State-owned enterprises as a political tool: The case of a Venezuelan oil company


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Public companies represent a valuable tool for the state to intervene in the economy by correcting market failures. However, critical positions that advocate its privatization continue to appear since they do not usually have great returns. This study analyzes the effect that political goals have on the efficiency of a state-owned enterprise (SOE) when ownership and management tend to be concentrated in the same actor. Agency theory served as a reference framework, using Petróleos de Venezuela (PDVSA) as a case study during the period 1995–2014. First, the period was divided into four stages differentiated by changes in the SOE volumetric strategy, the exploration strategy, the position regarding foreign capital, and the SOE participation in social development activities. Later, the SOE economic and productive efficiency was analyzed in the stages to identify relevant changes. The results indicate that the interests of the principal and the agent by good management of the SOE increase when the profit is reduced. It is mainly due to the need of the government to benefit from these activities. However, when the company surplus increase, the government tends to intensify its control to obtain additional benefits, especially during electoral events.

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    • Figure 1. Evolution of company’s profit and social development spending (in millions of USD dollars)
    • Figure 2. Participation of citizens in national elections in Venezuela
    • Figure 3. PDVSA global productivity index (GPI)
    • Figure 4. PDVSA average cost of production
    • Figure 5. PDVSA total crude oil, liquid petroleum gas, and net natural gas (in thousands of BOE per day)
    • Table 1. Position regarding the oil policy between the owner and the agent by stages
    • Table 2. PDVSA operation data by stage
    • Table 3. PDVSA operation income and costs
    • Table 4. Expenses for social developments (in millions of US dollars)
    • Conceptualization
      Juan Morales
    • Data curation
      Juan Morales
    • Formal Analysis
      Juan Morales
    • Investigation
      Juan Morales
    • Methodology
      Juan Morales
    • Supervision
      Juan Morales
    • Validation
      Juan Morales
    • Writing – original draft
      Juan Morales
    • Writing – review & editing
      Juan Morales