Why Companies Bring the State Back In. The Voluntary Self-Nationalisation of the Anglo-Persian Oil Company and the Rise of ‘Governance by Government’

ABSTRACT

While companies usually prefer private to hybrid governance, they sometimes transfer governance to governments. This paper assumes that this emerges from a decline in a firm’s relative market position. It tests this assumption in a two-stage qualitative analysis: First, it conducts a fuzzy-set QCA of these decisions based on BP’s Annual Company Reports. Second, it presents a process tracing of the voluntary self-nationalisation of the Anglo-Persian Oil Corporation. The paper produces three core findings: First, threats to a company’s survival enable a preference reversal in favour of governmentalisation. Second, shareholder dissatisfaction is a crucial motivator for governmentalisation. Third, managers with an entrepreneurial role-model are more sensitive to autonomy costs and more likely to opt for unconventional governance options.

KEYWORDS:

• Global governance dynamics
• transnational governance
• energy governance
• institutional change
• private authority

Acknowledgements

I gratefully acknowledge co-funding by the Centre for International Studies at the London School of Economics and Political Science. The research for this paper profited greatly from advice and insights by Robert Falkner, Leonardo Baccini, James Ashley Morrison and Andreas Dür as well as the anonymous reviewers. I am grateful for their feedback and support. I also thank the fellows and staff at the Centre for International Studies as well as the organisers of several workshops and conference panels at the European International Studies Association, the International Studies Association and the research network Political Economy of Energy in Europe and Russia. I am thankful to the team at the BP Archives for very helpfully supporting my research visits.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes on contributor

Michael Sander is an independent researcher stationed in London. He was a Visiting Fellow at the Centre for International Studies, London School of Economics and Political Science, a Research Associate at the Forschungszentrum Jülich and a Graduate Scholarship Holder with the Friedrich-Ebert Foundation. He received a PhD from the University of Trier in 2010 with a thesis on interorganisational networks in German–Russian energy relations.

Notes

1 A similar finding exists for intergovernmental agreements (Bernauer et al. 2013, pp. 487–95).

2 I use the term to differentiate increasing ‘governance by government’ from exiting labels like ‘politicisation’(Zürn et al. 2012) or ‘nationalisation’. The concept differs from Foucault’s theory of ‘governmentality’ (Foucault 1991, 2005, p. 252) in that it addresses only consciously initiated changes in material structures through which private actors increase the role of governments. This is much narrower and more immediate than the long-term changes of power-relations and the disciplining of citizens in Foucault’s concept (see e.g. Innes and Steele 2012).

3 Anglo-Iranian Oil Company, the company’s name between 1935 and 1954.

4 I will use the shorthand ‘Shell’ for reasons of brevity. The two firms remained legally independent until their full merger in 2005.

Additional information

Funding

This work was supported by Centre for International Studies, London School of Economics and Political Science.