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Political Survival, Energy Policies, and Multinational Corporations

A Historical Study for Standard Oil of New Jersey in Colombia, Mexico, and Venezuela in the Twentieth Century

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Abstract

  • We draw on the selectorate theory and detailed historical research to explain how a government relationship with foreign multinationals will depend on the strategies followed by the host country’s ruler to assure his/her political survival. Focusing in three oil-exporting countries (Colombia, Venezuela, and Mexico) and one firm (Standard Oil Company of New Jersey) during the twentieth century, we show that oil rents are a valuable resource for the host country’s ruler to assure the loyalty of his/her winning coalition.

  • We argue that a government depending on a small winning coalition will use oil rents as a private good to be distributed among those close to the ruler, while a government relying on large coalitions will use oil rents as public goods to be distributed among the population. When acting against foreign multinationals, the host government is constrained by the political power of the firms’ home country over the host country and by the relationship between the firm and its home country. Finally, we show that shared political agendas between host and home governments give the host government more space to maneuver against foreign firms.

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Notes

  1. The commonly accepted definition of polity is a country’s “political and governmental organization” or “authority patterns.” (Marshall and Jaggers 2002, p. 1).

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Author information

Authors and Affiliations

  1. Department of Business Administration, College of Business at Illinois, University of Illinois at Urbana-Champaign, Urbana-Champaign, USA

    Marcelo Bucheli

  2. Center for Professional Responsibility in Business and Society, College of Business at Illinois, University of Illinois at Urbana-Champaign, Urbana-Champaign, USA

    Ruth V. Aguilera

Authors
  1. Marcelo Bucheli
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  2. Ruth V. Aguilera
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Correspondence to Marcelo Bucheli.

Appendix

Appendix

Oil Legislation, Jersey Strategy, and US Role in Mexico, Colombia and Venezuela

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Bucheli, M., Aguilera, R.V. Political Survival, Energy Policies, and Multinational Corporations. Manag Int Rev 50, 347–378 (2010). https://doi.org/10.1007/s11575-010-0036-1

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