Implications of Policy Incentives for Strategic Control: An Intergrative Model

This paper proposes an internal management

perspective of the company, as a complement to longstanding

principal-agency theory, for understanding the interchange

between regulator and company. It draws from a longitudinal

research project on understanding the implications of regulation

policy incentives for strategic control in the management of UK

monopoly network utilities and the management implications of

regulatory policy making. This paper reports on how two utility

companies have managed regulatory objectives alongside organizational

ones in electricity distribution and gas transportation

and suggests a new integrative model of strategic control for

understanding utility management. It concludes if regulation

policies are to be effective then regulators should understand the

internal management of the companies if performance targets are

to be attained.