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How Do Network Companies Seek Legitimacy for Public Value Trade Offs?

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  • Bauke Steenhuisen
  • Mark de Bruijne

Abstract

Network companies fulfill a critical role in the energy transition. This article provides an empirical study of this role of a Dutch national gas network company connecting a biogas producer. This project requires choices about many intertwined technical and institutional variables. Choices involve multiple, potentially competing public values like safety, cost-efficiency, sustainability and non-discrimination. A formal governance structure provides generic guidelines for network companies about how to act in the public interest, but we argue that unclarity remains on how to trade-off public values. In these instances, a network company seeks legitimacy for the choices that are made. Via an in-depth case study on the injection of biogas we explored how a network company interpreted its public role and how public value trade-offs were made. We conclude that legitimacy is sought and found in a mixture of formal and informal ways both inside the network company as well as outside. Although the governance regime allowed the network company to take a leading role in the innovative project, it failed as a starting point to claim legitimacy. These findings provide food for thought on how to institutionally embed the role of network companies in the energy transition.

Suggested Citation

  • Bauke Steenhuisen & Mark de Bruijne, 2016. "How Do Network Companies Seek Legitimacy for Public Value Trade Offs?," Competition and Regulation in Network Industries, , vol. 17(2), pages 181-201, June.
    • Handle: RePEc:sae:crnind:v:17:y:2016:i:2:p:181-201
    DOI: 10.1177/178359171601700204
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    References listed on IDEAS

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    1. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    2. M. De Bruijne & B. Steenhuisen & A. Correljé & E. Ten Heuvelhof & L. De Vries, 2011. "How to design a new gas bid price ladder? Exploring market design issues in the new Dutch gas balancing regime," Competition and Regulation in Network Industries, Intersentia, vol. 12(1), pages 83-98, March.
    3. Wijnand Veeneman & Willemijn Dicke & Mark De Bruijne, 2009. "From clouds to hailstorms: a policy and administrative science perspective on safeguarding public values in networked infrastructures," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 4(5), pages 414-434.
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