixon had risen through the ranks from 1956 onward (Hyde et al., 1991: 10). Cadbury's chairman Roger Carr had been appointed only two years prior to the bid.⁴⁰

However, while board room characteristics may help explain the decline in directors’ resistance, stakeholder resignation in the face of notoriously footloose owners also dampened the protest. David Watts, Labour MP for St Helens North, observed that, ‘[nowadays] large companies like Pilkington are mainly controlled by London-based investors anyway and therefore the local link isn't as strong as it might have been in the past’,^41,42 In the same vein, Roger Carr dismissed nostalgic sentiments regarding the Kraft takeover by pointing out that ‘[Cadbury's] hadn't been a family company for 50 years, it hadn't had a member of the family working in it for a decade. Fifty per cent of the company was purchased from an American drug company – it simply wasn't the business people believed it to be.’⁴³

News reports of trade union attitudes to foreign bids suggest, further, that the short-termist reputation of many British investors may even lead local stakeholders to prefer some foreign owners. The Trades Union Congress (TUC) regularly expresses itself ‘in favour of all investments [including foreign takeovers] that create new jobs’.⁴⁴ Some TUC spokesmen go further and explicitly welcome foreign takeovers. In 2006, Ian Brinkley, the TUC's chief economist, declared that ‘foreign deals are often better for British workers.’⁴⁵ In 2009, Tim Page, the TUC's senior policy officer, said that ‘[f]oreign owners can be better than British ones, if they invest and expand the business.’⁴⁶

6. CONCLUSION

In sum, the article harnesses research on comparative corporate governance to dispel expectations that internationalization of the market for corporate control will trigger a protectionist backlash. Corporate governance regimes differ with regard to their reliance on network-based coordination, and this affects stakeholder attitudes toward foreign ownership. Networks are more valuable where they perform a function. Where, as in the UK, coordination relies more on market-based mechanisms, foreign acquisitions are less disruptive, and political mobilization is weaker. To the extent that the internationalization of corporate ownership spreads outsider governance by destroying networks, resistance therefore declines as the market expands.

By highlighting the connection between corporate ownership structures and policy preferences, the article contributes to recent research on mechanisms of capitalist development (Streeck, 2009; Deutschmann, 2008; Sewell, 2008; Callaghan, 2013). The mechanism in question here operates by eroding the ‘habitat’ in which the opponents of market expansion prosper. Stable, long-term ownership relations have advantages, and when these relations first come under threat, the stakeholders who benefit from them have strong incentives to complain. However, the incentives grow weaker as the market expands. Employees of a company that is already owned by footloose outsiders care less if their company is taken over by another investor of the same type. Weak mobilization therefore need not imply that everyone is happy but may instead indicate that some have nothing left to lose.

Previous research on trade policy preferences has identified factor endowments (Gourevitch 1986; Rogowski 1989; Keohane and Milner 1996; Hiscox 2002) as a source of cross national variation, and they clearly matter, too. Although developed with respect to trade in goods, resource endowment theories easily travel to the market for corporate control. Europe's financial services industry, which earns its money by arranging and financing mergers and acquisitions, is heavily concentrated in the City of London. In 2007, financial services accounted for 4 percent of total UK employment, 15 percent of income tax and 26.5 percent of corporation tax (Moran, 2012: 379). It stands to reason that British governments should pay greater attention to the demands of financial sector interest groups than should governments in other countries, where financial services contribute less to overall economic performance.

However, explanations focused solely on factor endowments cannot account for a striking peculiarity of recent British political discourse. The economic weight of the City may explain why British governments support open markets for corporate control, but it does not explain why backbenchers and opposition parties have ceased to speak up for the victims of cross-border takeovers. Surely, liberal economic ideas have not penetrated the British electorate to the point of converting everyone. Nor is it plausible that the workers and managers of target companies subjugate their own immediate interests to the greater good of a thriving financial sector. And the pervasively nationalist discourse on European integration shows that British voters and politicians are by no means culturally immune to populist nationalism. By highlighting the effect on stakeholder preferences of corporate governance regimes, the present article helps explain why, despite large numbers of cross-border takeovers, the bashing of ‘foreign raiders’ is not pursued as a vote-winning strategy in the UK.

Despite emphasizing institutional variation among capitalist systems, the present article challenges the optimistically pluralist vision of international market integration associated with parts of the ‘Varieties of Capitalism’ literature. Hall and Soskice (2001) influentially claim that globalization benefits both Liberal and Coordinated Market Economies (LMEs and CMEs). They argue that different degrees of reliance on network-based coordination give rise to comparative institutional advantages regarding different production strategies. Economic openness is said to help countries realize mutual gains from trade, by allowing them to specialize on their respective strengths. I submit that this argument, while plausible for goods and services, does not apply to cross-border trade of corporate control. To the extent that takeovers disrupt network-based coordination, CMEs suffer asymmetrically from the removal of formal and informal barriers to trade that still remain in the market for corporate control.

Unlike previous attempts to explain protectionist preferences with reference to Varieties of Capitalism (e.g. Fioretos, 2001; Callaghan and Höpner, 2005), the present account emphasizes selective incentives – rather than the collective incentive of maintaining the ‘institutional complementarities’ and ‘comparative institutional advantages’ associated with a national ‘production regime’. Interest groups in my account defend networks not because of their overall effects on economic performance, but because there is something in it for them, personally. In other words, it is irrelevant to my argument whether network-based coordination is indispensable to a national production regime as described, among others, by Hall and Soskice (2001).

The focus on selective incentive has three distinct advantages. First, it extends the applicability of the argument beyond the ideal-typical liberal and coordinated market economies (‘LMEs’ and ‘CMEs’). Second, it makes my account less susceptible to the accusation of functionalism frequently launched against Hall and Soskice (e.g. Streeck, 2010; Howell, 2003). Third, it allows for the possibility of change over time – whereas the assumption that interest groups and governments care mainly about preserving the comparative institutional advantage of their national production regime makes it difficult to explain moves away from equilibrium.

Further research inspired by the present article could proceed along several lines. First, the argument proposed above should be subjected to further tests. Possibilities include extending the analysis to other countries, conducting case studies of further bids, operationalizing the explanatory variable (‘paternalism’) more rigorously, operationalizing and examining the causal relevance of alternative manifestations of network-structures (e.g. ‘nepotism’), and exploring changes over time. The latter is likely to be especially rewarding, provided that it is adequately contextualized. The rise of shareholder value as a principle of corporate governance only began in the 1970s (Lazonick and O’Sullivan, 2000), and, as my argument would suggest, British parliamentary opposition to foreign takeovers has markedly declined since then (Callaghan and Hees, 2013). However, as always, historical context matters and disqualifies mono-causal arguments. Research into the implications of differences in the nature of network-based coordination would also be worthwhile. For example, networks in France are strongest between government and top managers, whereas coordination in Germany also involves employees. This difference should affect who mobilizes against foreign takeovers, on behalf of which companies, and to what effect.

Second, the contribution of network-structures to seemingly ‘cultural’ differences in attitudes to intervention merits further explanation. The present article has focused on how networks affect preferences regarding ownership, but a dislike for foreign takeovers does not automatically translate into calls for intervention. British employers refrained from turning to the state even where they disliked foreign takeovers, because, as CBI director general John Banham put it, they had ‘zero faith’ in Whitehall's ability to spot strategic winners.⁴⁷ By contrast, those French employers who disliked foreign takeovers did call for direct intervention. According to a 1989 survey reported by Le Monde, 56 percent of CEOs of listed companies also thought that the government should be allowed to intervene when French companies were attacked by non-European bidders, and 27 percent favored such intervention in the case of European raiders.⁴⁸ In February 1989, Mitterrand gave a passionate televised speech against ‘takeover mania’ in which he claimed to ‘have received several CEOs from among the ten most important French companies, who have asked me – as a representative of the state – for help’.⁴⁹

Two network-related explanations are conceivable. First, the density of networks may affect the legitimacy of network-based intervention. Even if a director of British manufacturing company were exceptionally well-connected and could simply pick up the phone to the prime minister, an interventionist response would be frowned upon as arbitrary nepotism. French company directors may be more ready to tolerate such practices because, as members of the same networks, they themselves are potential future beneficiaries. Second, business-government relations may affect the expected efficacy of intervention. This is not to say that past experience plays no role. As one observer notes, Britain ‘made a pig's ear of British Leyland. France persevered and made Renault a world-class group.’⁵⁰ Rather, past experience and future expectations are both likely to be shaped by employer involvement in policy-making.

Third, the discursive dimension of political reactions to foreign bids deserves further exploration.⁵¹ In Britain, martial rhetoric and flag-waving accompanied the public discourse on foreign takeovers until well into the 1990s. Sir Hector Laing, chairman of United Biscuits, warned the 1988 CBI conference against the danger of ‘selling some of our best weapons in the international trading war to the competitors we are doing battle with’.⁵² The Independent referred to the foreign takeover of Rover in 1994 as ‘Britain's industrial Dunkirk’.⁵³ In protest against the bid by General Motors (GM) for British Leyland, a regiment of Land Rovers of every size, year and condition paraded past the Houses of Parliament with a Union flag fluttering from each vehicle.⁵⁴ In response to BMW's bid for Rolls-Royce, a group of wealthy Rolls-Royce drivers sought to raise 680 million pounds to launch a nationalistically motivated counterbid.⁵⁵ In the past decade, such overt manifestations of nationalism have become more rare – though, in 2006, Lord Sterling still felt that the sale of P&O to Dubai in 2006 amounted to selling the ‘fabric of the Empire’,⁵⁶ and the Daily Mail declared it ‘Time to stand up to these invaders.’⁵⁷ A systematic study of media commentary, political rhetoric and parliamentary debates would provide a fuller picture of how, and to what effect, attitudes to foreign ownership vary across countries and over time.

Acknowledgements

My thanks go to Ben Clift, Martin Höpner, Paul Lagneau-Ymonet, Sascha Münnich, Britta Rehder, Wolfgang Streeck, Cornelia Woll, Nick Ziegler and the anonymous reviewers for helpful comments on earlier versions of this article.

Additional information

Notes on contributors

Helen Callaghan

Helen Callaghan is a senior research fellow at the Max Planck Institute for the Study of Societies, Cologne, Germany. Her research interests include comparative corporate governance, economic nationalism, mechanisms of capitalist development, and the political economy of European integration.

Notes

1 Coffee (1999: 656) explicitly suggests that political resistance to takeovers may grow as capital markets become more complete, because the incentives to support anti-takeover measures that protect local jobs grow as the costs of such action fall increasingly on foreign shareholders.

2 Classics include Gerschenkron (1962), Shonfield (1965), Zysman (1983), and Hall (1986).

3 As cabinet minister Kenneth Clarke remarked accurately enough, albeit with alienating pride: ‘British predators are more feared than any others across most of Western Europe, and long may that remain so.’ (Commons Hansard, 25 May 1988, column 331).

4 Conversely, actual or potential mobilization may prevent takeovers even without government intervention, because it may persuade buyers to withdraw their offer, persuade owners not to sell their shares, or lead governments to take regulatory action to prevent similar face-downs in the future.

5 Examples include the takeovers of the Franco-European stock market operator Euronext by the New York Stock Exchange in 2006 (see Callaghan and Lagneau-Ymonet, 2012), and of the French aluminium conglomerate Pechiney by its Canadian competitor Alcan.

6 Debates in the British House of Commons, recorded in Hansard, were sourced from Millbank Systems (for debates prior to 2006) and from the website of the UK Parliament (for debates from 2006 onward). The search covered all available years, starting in 1805. The term ‘takeover bid’ was first used in 1953.

7 Pilkington: debate on ‘City and Industry’, Commons Hansard, 28 January 1987; debate on ‘Pilkington Brothers’, Commons Hansard, 12 December 1986; debate on ‘BTR and Pilkington Brothers’, Commons Hansard, 15 January 1987; debate on ‘Manufacturing and Economic Prosperity’, Lords Hansard, 5 March 1987. Rowntree: debate on ‘Rowntree plc.’, Commons Hansard, 25 May 1988; ‘Rowntree plc.’, Commons Hansard, 8 June 1988; debate on ‘Rowntree plc takeover bid’, Lords Hansard, 25 May 1988. Cadbury: debate on ‘Cadbury’, Commons Hansard, 26 January 2010.

8 E.g. Barry Jones, Labour, Commons Hansard, 15 December 1986, column 884.

9 Between 1986 and 2005, 3368 British companies went into foreign ownership, compared to 1374 French and 1237 German companies. World-wide, only the United States, at 6218, experienced more foreign takeovers (cf. van Marrewijk and Garita, 2009: 9).

10 Earlier examples of French intervention in foreign takeovers or partial takeovers include the cases of General Electric/Bull in 1964, Westinghouse/Jeumont-Schneider and Fiat/Citroën in 1968, Leasco/SEMA in 1969, ITT/Pompes Guinard, Helena Rubenstein/Parfums Rochas, Heinz/Grey Poupon and General Foods/Orangina in 1970 (see Torem and Craig 1971: 324–334).

11 The Guardian, 14 December 1989.

12 Examples include the purchase of Racal's defense electronics business by the French group Thomson CSF in 2000, the sale of a controlling stake in helicopter maker AugustaWestland to the Italian defense and aerospace company Finmeccanica in 2004, and, also in 2004, government approval for the takeover of tank maker Alvis by the American defense contractor General Dynamics. (Alvis ended up remaining British after a successful counterbid by British Aerospace Engineering, BAE). In 1999, the government approved Enron's bid for Wessex Water, and Texas Utilities’ bid for Energy group. In 2008, Electricité de France acquired British Energy.

13 The Times, 24 March 2006.

14 Evening Standard, 12 December 2006, p. 22.

15 Daily Telegraph, 14 February 2007.

16 Sunday Times, 30 May 2004, p. 11.

17 The Guardian, 9 February 2007, p. 37.

18 Daily Telegraph, 28 November 2006, p. 2.

19 The Guardian, 26 July 2007, p. 32.

20 Financial Times, 15 August 2001, p. 18.

21 Daily Post (Liverpool), 16 November 2005, pp. 8, 9.

22 Wiggin accused protesting workers of putting their own jobs at risk ‘by sending out such negative signals’ and expressed doubts on whether anyone would want ‘to hire a whingeing workforce when you can have a positive upbeat one.’ (Birmingham Evening Mail, 22 January 2010 Friday, p. 5.)

23 Kraft had announced a plant closure seven days after the bid had gone through, having previously promised to keep all plants open.

24 Ian Lucas, cited in Birmingham Mail, 27 January 2010.

25 The strength of horizontal, intra-managerial networks (through interlocking directorships or old school ties) is at best indirectly relevant to the functionality of vertical coordination between government officials, corporate elites and local stakeholders and is therefore not documented below. However, data by Maclean, Harvey and Chia (2010: 338f.), Scott (2003: 168), Agardi and Alcouffe (2007: p. 7, table 3), Elouaer (2006: 11) and others suggests that such networks are also weaker in Britain than in France.

26 Moreover, in the UK, 7.8 percent of all firms (and thus more than half of all family firms) were controlled by foreign rather than domestic families, compared to 12 percent in France.

27 The Times, 16 January 1987.

28 Pilkington.com, ‘about pilkington’, cited in Froud et al. (2008: 179).

29 Die Zeit, 20 May 1988.

30 York Press, 6 March 2012.

31 Toronto Star, 2 June 1988, p. D28.

32 The Times, 8 August 1988.

33 The Guardian, 27 January 2010.

34 Associated Press, 2 February 2010.

35 Birmingham Mail, 11 November 2009.

36 Birmingham Post, 20 December 2007.

37 Similar endorsements of target companies were also voiced with regard to a bid for the brewery Matthew Brown by National Distillers (Commons Hansard, 28 November 1985, c.1112), and an expected bid for the Trustees Savings Bank (Commons Hansard, 20 February 1985, c. 1130). A search for the term ‘local community’ did not produce any other examples. A more reliable quantitative measure would require coding all 512 debates in the database. However, the more relevant comparison is not across debates, but between those bids that were debated and those that were not.

38 Froud et al. plausibly argue that their weak integration into industrial networks helps NEDs ‘understand unquestionably how to behave when auctioning the company. This typically means efficiently holding out for the highest price for shareholders … and then endorsing acquisition without questions about industrial logic, the effects on other stakeholders, or any reference to the mass of empirical research on how mergers usually destroy value.’ (Froud et al., 2008: 177).

39 Pilkington chairman Sir Nigel Rudd would later be described as ‘British dealmaker extraordinaire or the man who flogged UK PLC to overseas private equity’. (www.thisismoney.co.uk, 29 November 2012, accessed 20 November 2013.)

40 <http://news.bbc.co.uk/2/hi/business/8496873.stm>, accessed 14 November 2013.

41 Daily Post (Liverpool), 16 November 2005, pp. 8, 9.

42 In 1986, stakeholder mobilization had persuaded Pilkington's largest shareholder – Standard Life, a long-term savings and investment business headquartered in Edinburgh – to support the incumbent management despite weak financial performance. (Froud et al.,2008: 179)

43 Financial Times, 12 March 2010.

44 The Times, 20 January 1997; The Guardian, 22 October 2010, p. 31.

45 The Daily Telegraph, 11 February 2006, p. 33.

46 The Observer, 20 September 2009.

47 The Times, 8 November 1988.

48 Le Monde, 15 February 1989, p. 46; La Vie Française, 14 May 1988.

49 Le Monde, 14 February p. 9.

50 The Times, 29 July 2005, p. 52.

51 For analysis of the British parliamentary discourse since the 1950s, see Callaghan and Hees (2013).

52 Sydney Morning Herald (Australia), 9 November 1988, p. 46.

53 The Independent, 21 February 1994, p. 17.

54 The Toronto Star, 8 March 1986, p. A10.

55 Hamilton Spectator (Ontario, Canada), 9 January 1998, p. D13.

56 Daily Mail, 28 February 2006, p. 12.

57 Daily Mail, 13 December 2006, p. 39.