Regionalization Strategies of European Union Electric Utilities

AuthorAns Kolk,Daniel Buuse,Johan Lindeque
Published date01 January 2014
Date01 January 2014
Regionalization Strategies of European
Union Electric Utilities
Ans Kolk, Johan Lindeque and Daniel van den Buuse1
University of Amsterdam Business School, Plantage Muidergracht 12, 1018 TV Amsterdam, The
Netherlands, and 1Amsterdam University of Applied Sciences and University of Amsterdam Business School,
The Netherlands
Corresponding author e-mail:
As part of the debate about globalization and regionalization, this paper adds a perspec-
tive that has so far remained underexposed, that of (formerly state-owned) f‌irms in
(previously) regulated industries, in order to better understand the (changing) role of the
home country/region in internationalization processes in the context of regional market
liberalization. We explore the global/regional orientations of the seven major European
Union electric utilities from f‌ive different home countries, which are active in both
fossil-fuel and renewable energy generation. Using a multiple case study design, we
collected internationalization/regionalization data from f‌irms’ annual reports for the
years 2000, 2005 and 2010, supplemented with an analysis of secondary sources. Firms
show a clear pattern of increasing internationalization away from the home-country
market, coupled with a home-region orientation for traditional generation activities
which differs from the more international, wider and often multiple regional presences in
the newer renewables business for some f‌irms. Institutional factors are argued to play an
important role in both processes. Findings suggest distinct regionalization patterns for
business units and different f‌irm-specif‌ic advantages, with strategic opportunities related
to asset positions. Home-country effects may be linked to a heterogeneous f‌irm-specif‌ic
home-region liability of foreignness, resulting in incomplete home-region internationali-
zation in most cases.
In the past decade, a debate has started about
regionalization, initiated by Alan Rugman who
announced the ‘end’ of global strategy, calling it a
‘myth’ (Rugman, 2001; Rugman and Hodgetts,
2001). Presented as a specif‌ication of the integra-
tion responsiveness framework (Bartlett and
Ghoshal, 1989), particularly to further explore
the ‘high national responsiveness’ dimension
(Rugman and Hodgetts, 2001), it has evolved as a
f‌irm-level manifestation of semi-globalization,
which alludes to the fact that markets show
neither complete fragmentation nor perfect inte-
gration (Ghemawat, 2003). The region as a
relevant unit of expansion for multinational
enterprises (MNEs) has been developed around
an extended notion of triad power and especially
the ‘global impasse’ phenomenon noted by
Ohmae (1985), pointing at the inability of many
f‌irms to be present in all three legs simultaneously
to the same extent. As such, political and eco-
nomic regional integration projects such as the
North American Free Trade Agreement
(NAFTA) and the European Union (EU) are
important inf‌luences on the regional nature of
MNEs, as these both provide more regional insti-
tutional coherence. For MNEs in a region, this
offers the potential for substantially lower invest-
ment costs and/or greater eff‌iciency in the exploi-
We would like to thank Alan Rugman and three anony-
mous reviewers for their constructive comments on an
earlier version of this paper, and Gerrit Buist for his
input on specif‌ic aspects related to the European energy
British Journal of Management, Vol. 25, S77–S99 (2014)
DOI: 10.1111/1467-8551.12015
© 2013 The Author(s)
British Journal of Management © 2013 British Academy of Management. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
tation and development of non-location-bound
f‌irm-specif‌ic advantages (FSAs) within the region
relative to other alternatives (Rugman and
Verbeke, 2004, 2005, 2008c).
The EU is the broadest and deepest regional
integration project between independent nation
states in modern time, including economic, politi-
cal and social dimensions. Energy is a key EU
policy issue area that features the longstanding
economic ideal of a single European market, with
an internal energy market, and a social dimension
in the response to pressing societal challenges,
pursued through the ‘EU sustainable energy
policy’ process (EC, 2010). Initially put on the
agenda in 1987, the EU internal energy market
has seen three policy packages (in 1996, 2003 and
2007) aimed at liberalization of what used to be a
‘heavily regulated industry in almost all EU coun-
tries, dominated by national or regional, vertically
integrated monopolies’ (Domanico, 2007, p.
5064). In conjunction with energy market liberali-
zation, which has been characterized as incom-
plete in some EU countries (Joscow, 2008), thus
creating major differences between countries
within the EU, renewable energy targets have also
been set through various EU directives (Jones,
2010). In 2009, a Renewable Energy Directive was
adopted by the EU in order to establish concrete
policy, to be implemented by all member states,
towards achieving the 20/20/20 targets (a 20%
cut in carbon dioxide emissions, a 20% share of
renewable energy and 20% energy-eff‌iciency
improvement by 2020). The steps taken in the EU
sustainable energy policy process represent a drive
for signif‌icant regional harmonization that has
shaped the regional institutional environment of
energy f‌irms.
A particularly important subset of these energy
f‌irms is formed by those that are involved in elec-
tricity generation and supply (hereafter labelled
electric utilities), in view of their role at the heart
of the business-society debate about how to sus-
tainably provide ‘the life blood of our society’
(EC, 2010, p. 2). These f‌irms generate a major
energy source for both industrial and domestic
consumers, using a range of natural resources as
their primary inputs, with various environmental
impacts depending on the types involved. As such,
these f‌irms are key players not only in the EU
sustainable energy policy process but also in the
broader transition from state-owned, protected
positions to liberalized electricity markets with
competition, private ownership and more inde-
pendent regulatory bodies. This changing context
clearly affects the prof‌itability, growth and sur-
vival of electric utilities, and speed and degree of
internationalization in relation to their home
countries/regions is a crucial f‌irm-specif‌ic factor in
this regard. Incumbent utilities may, for example,
benef‌it from a protected home market while
enjoying the opportunity to enter markets where
liberalization has seen more progress. This
raises questions about the importance of these
utilities’ home countries and region in their
internationalization processes, in relation to both
their ‘traditional’ fossil-fuel and renewable energy
We seek to answer these questions by exploring
the global/regional orientations of the seven
major EU electric utilities (EDF, Enel, E.ON,
GDF Suez, Iberdrola, RWE, Vattenfall) from f‌ive
different home countries (Germany, France,
Italy, Spain, Sweden), which are active in both
fossil-fuel and renewable energy generation. They
have leading positions in multiple national
markets and existing power generation portfolios
largely established in fossil and/or nuclear tech-
nologies, with vertically integrated supply chains
covering the production to end-consumer value
chain including generation, transmission, distri-
bution and retail supply activities (Schülke, 2010).
The seven f‌irms are featured by (former) state
ownership, are most often based in the largest
national energy markets of key EU member
states, and have shown serious internationaliza-
tion since the late 1990s, in the context of regional
market liberalization. The unique characteristics
of the electric utilities give the opportunity to
further examine the representativeness critique of
the original Rugman and Verbeke (2004) MNE
sample (Seno-Alday, 2009). The predominance of
(former) state ownership of these utilities, and
their frequent historical dominance as domestic
monopolies, suggests home-country effects are
likely to be important features of their regionali-
zation. The EU sustainable energy policy process
furthermore offers the opportunity to explore the
regionalization of f‌irms in terms of legacy fossil-
fuel energy generation and emerging renewable
energy operations, thus considering the different
scope of business units and FSAs.
The paper proceeds by reviewing the regionali-
zation literature and the role of the home country/
region in this debate. This is followed by an
S78 A. Kolk, J. Lindeque and D. van den Buuse
© 2013 The Author(s)
British Journal of Management © 2013 British Academy of Management.

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