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The Role of State-Firm Relationships in Fostering Competitiveness: Telefonica’s Upgrading

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  • Angela Garcia Calvo

Abstract

This paper examines the structures behind competitive transformation in telecommunications. The analysis is based on qualitative evidence from Telefonica’s transformation since the mid-1980s and comparisons with BT, Orange, and Deutsche Telekom. Telecommunications is a critical industry whose services are crucial inputs for most economic activities. Telefonica’s upgrading remains a rare example in which a non-leading firm reached the efficiency frontier. I argue that Telefonica’s upgrading cannot be explained without defining business-state interactions in Spain and characterizing the impact of the shift from the natural monopoly to the market paradigm. Spain resolved the tension between government objectives to universalise service and Telefonica’s concern for profitability through a non-hierarchical system of negotiated interactions and mutual exchanges that helped the state and the incumbent further their respective goals. Overall, this paper enters into the debate about the state’s role in industrial transformation and provides insights about the conditions that favour competitiveness in telecommunications.

Suggested Citation

  • Angela Garcia Calvo, 2014. "The Role of State-Firm Relationships in Fostering Competitiveness: Telefonica’s Upgrading," Carlo Alberto Notebooks 397, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:397
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    References listed on IDEAS

    as
    1. Faulhaber, Gerald R., 1995. "Public policy in telecommunications: The third revolution," Information Economics and Policy, Elsevier, vol. 7(3), pages 251-282, September.
    2. Macher Jeffrey T & Mayo John W & Schiffer Mirjam, 2011. "The Influence of Firms on Government," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-27, January.
    3. Rozas, Patricio, 2003. "Gestión pública, regulación e internacionalización de las telecomunicaciones: el caso de Telefónica S.A," Gestión Pública 7289, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Angela Garcia Calvo, 2012. "Universal Service Policies in the Context of National Broadband Plans," OECD Digital Economy Papers 203, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    political economy; telecommunications; business-state relations; upgrading; competitiveness;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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