The British gas industry, 1949 to 1970 : management strategies and government regulation.
The theoretical literature on public ownership suggests many reasons for anticipating
poor performance by publicly-owned firms, especially the lack of incentives for managers
in uncompetitive environments combined with the problems of political interference. Yet
the performance of the nationalized British gas industry in the post- war period was very
impressive, with high rates of growth of output and productivity and the successful
development of new techniques and new markets. To resolve this puzzle, the key
factors to be examined are government/industry relations and strategic management.
A detailed analysis of the evolution of government policy towards the nationalized
industries in general and gas in particular, including the provision of funds for
investment, pricing policies, the extent and quality of monitoring of the industry's
performance and energy policy, reveals that government policy in the case of gas was
more benign than for many of the nationalized industries.
Management strategy is investigated by means of a comparison of two Area Gas
Boards, the South Western and the East Midlands. Quantitative indicators show that the
East Midlands Board enjoyed rapid sales growth for much of this period, and made use
of a wide range of techniques for manufacturing and supplying gas. The South Western
Board's sales performance was among the weakest in the industry and it remained
committed to out-moded techniques based on coal for a long time.
Underlying differences in the market/technological environments faced by the two
Boards provide a major part of the explanation of these variations in business
performance. However, the strategies adopted by the Area Boards are also shown to be
In contrast to much existing literature on nationalized industries the emphasis here is on
the autonomy enjoyed by managers in many crucial aspects of decision-making, the
surprising strength of competitive forces acting on the gas industry, regional diversity,
and the reasonably benign role played by government.