Mixed ownership in the face of technological change:Response to digitization in telecommunications

Abstract

This study examines how the ownership structure of corporations shapes their response to technological change. In our empirical analysis, we focus on how European telecommunications operators responded to digitization. We predict that mixed ownership, a situation in which, following privatization, the shares of a company are partly privately held and partly held by the government, is associated with lower responsiveness to digitization. We theorize that CEOs and top management of corporations with mixed ownership are exposed to conflicting views on how companies should address the challenges posed by technological change, thereby making them more likely to maintain the status quo. Our data on European telecommunications operators that had to adapt to the advent of internet-based communication services provide support for our conjectures. In addition, the analysis shows that mixed ownership is particularly problematic when firms are led by an internal CEO and when they integrate extramural digital technology, which lends further support to the proposed theoretical mechanism.