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Extending the Eclectic Paradigm in International Business

Essays in Honor of John Dunning

Edited by H. Peter Gray

John Dunning is undoubtedly the world’s leading scholar on the subject of multinational corporations and international business. This collection of original essays is designed to honor this work, particularly his achievements during his association with Rutgers University.
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Chapter 16: The Eclectic Paradigm and the Evolution of the United States Public Utility Industries, 1875–2000

Cliff Wymbs


Cliff Wymbs INTRODUCTION Just as they did at the turn of the century, public utilities (telecommunications, electric, gas and water) today provide the basic infrastructure necessary for economic growth in both developing and developed countries. Over the past seventy years, government has regulated these industries and has maintained an uneasy balance of social, economic and political objectives. This government control, coupled with an inward industry focus, has made this a neglected area of research for international business scholars. Trends associated with globalization of business, smaller government mandates and dramatic technological changes have been key factors in precipitating fundamental change and a worldwide growth of foreign investment in the public utility industries. This chapter provides a longitudinal view of both investment into the United States public utility sector and investments by United States public utility companies around the world. The dynamic interaction among large firms, markets and governments both in the home and host country markets provides valuable insight into understanding the rationale of public utility FDI. The industries studied have historically been characterized as natural monopolies, i.e., their long run cost structures make competition inefficient, and provide basic consumer and business services that are billed at usage sensitive (e.g. per minute) rates. Traditionally, local, state and federal government regulatory agencies, rather than unimpeded market forces, have exerted significant control over firm behavior and geographic expansion in these industries. However, neither regulation nor industry dynamics are homogeneous across these industries. Water utilities provide a basic staple of life and...

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