Global Value Chains
Authors: Hesse, J.O. and Neveling, P.
This chapter focuses on the role of foreign investment and multinationals in the electric power industry. It explores the evolution of the organizational conduits for doing business abroad to understand why the electric holding company epitomized the multinational firm in the industry. The chapter focuses on the synthesis provided by William J. Hausman and his co-authors and the insights from research on free-standing companies and other unconventional organizational forms in multinational activity, which “pushed forward thinking about different forms of multinational enterprise behavior over time”. Launching downward vertical integration of foreign electric utilities via electrical equipment manufacturers was the closest the electricity business came to the classic model of multinational firm, in which investment abroad starts after developing a consistent presence in the home country. The transformation of former electrical holdings into actual multinational firms addressed the fragility and short-termism of the entrepreneurial initiatives based on investment trusts.