How Mixed Ownership Affects Decision Making in Turbulent Times: Evidence From the Digital Revolution in Telecommunications

Abstract

This study examines how the ownership structure of corporations shapes their responses to technological change. We predict that mixed ownership, a situation in which, following privatization, the shares of a company are partly privately held and partly held by the government, is associated with lower responsiveness to technological change. We theorize that the top management of corporations with mixed ownership is exposed to conflicting views regarding how companies should address the challenges posed by technological change, thereby making them more likely to maintain the status quo. In addition, we argue that mixed ownership is particularly problematic when firms attempt to integrate extramural technology to manage technological transformation. Our data on European telecommunications operators that had to adapt to the advent of Internet-based communication services support our predictions.

Keywords: ownership structure, mixed ownership, privatization, digitization, innovation, telecommunications industry

JEL Classification: G32, G38, L33, L96, O31, O33