State Capitalism in Western Europe

Abstract

Abstract Notwithstanding the intense wave of privatizations which has deeply transformed the physiognomy of Western European economies since the mid-1980s, Governments are still playing a relevant role as direct owners of companies in several industries, particularly those with a strategic relevance. What has changed is, however, both the structure of state involvement in the companies’ ownership, and also the strategic orientation of the companies themselves. As far as ownership is concerned, in several (but not in all) cases Western European governments have reduced the size of their shareholdings to the minimum threshold of control. This has meant the floating of a consistent part of the companies’ capital on the international stock market, and the involvement of relevant constituencies as institutional investors. This has had, of course, a relevant impact on these companies’ corporate governance practices, which are now subject to a much closer scrutiny than in the past. The consequence of this process has been a radical change in the companies’ strategies, now facing a much more diversified constituency of shareholders. Inward-looking, domestic-oriented market strategies have given room to outward-looking behaviors based on aggressive internationalization. This process in its turn has impacted on other aspects of corporate life as for instance the hiring of top management. The chapter analyses the contours of the phenomenon suggesting a taxonomy useful for understanding the different typologies of state-ownership.