The management of state-owned enterprises (SOEs) is frequently seen as source of debts for public spending or is quoted for the opacity in the choice of board members but less often is recognized as a priority for ensuring local, regional, and national economic development. Utilities, in particular, own and maintain infrastructure and facilities to provide fundamental services to the community.
Historically, generation and distribution of water, gas, electricity, as much as rail transportation and telecommunication networks, have always been operated by Public Administrations (municipality, agencies, etc.) due to the need for universality and uniformity of services offered to the population and the enormous costs associated with related infrastructures. Since privatization kicked in to combat the inefficiencies of the public sector, in Italy, as in many other countries, something changed.
Despite the acknowledged importance of utilities for quality of life in a given territory and the positive contribution of the latter to entrepreneurial activity, the role of utilities in fostering innovation appears to be poorly researched. Both resource dependence and population ecology standpoints to organizational studies recognize the need for firms to fit with their environment and access localized resources for the sake of their survival. The literature on local systems indicates that fragmentation, lock-in, and institutional thinness are the cause of the weakness of regions; utilities can help to overcome these gaps.
Changes in utilities’ offerings provoke significant changes in the environment, thus suggesting that utilities have a major role for economic growth from a territorial capital perspective. Utilities’ offerings, let them be services or infrastructures, embed knowledge that, once in the market, sets the stage for new knowledge to be created.
This paper represents an attempt to assess the role of utilities in promoting innovation and new knowledge creation. In particular, we investigate whether advances in utilities’ offerings are the results of internal R&D activity or are acquired from external actors and, downstream, the extent to which such advances foster innovative initiatives when they flow to the market. By looking at different businesses, cases and discussion outline fundamental elements that lead and support the development of our propositions. Direct quotations from interviewees corroborate the discussion, thereby supporting with evidence our propositions under the very spirit of the Grounded Theory.
Such an attempt is organized as follows: we first review the relevant literature as a starting point for our arguments; we then proceed with the formulation of propositions, the latter grounded by cases of utilities nourishing innovative entrepreneurial initiatives and corroborated by direct quotations from interviewees.
The main contribution of this study is represented by the identification of SOEs as wellsprings of innovation. From a business ecosystems perspective, management of utilities influences environmental factors that shape the way firms compete and, thus, how regional economy grows. The positive contribution of utilities to innovation is twofold: they buy technology from external actors, upstream, and their advanced offerings create new opportunities for innovation, downstream. Implication for managers and policymakers are finally discussed, while directions for further empirical research are presented.
Governance and management of State-Owned Enterprises, corporate forms and agencies on loca
