THE STRATEGY OF SPANISH INDUSTRIAL FIRMS IN THE LATE TWENTIETH

CENTURY: A CONVERGENCE FAILURE

Veronica Binda

1) DIVERSIFICATION AND CONVERGENCE

In the twentieth century the strategy of diversification has played a fundamental role in the

development of the largest industrial enterprises in the world, revealing itself to be a crucial point in

sustaining their growth and competitiveness. The decision to move into new geographical or

product markets both permitted to use the competences and the resources acquired thanks to the

core activity and created ways to escape productive ties that would have seriously mined the

activity of big firms. Alfred Chandler1 affirms that in the United States, at the end of the nineteenth

century, the new big machineries and the technologies typical of the “Second Industrial Revolution”

permitted to exploit important scale and scope economies for the first time and therefore to produce

decreasing unitary costs to the increasing quantity. The growth of the productive process efficiency

generated a large surplus that could find employment in the development of fundamental activities

for a further growth of the enterprise. The exploitation of the productive potentialities of the

machineries, the systematic investment in the activity of research and development and the

emerging of geographical or product markets to conquer, stimulated the great American enterprises

to use the surplus in the pursuing of a strategy of diversification. The birth of new lines of product

or the conquest of unexplored regions allowed the firms to continue their own growth in spite of the

conditions of the originary markets that, with the increase of competition, were saturating. Chandler

claims that the strategy of diversification proved itself winning in particular if considering products

related to the core activity, because throughout an expansion in neighboring sectors it was possible

to fully exploit sinergies in knowledge, production and distribution and to maintain the control of

the whole created system basing on competence. Above all the strategy of unrelated diversification

was successful beginning from the 1960s, even if often not long lasting in the American case.

Undertaking a radically different activity from the original one permitted a risk reduction through

its subdivision in different sectors, a lower capital cost and a better use of the managerial resources.

On the other hand, the incompetence and the incapability to organically manage such different lines

of product constituted the main risk of this strategy. The modern industrial enterprise, as described

by Chandler, rarely continues to grow or maintain a competitive position for a long time if the

addition of new units isn’t followed by the development of suitable managerial abilities.

The empirical evidence collected on the world’s largest industrial enterprises has shown that the

strategy of diversification, related or unrelated, is currently the mostly used and is the one that

guarantees a higher level of competitiveness to the American and European enterprises, regardless

of the different national contexts and business cultures of these countries. A recent analysis of two

researchers, Richard Whittington and Michael Mayer2, faced the theme of the potentially difficult

destiny that diversification could have met in Europe, because of the different features of ownership 1 A. D. Chandler, Scale and Scope. The dynamics of industrial capitalism, Cambridge, London University Press, 19902 R. Whittington and M. Mayer, The European Corporation: Strategy, Structure and Social Science, Oxford U.P., 2000

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and financial structure and of the heterogeneity of the historical paths followed by these nations in

comparison to the United States. According to these authors, the obstacles met by the diversification

during its spreading in Europe have been many: France for instance, presents a system of financial

relationships, a personal capitalism and a technical culture that could have arrested the expansion of

the firms in new activities just like the predominance of the banks and the strong technical

inclination in Germany. In particular, the empirical evidence collected relatively to the feature of

ownership and to the importance covered by Rhenish capitalism model 3, in which the concentration

of the ownership is strong, seemed an obstacle to the diversification because it was suspected that

the major shareholder would have prevented an excessive expansion of the enterprise for fear of

losing its control. The results of the study on the largest industrial enterprises in France, Germany

and Great Britain in 1983 and in 1993 have not confirmed this hypothesis. In front of the greater

economic efficiency guaranteed by this strategy, the resistances have been outdone by the necessity

of remaining competitive in order to survive. The big enterprises of these countries, choosing to

grow through diversification, succeeded in emulating the American “first - movers” and to compete

with them on a functional and strategic level.

The diversification revealed itself a winning strategy also in nations with radically different models

of capitalism from the European and American ones, as Japan and South Korea. In these countries

the development of specific abilities has allowed huge industrial groups to manage different

activities with success and also to conquer the foreign markets. The path followed has not often

been the same as the American enterprises: in the Japanese and Korean case, the diversified

business groups are formed around few entrepreneurs that, having the capability, the will and the

necessary contacts to create great enterprises, have exploited them to enter different sectors. In this

system the State has played a fundamental role, protecting and sustaining the groups but requiring

the enterprises to export and to measure their competitiveness on the global market. The search of

an efficient way of production, also following a different path from the chandlerian one, has had the

same result: the creation of the fundamental organizational abilities to keep on pursuing strategies

of diversification and growth successfully.

The main interest of the analysis of the Spanish case is constituted by the fact that the political and

economical history of the country, in the twentieth century, presents strong particularities in

comparison to the nations studied by Whittington and Mayer and also in comparison to the history

of the countries protagonists of the Asian model of development, “industrial late comers” as Spain.

The Civil War and the Autarky experimented during the first decade of Franco’s period, in fact,

interrupted for a long period the growth of the great enterprises that were developing themselves at

the beginning of the century according to the path followed by the United States and by the other

3 M. Albert, Capitalisme contre capitalisme, Seuil, Paris, 1991

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European nations, and only during the 1950s Spain succeeded in obtaining a political stability

accepted at international level and started a plan of development of the economy. In the attempt of

regaining the accumulated disadvantage, the State became the principal actor of the industrialization

and intervened both through politics of regulation and protectionism and with the foundation of

public enterprises in the main sectors. The foreign investors, that entered Spain principally with the

economic opening of the country from the end of the 1950s, were fundamental for the take-off and

the industrial development. Spain grew importantly but, at the death of Franco, the serious mistakes

committed in the economic policy and the unsolved problems, emerged powerfully. The country

left in inheritance to the democratic goverments still presented a weak economy and it had been

harshly struck by the economic crisis of the 1970s. Considering this particular path of industrial

development, the aim of the project is to analyze the strategic choices and the performance of the

great Spanish enterprises in the 1980s and 1990s. The fundamental model of development, which

the strategy of these firms is compared to, is the chandlerian one with which the Spanish enterprises

have been in contact ever since the end of the Autarky and that, throughout the action of the

European multinational firms mainly after the integration in the EEC (1986), has completely

changed the relationships of competition among the enterprises seeing the multinationals victorious

on the national firms. On the other hand it is important also to compare the behavior of the Spanish

firms with the other “late comers” that today present a strong industry in which the diversification,

even if pursued through the organizational structure of the groups and not of the multidivisionals, is

at the base of the economic prosperity.

2) METHODOLOGY AND PROBLEMS

The opening towards the outside, that Spain experimented at the end of the 1970s with the transition

to democracy, brought many economists to question themselves on the competitiveness of the

Spanish enterprises in the world market. Aware of the debate terms and of the importance that the

strategic choices had covered since the Postwar period, many researchers have analyzed the degree

of diversification of the Spanish industry in the 1980s and 1990s4, confirming its low level. These

analysis show an ample picture of the diversification choices of the Spanish firms but, studying

samples of enterprises of various dimensions, they neglect the weight of the great firms. It is in the

great industrial enterprises, in fact, that the diversification has reached its maximum level and it is

on this level that it becomes necessary to compare the results obtained from the Spanish firms with

those of the European and American enterprises. To this purpose the same criterions adopted and

the exact period taken in consideration by Whittington and Mayer in the analysis of the cases of

4 E. Bueno, P. Morcillo and I. de Pablo, Dimensiones competitivas de la empresa española, in “Papeles de Economía Española”, no. 39, 1989; F. Merino de Lucas and D. Rodríguez Rodríguez, Un analisis de la diversificación en la industria manufacturera española, in “Actas de las X jornadas de economía industrial”, Fundación Empresa Pública, Madrid, 1994; I. Súarez González, Estrategia de diversificación y resultados de la empresa española , in “Revista de Economía Aplicada”, no. 4, 1994

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France, of Germany and of Great Britain, have been used: for 1983 and 1993 two samples, each of

which composed by the one hundred largest industrial enterprises by turnover in the country, have

been selected. The principal source used for creating the samples is the “Anuario El Pais”

publication, that reports the list of the largest enterprises every year. All the non industrial

enterprises have been eliminated from this list, according to the classification of Whittington and

Mayer: the commercial, financial, public service and construction firms, strongly present in the list,

can’t be found in the empirical analysis proposal. Subsequently the industrial firms belonging to a

same holding have been gathered thanks to the information drawn from “Duns & Bradstreet” and

“Fomento de la Producción”, considering in a unitary way the total sales of the group. Subsequently

the identity of the owner subject has been established, classifying the enterprises in foreigners and

“national” (public and private) so to exclude from the analysis the firms whose head office was in a

foreign State, and to concentrate only on the Spanish enterprises. When the sources permitted to

ascertain it, even the nature of private owners was specified, be it personal, family, banking, group

of firms, cooperative society or widespread ownership, because the affiliation to one or the other

category often implicated a different propensity in undertaking investments and risks, enlarging the

company, submitting its control to external managers, moving into other makets. It has finally been

necessary to identify the strategy adopted by each of the national enterprises, cataloging it

according to the classification proposed by Whittington and Mayer for other European States. They

measured the strategy classifying it in four types:

- “Single business strategy” if at least the 95% of the turnover originated from a single activity;

- “Dominant business strategy” if an activity reached at least 70%, but didn't overcome the 95% of

the turnover;

- “Related diversification strategy” if no activity reached the 70% of the turnover, but there were

market or technological relationships among different activities;

- “Unrelated diverisification strategy” if no activity reached the 70% of the turnover and almost no

technological or market relationship existed among different activities5.

The peculiarity of some of the great Spanish enterprises’ features made it difficult, if not

impossible, to completely follow the methodology adopted for the other European countries. The

conclusive role that the foreign enterprises cover in the Spanish samples, first of all, limits the

sources of the data. While in France, Germany and Great Britain the “national” samples were

composed in average from 70 enterprises, in the Spanish case the analyzable firms in 1983 were 66

and in 1993 only 38, statistically provoking the pursuit of less significative results. Besides

Whittington and Mayer, when confronting industrial groups, took only the group leader in

consideration, while in the Spanish case a similar choice is not adequate because the role practiced

5 R. Whittington and M. Mayer, cit., p. 163

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by the largest industrial enterprises, that are those belonging to the public groups INI and INH,

would be eliminated from the calculation effected for the strategy, considering them as if they

weighed “one” in their totality and firms of smaller dimension in comparison to those considered

for the other countries would be inserted in the sample. For this reason both the necessities have

been taken in consideration, counting the strategy of every group only once but avoiding to insert in

the samples firms of reduced dimensions, often all single business, that would have unbalanced it,

reducing the weight that the great groups practice in the sense of a greater diversification and

moving the analysis from the large enterprise to very small companies, incomparable with those of

the rest of Europe. In the calculation of the first one hundred enterprises, therefore, the great firms

belonging to the INI and the INH have been counted separately although their strategy and their

structure has uniformly been considered, making it coincide with the group one and counting it only

once. The last remarkable problem in the analysis has been the computing of the strategy one. The

sources analyzed for this type of investigation are various: for what concerns the classification of

the productive activity of the enterprises the international codes of classification of the industrial

activities (SIC) have been considered6. The SIC were needed above all for cataloging with precision

the type of developed activity, but they didn’t permit a cataloguing of the strategy adopted because

they do not allow a measurement of the activities’ correlation degree and neither of the sales

percentage guaranteed by every type of product. For this reason, besides the SIC, has been used an

intuitive logic concerning the correlation among activities and other sources for the measurement of

the percentage of sales guaranteed to the company from every product. The most significant

quantity of this information is in the major economic newspapers and periodicals’ files of the years

between 1982 and 1994 (El Pais, El Mundo, Actualidad Económica, Dinero, Fomento de la

producción, Inversión, Mercado). Other data have emerged from the Informes Anuales of the firms,

from the commemorative publications published in the event of particular anniversaries of the

foundation of the companies, from business cases, from monographic publications on single

enterprises and from the biographies of the most important Spanish entrepreneurs.

3) EMPIRICAL ANALYSIS

3.1) RESULTS

Even if in smaller proportion in comparison to the samples composed by firms of various

dimensions, the most greater Spanish companies confirm the tendency to a low level of

diversification in comparison to the European ones (table 1).

Table 1 - Strategy of the 100 largest industrial enterprises in EuropeSpain France Germany Great Britain

1983 1993 1983 1993 1983 1993 1983 1993

6 España – 10.000 principales empresas españolas/84, Duns and Bradstreet, Madrid, 1984; España 30.000 principales empresas españolas/93, Duns and Bradstreet, Madrid, 1994

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Single Business 63,1% 60% 24,3% 19,4% 18,3% 12,7% 6,7% 4,5%

Dominant Business 7,8% 15% 10,8% 15,2% 16,7% 7,9% 16% 10,4%

Related Diversification 15,7% 15% 52,7% 51,5% 40% 47,6% 66,7% 61,2%

Unrelated

Diversification13,1% 10% 12,2% 13,6% 25% 31,7% 10,7% 23,9%

Source: proper Elaboration and Whittington and Mayer, The European corporation

As occurred in the United States, also in Europe the largest industrial enterprises in the 1980s and

1990s showed the results of a growth persecuted throughout diversification (dominant business or

related or unrelated diversification) in over the 60% of the cases, while the percentage of single

business firms seldom reached the 20%. The tendency at the end of the century shows an

intensification of this course: the number of enterprises assembled on their “core business”

decreased in all the nations between 1983 and 1993. The results obtained in Spain are very

different: in both these years a total predominance of the single business strategy can be noticed,

with values that overcome the 60%, despite the fact that the 1980s and the European integration had

created many opportunities of growth for the Spanish enterprises. In 1993, in comparison to a light

diminution of the number of the single business firms, only dominant business strategy benefited,

while those of related and unrelated diversification subsequently fell behind. The decision to

assemble their own activity in an only product was dominant at the beginning of the democratic

phase and did not suffer big variations even if the economic conditions of the new period were

favorable to strategic improvements and the widening of their own markets. The largest Spanish

enterprises at the end of last century had rarely undertaken the strategy of the diversification as a

path of growth, and when they tried it, in most of the case they did not have a positive performance

often incurring in real disasters. The elements that have hindered their choice of diversifying are

numerous, they have both economic nature and political origin and are the results of interaction

among foreign and national, public and privates actors. The picture shown in the 1983 sample,

allows many topics of reflection.

3.2) EXPLANATORY FACTORS

3.2.1 - ACCUMULATION OF CAPITAL AND DIVERSIFICATION

The principal factor that has started the pursuit of diversification strategies in the large American

enterprises was the accumulation of a huge quantity of resources thanks to a radical improvement of

the productive process of the core activity and the pursuit of scale and scope economies. Had a

similar process of accumulation of wealth ever occurred in the same period in any national firm in

Spain? Had the Spanish industrial enterprises reached the dimensions that had been the motor of the

growth and the critical stage that had allowed the foreign competitors to face with the right

resources the adventure of diversification? In 1983 no Spanish firm was present among the major

one hundred industrial enterprises by sales in the world, and only two of them can be found in the

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European list7. In this outline the public firms had chosen to grow up to the maximum ceiling of the

domestic market and they had remained small in comparison to the European rivals8. These great

firms grew in protected sectors and they had scarce incentives to increase their own

competitiveness. Besides they suffered from obstacles in the management which made it difficult to

pursue a rational and efficient strategy because the economic aims were overlapped by the political

and social finalities, that implicated a notable use of business resources9. The surplus was often

nonexistent, above all for the enterprises belonging to the great public holding INI: in 1983 the

group was not profitable because of the crisis of the 1970s, that had forced it to save and to gather

under its own guardianship a big number of enterprises belonging to various sectors. The State

didn't have either the necessary resources to restore to health all these firms or the organizational

and managerial competences to manage such a vast and diversified group10. The result was a drain

of resources from the most profitable enterprises to those in difficulty and a worsening of the

economic conditions of all the public firms. In this context it is not possible to assert that at the

beginning of the 1980s in the public firms (that were also relatively the largest of the country by

sales) that surplus of resources produced by the efficiency that Chandler held at the base of a solid

process of growth was present.

The private enterprises suffered from the competition of a rival which, even without being

competitive, was of greater dimensions and had privileged resources and they often didn't succeed

in growing much, as underlined by the 1983 sample. Up to the end of the 1980s the data underline

how the Spanish firms had the lowest rate of self-financing among the countries of the OECD11 and

were in difficulty in retrieving resources from a small and inefficient Stock Exchange and almost

totally depended on the banker's loans. Difficulties were also strong in this field: often the banks

granted credit to their own enterprises or to clients protected by the State and wouldn't risk their

own capital in other smaller unprotected firms and with more uncertain results. The private firms

not supported by the goverment, because of the banking sector conformation in those years,

suffered both from the difficulty in obtaining credit and from an elevated cost of the loan, that

brought the external indebtedness to be heavier. Between the 1970s and the beginning of the 1990s

the financial costs of the non-financial enterprises overcame their rate back on the investments in

average of quite a lot12. The only private enterprises able to sometimes have the necessary resources

to their growth and to have approached the critical dimensional level that in the United States had 7 Anuario El Pais, Madrid Prisa, Madrid, 1985, pp. 360-3618 A. Carreras e X. Tafunell, “Spain: big manufacturing firms between State and Market, 1917-1990”, in A. Chandler, F. Amatori and T. Hikino, Big business and the wealth of nations, Cambridge University Press, 19979 A. López Muñoz, El debate sobre la empresa pública, in “Anuario El Pais 1983”, Madrid Prisa, Madrid, 1985, p. 27310 F. Comín and P.Martín Aceña, La empresa pública en la España contemporanea”, in F. Comín and P. Martín Aceña, La empresa pública en la historia de España, Civitas, Madrid, 199611 S. Peréz, Banking on privilege: the politics of Spanish financial reform, Ithaca, N. Y., Cornell University Press, 199712 J. A. Maroto Acín, La situación empresarial en España, 1982-1989, in “Cuadernos de Información Económica”, 44-45

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preceded the stage of diversification, were in most of the cases directly of banking ownership

(almost half of the 1983 sample private firms) and those that benefited from some public support. In

these cases the availability of resources did not always coincided with the propensity of the owner

to embark upon strategies of diversification and with the presence of other necessary factors to be

successful. The low level of internal resources and the difficulty in obtaining them from the outside

context made it concretely impossible to grow and to diversify in capital-intensive sectors, in which

the great machineries and the efficient nets of distribution that constitute the source of the

economies of scale and scope need huge investments of initial capital and a lot of money for their

maintenance.

3.2.2 - THE ROLE OF THE STATE IN INFLUENCING THE CHOICES OF DIVERSIFICATION

The goverment interventionism in the economy played a remarkably important role in the life of the

enterprises since the beginning of the Francoist period, with results still visible today in the

mentality and in the strategy of many enterprises. The intervention of the State influenced the

choices of diversification of the firms through different channels. First of all the missed

achievement of the critical level of resources by the private firms to enter new activities is partly

referable to the difficulties that they faced in the growth, because of the public enterprises’

competition and the regulation in some sectors. Secondly the economic policy has indirectly

intervened in the choices of the entrepreneurs, creating a climate in which the growth of the

enterprises and the pursuit of efficient economic strategies as diversification wasn’t stimulated. In

the United States a decisive impulse to the geographical and product diversification originated from

the progressive saturating of the original markets due to the increase of the productivity and

competition, that had caused a diminution of the returns and made the entry in new activities

essential. In Spain a strong protectionism until the 1970s managed to make many industrial

enterprises face the challenges set by the market only in recent times. The traditional strategies in

the domestic market continued to be effective for a longer time and they remained profitable thanks

to the goverment protection: incentives to undertake new and more competitive tactics were

missing. When the period of protectionism concluded also in Spain, the national enterprises had

accumulated such a delay in comparison to the great multinationals already in the country to make,

in most of the cases, a later diversification useless in the markets already saturated by foreign

products13. It is finally not to be excluded that a form of “political capitalism” accompanied the

growth of these enterprises, that focused their attention on the agreement with the political world,

from which financings and protection could originate, more than on the economic advantages that

an efficient strategy of diversification would have been able to guarantee, preferring a growth for

political bargaining to a development of economic efficiency. This behaviour is not new to the

13 I. Suárez González, Estrategia de diversificación y resultados de la empresa española, cit.

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strategies of growth in the industrial “late comer” countries, in which the State played a great

economic role: in the Italian case at least half of the great enterprises, between the two Wars, had

their reference more in the State than in the market, often choosing to move into unrelated sectors.

This growth didn’t aim to the lowering of the unitary costs, but it had a strategic character: it was

driven from the ambition to place the firms in better positions to bargain with the public power14.

3.2.3 - MANAGEMENT AND ENTREPRENEURS’ PROPENSITY TOWARDS

DIVERSIFICATION

The characteristics and the attitudes of the entrepreneurs can form an obstacle to the strategies of

growth: the feature of the ownership of the enterprises in particular has been indicated by the

researchers as a determinant of the development process, since convenient strategies for a certain

category of entrepreneurs can be unsuitable for others. One of the main variables in the strategic

choices is constituted by the concentration degree of the ownership in the hands of the owner. In a

same economic area enterprises of widespread ownership among thousands of small shareholders

administrated by managers can coexist with firms completely possessed by only one entrepreneur,

jealous of his own control and that avoids the intervention of other people as far as possible in the

management. In this last case, increasing the number of his own products means to accept inside the

firms a radical change of the organizational structure, that has to adapt to a more articulated

strategy, accepting to decentralize in order to administrate and supervise the single products and

markets with efficiency. The number of people involved in the management must increase just as

the degree of autonomy of which they can dispose, condition that the entrepreneurs are reluctant to

accept. In France, Germany and Great Britain, despite the strong weight covered by the personal

capitalism and the banks, great diversified enterprises were born when this model manifested its

superiority in the competitive arena. In Spain the number of enterprises whose ownership is

constituted from only one or few individuals in the analyzed period is extremely consistent. The

Exchange has not played a fundamental role in recent times and that dispersion of ownership

oriented to the short period occured in the United States thanks to emerging of the Exempted

Dealers didn’t take place. Up to the end of the 1980s the national firms in most of the cases were

under the dominion or the important influence of few great shareholders: the State, the banks or the

private entrepreneurs. The propensity of these owners to accept a diffused managerial control

necessary to pursue the strategy of diversification efficiently was different from each case. The

State, for its own nature, has always used administrators but they were strongly conditioned in their

own management from social and political aims ordered by the goverment, that, when suggesting to

pursue strategies of diversification often acted out of the economic logics implicating disastrous

results. The banks were accused of having controlled great enterprises essential for the wealth of the

14 F. Amatori and A. Colli, Impresa e Industria in Italia dall’Unità a oggi, Marsilio, Venezia, 1999

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nation maintaining a scarce interest in the development of long period strategies for their

management and leaving them to foreigners in the moment of greater difficulty and deprived of

managerial experience. The private entrepreneurs, unlike what occurred in other European

countries, have generally shown a certain aversion to risk and a marked hostility towards the

transfer of power, preventing in this way the growth of their own enterprises. Confirming this

tendency some researchers have underlined how the economic rationality in many cases has been

hindered in the Spanish enterprises by owners reluctant to accept new solutions, emphasizing the

difficulties that the managers have faced in proposing their own opinion to often authoritarian

entrepreneurs, convinced that the industrial world was subject to a rigid hierarchy and to unyielding

rules dictated by a person that claimed to know “more than the others and better than others” 15.

It must be added that the same managers, had they succeeded in getting the control on the

enterprise, seemed hostile to undertake new activities. The managers often had had a strong

technical formation and, although damaging the rational choice of diversification of risk in various

activities and of exploitation of the scope economies, preferred to focalize on their own original

activity. In 1993 Spain was still the European country in which the engineer-managers had most of

the power16 and this characteristic made the Spanish case radically different from the Anglo-Saxon

one, in which one of the principal growth phases of the enterprises was the transition from the

engineer-managers to the MBA managers, educated at Harvard with the “method of cases” and

convinced that a manager could manage every type of activity independently from having a specific

formation on the product in consideration and therefore more inclinable to diversify the firms17. In

Spain entrepreneurs and management, principal authors of the strategy of the great enterprises,

often agreed on the decision not to estrange from their own core activity.

3.2.4 - INNOVATION AND DIVERSIFICATION

A further conclusive factor in inhibiting the possibility of the entrepreneurs to diversify is

constituted by the lower innovative level that characterized the Spanish enterprises still in the

1990s. In the United States and in Europe the introduction of the business function of research and

development was one of the keys of success in order to conquer new markets and to move into new

sectors: improve their own products, develop new goods or accomplish the productive process

were an essential base both for increasing the efficiency of the core activity, lowering the costs of it,

and for having success in proposing innovative goods. The dialogue among the analysers of market

and the department of research and development became more and more a fundamental condition to

diversify their own activity with success and to propose, in advance in comparison to the

competition, an interesting product for the demand in the right geographical market. In the Spanish

15 M. Guillén, Models of management, The University of Chicago Press, 1994, p. 20116 Así son los ejecutivos europeos, in “Actualidad Económica”, no. 1803, 11 gennaio 1993, pp. 64-6617 A. D. Chandler, The visible hand. The managerial revolution in American Business, Harvard University Press, 1977

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case all the measures of the innovation indicate scarce success in this field18. A big part of the firms

in the samples didn’t institutionalize the function of research and development if not in recent times.

In 1983, the percentage of investments in this activity in comparison to the GDP was the lowest of

the OECD after the Portuguese one and didn't even constitute a fifth of the American ratio, that was

the first one of the list in that year19. Spain doesn’t seem not even to have gathered the advantages

of the small enterprises’ dynamism that usually are protagonists of spontaneous innovations: the

number of patent requests was clearly inferior in comparison to the other European countries. In

1986 Germany could count 40.875 requests from its own citizens, France 13.919, the United

Kingdom 22.892 and Spain only 1.649. A constantly negative technological balance made it more

difficult for the Spanish entrepreneurs to enter new sectors successfully because, in order to have

fortune, it was necessary to produce competitive goods and to have more efficient productive

processes and, not having a propensity towards innovation, it needed to invest resources in

purchasing of other people’s patents. The depending on foreign countries and the carrying of these

costs constituted a further obstacle to the entrance in new sectors and therefore to the same

diversification.

3.2.5 - ORGANIZATIONAL CAPABILITIES AND DIVERSIFICATION

The last factor that influences the possibility of diversifying is perhaps the most important one: the

development of the organizational capabilities. Chandler uses the concept of organizational

capability as a key element for the growth of the enterprises: the creation, the maintenance and the

development of these capabilities by the manpower and the direction in the original activity,

allowed the American, European and Japanese enterprises to grow through the pursuing of

successful strategies founded upon solid organizational bases20. Have the Spanish firms been able to

create these organizational capabilities? The elements considered in the preceding paragraphs

presume a negative answer to this question: the great Spanish enterprises in the 1980s were small

and inefficient and they had never reached the levels of scale and scope economies that had

guaranteed success to the other countries. Yet, only a few years before there were several great

diversified groups of which there is almost no more trace in the 1983 sample. Some of these

specific cases will be analyzed in the following paragraphs, but in this context it is necessary to

underline how the great industrial Spanish enterprises developed capabilities different from the

organizational ones, that allowed them to grow and to survive under certain circumstances also in

the absence of the chandlerian efficiency. When some conditions, inside and ouside the country,

changed, these capabilities were often not even enough to guarantee its survival. The researcher that

18 Ministerio de Industria y Energía, Encuesta sobre estrategias empresariales, 1998 y 199919 P. Escorsa, F. Solé and J. M. Suris, La introducción de las nuevas tecnologias en la empresa española, in “Papeles de Economía Española”, no. 39, 1989, p. 20020 A. D. Chandler, What is a firm? An historical perspective, in “European Economic Review”, no. 36, aprile 1992

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has mostly deepened this thematic is Mauro Guillén, who analyzed the birth and the success of the

groups of enterprises in opposition to the great chandlerian multidivisionals in the countries of late

industrialization21. In these nations, among which even Spain is considered, a convergence towards

the American model in terms of strategy and structure has not occured since the delay in the

industrialization, the role of specific institutional lines that influence the choices of competition in a

global economy and the variety of economic, political and social actors, has made the coexistence

of the “American” strategies and structures with other types of choices possible for a certain time.

Concerning the Spanish case, Guillén has underlined how, in the preceding and contemporary

period to the industrial crisis of the 1970s, there were several diversified groups around the banks,

the great chemical and iron enterprises and other enterprises belonging to the traditional sectors and

how these groups had succeeded in being successful for a certain period of time. The capability on

which they were based upon, was not the ability in achieving productive, distributive and

organizational efficiency, but in taking advantage of some conditions of asymmetry that

characterized the Spanish economy, exploiting the contacts with the State and the foreign investors.

Who possessed these contacts was able, despite the economic and technological adversities

described in advance, to deal with of a lot of different activities successfully because he could unite

the contributions coming from the State (concessions and protection), the national market and the

inputs (job, raw materials) and the resources coming from foreign countries (capital, technology) to

enter different markets. Essential condition to the suriving of these groups was the maintaining of

the asymmetries, above all for what concerns the economic relationship with the foreign nations:

the protective tariffs used in Spain and the restrictions against the foreign multinationals constituted

the principal factor of asymmetry. During the process of democratic transition and subsequently of

integration in the EEC, the liberalization of the markets destroyed these asymmetries and, together

with the results of the economic crisis of the 1970s, it implicated the collapse of nearly all these

groups under the pressure of the international competition practiced by the enterprises that had

developed organizational capabilities suitable to maintain a long period success in these sectors.

The ability of the Spanish entrepreneurs to use the asymmetries for obtaining protection, capital and

technology became obsolete as soon as these conditions started missing and the national enterprises

didn't seem to have developed organizational capabilities comparable to those of the firms of the

chandlerian model, but not even to those of the Asian model. In the case of South Korea, for

instance, the birth and the growth of the principal groups owes a lot to the protection of the State

and to the ability in exploiting the asymmetries that it used to allow, but the enterprises have been

able to become competitive because the State asked for the attainment of a certain performance on

the global market. Also thanks to this condition, the groups born and grown on the ability of 21 M. Guillén, The limits of convergence – globalization and organizational change in Argentina, South Korea and Spain, Princeton University Press, Princeton, 2001

12

exploitation of the asymmetries, were forced to develop technical and organizational capabilities

that kept them competitive in the world. In Spain this didn't happen and when the foreign

multinationals were free to operate inside the country, the groups based on the exploitation of the

asymmetries in commerce and in foreign investments started to suffer while the investors took

possession of a lot of enterprises, without the collaboration of local partners. Under these conditions

some groups failed, others broke up, others returned to their core activity, others were directly given

to foreign investors. The collapse of the greatest Spanish chemical group, that had been divided

among numerous foreign multinationals during the 1980s, will be reported in the next paragraphs as

one of the greatest cases of failure of a big Spanish enterprise, characterized by this type of

capability and by the missed development of the organizational capabilities. The thesis held by

Guillén has its confirmation in the empirical evidence: the great diversified industrial groups have

almost entirely disappeared in 1983, after the failure of diversification attempts based on

capabilities, later revealing themselves obsolete, to which an increase of efficiency and an

improvement of the competitive position in the long period did not correspond.

3.3) WHAT CHANGES OCCURRED IN THE 1980s AND 1990s?

Despite the decade following 1983 has been rich of changes and opportunities, the level of

diversification of the national enterprises has not suffered great variations. In the period taken in

consideration, despite Spanish entrepreneurs could finally compete in a free market in which the

public intervention and the dominion of the banking initiative were reducing, the uncertainties and

the fears that prevented them from incurring in risks were still numerous. The delicate context of

the transition to democracy had still not created, at the beginning of the 1980s, such an economical

and political stability to allow the entrepreneurs to operate in a safe context. The costs for the

enterprises were elevated: at the end of the 1970s the cost of energy increased in their balances

because of the oil crises and so did the cost of money, because of a restrictive monetary policy. Also

the labour cost had a strong upsurge: the renewed role of the labor unions, forced to silence during

the Francoist period, made it more difficult for the entrepreneurs to bear the labour cost and to

manage the adjustment of the number of workers made necessary by the crisis. The context was not

favorable to a process of accumulation of the necessary resources to permit diversification and the

enterprises that tried to save themselves from the crisis undertaking new activities without having

the money and the necessary competences, failed in their intents. The situation worsened because

the Spanish firms re-emerging from the crisis and that could have stabilized their own performance

and set out along a new growth path, attracted the attentions of the foreign investors: in few years

they purchased most of the national enterprises. The decision to sell their own companies, after the

entrance of Spain in the EEC and the opening of the domestic market, wasn’t without economic

rationality: the competitive superiority of the foreign rivals was evident and the risk to be defeated,

13

in the new competitive arena of the European market by the great American and European

multinationals was almost a certainty. The multinationals had followed the path pointed out by

Chandler since the Postwar period, they had purchased a position of firm protagonism and, at that

time, they were enormous companies throughout the whole world. These enterprises achieved scale

and scope economies, they had lower unitary costs, a financial structure able to cover temporary

deficits in some markets and internationally known brands. The Spanish enterprises in the 1980s

instead were still small and inefficient and, also where they had succeeded in growing in greater

measure, the energetic and economic crisis of the 1970s had seriously put their ability of survival to

test. Choosing to move into other sectors at the beginning of the 1980s and in the period that

followed, was consequently an a unsuitable option, since the markets had already been conquered

by the most efficient foreign multinationals and the private enterprises didn't have either the

financial advantages or the suitable competences or a level of innovation such to allow them to try

new ways. The choice of selling the enterprises to consolidated foreign multinationals changed the

Spanish industrial context decreeing the failure of the industry in the convergence towards the

model of the large diversified industrial enterprise proposed by Chandler, but contemporarily it

confirmed the economic superiority of this form of enterprise, whose pioneers had conquered the

world markets: in 1993 almost all of the one hundred enterprises at the vertex of the sales in Spain

were foreign diversified multinationals. Among these, of the twenty industrial groups remaining of

Spanish ownership, only three of them had decided to undertake a dominant business strategy, other

three of related diversification and only two of unrelated diversification. The other enterprises

survived maintaining themselves to single business but entering, where possible, in nets of firms

that often allowed a partial economic compensation, frequently tied up to foreign multinationals.

4) SOME PARTIAL SUCCESSES

This general picture of obstacle to the choices of diversification and of bad performance of the big

firms illustrated up to now, mustn’t cover the success up of some firms that, although maintaining

various types of limits to their development, understood what direction to follow and were

successful. An example is represented from the firm of Tomás Pascual Sanz: Leche Pascual. The

birth of this enterprise is dated 1969, when the entrepreneur managed to get a financing from the

Savings Bank of Burgos and took over an old factory of an Aranda breeder cooperative that dealt

with the treating and the bottling of 3.000 liters of milk per day22. In the year 2000, the same factory

produced 1,6 million liters23. Pascual invested a huge quantity of resources both in the productive

machineries, that made the enterprise one of the greatest of its sector, and in research and

development, that allowed it to compete with the greatest multinationals. It also devoted a lot of

attention to the development of the product distribution, making an enormous effort to reach the 22 “Leche Pascual”, in P. Nueno, las 49 empresas con más futuro, Ediciones Gestión 2000, Barcelona, 1996, p. 11523 E. Torres, Los 100 empresarios españoles del siglo XX, LID, Madrid, 2000, p. 524

14

sales points in the least time possible and using the experience that he had accumulated

administering the relationship with the retail dealer for his father’s firm. In particular Pascual

believed the channel of the distribution to be such an important element, to base the process of

diversification on the exploitation of the marketing sinergies in the sales points, entering in 1975 in

the mineral water sector throughout the purchase of three firms in this sector. The entrepreneur

thought the new strategy to be:“…More than a diversification, a natural enlargement of the product

line and the optimization of the human resources in the commercial sector24.” In 1987, the

diversification continued in the juice sector with the acquisition of Zumosol and in 1991 in the

breakfast cereals through Cereales Expandidos. While the investments in the productive ability of

milk continued with the opening of new factories, in 1992, Pascual entered the branch of desserts

based on milk and in 1994 in the market of yogurts. In the 1990s the strategy of the enterprise

reached its highest point in the geographical diversification: having obtained the leadership in the

domestic market, Pascual fixed the next aim in the international brand growth. Currently the exports

are assembled in Europe, in America and in Africa25. Leche Pascual has succeeded in successfully

diversifying its activity both in the new geographical and product markets, basing on resources and

competences, without suffering the competition of foreign investors and operating in a sector in

which the intervention of the State didn’t reveal itself as consistent as in the others.

Another case of success on a strategic level concerns the chemical Catalan firm Carburos Metálicos,

born in 1897 thanks to a group of Swiss investors belonging to the Société of Enterprises

Électriques and of the Parisian firm Société des Carbures Métalliques. The decision to found a

similar enterprise in Spain was determined by the market prospects of this product: the gas that

could be produced by the carbide was used for illumination. The firm grew in the first decade of the

century, through the construction of factories, the foundation of new participated firms and the

acquisition of chemical companies26, but when the difficulties of transport that had prevented the

diffusion of the electricity were sorted out, and this latter revealed itself to be the winning

illumination form, Carburos Metálicos had to radically revise its own strategy. The answer to the

crisis was originated from another channel of the carbides use: the welding metals. The greatest

results are visible after the Civil War, when the industrial growth imposed a contextual boom of the

sidero-metallurgic sector and of the welding one. The resources of Carburos Metálicos increased

and the enterprise, that was now in the hands of a group of Spanish banks, could diversify with

success both constituting a firm for the construction of machineries for the welding, and entering

the production of nitrogen, hydrogen and other atmospheric gases. The crisis of the 1970s was

24 Ibidem25 www.lechepascual.es/mundo/exportación.html26 La Sociedad Española de Carburos Metálicos, S. A. – Cent’anys d’historia d’una empresa química 1897 – 1997 , S. E. Carburos Metálicos BOBALÁ, 1997

15

particularly hard for this enterprise, but it was also brightly overcome thanks to the intervention of

the world leader firm in the atmospheric gases sector, the U.S. Air Products. In 1982 it acquired a

minority share in the firm capital, it brought the most advanced technology in the production and in

the chemical transformation of the gases and it automatized the productive cycle but contemporarily

it turned the Spanish entrepreneurs out. Progressively the Americans consolidated their presence

acquiring the major part of the company and they confirmed its success. The case of Carburos

Metálicos is meaningful since the growth of this enterprise continued for more than a century

thanks to the ability in using the more favorable - in terms of sales - industrial application according

to the period and in diversifying, when necessary, following the changes of the market. The success

of this strategy is also due to an efficient organizational structure capable of managing different

activities that go from the welding to the sanitary medical material, although maintaining a unitarity

of the strategic direction in order to recognize the right moment to undertake or to end an activity.

This enterprise, also thanks to the fundamental contribution of foreign investors, has shown such a

strategic and structural flexibility that permits it to be successful despite the other chemical

enterprises’ competition and the economic and political problems that have characterized the

Spanish twentieth century.

5) THE GREAT FAILURES

The strategy of diversification attracted the attention of some great Spanish firms especially

beginning from the 1970s, but most of these diversification attempts had disastrous results for

economic and organizational causes. The reasons that pressed the great enterprises to move into

new sectors were very far from those described by Chandler: this choice was often not taken for

investing a surplus during the period of growth, but as an attempt of survival by enterprises whose

original activity had been compromised during the economic crisis of those years and, as Guillén

affirms, as an occasion to exploit the contacts and the asymmetries in a period in which they

allowed an easy growth. The decision to undertake new activities for the Spanish enterprises

occurred in most of the cases without having the necessary resources nor a suitable planning of the

strategy to pursue and of the new born conglomerate management modalities. The mergers among

big companies transformed themselves into the addition of each firm’s debts and didn't bring any

increase of efficiency: only one managerial group administrated products and markets of which it

hadn’t have any knowledge and of a quantity and variety that made it impossible to administer them

at the same moment. The situation is described correctly by some Spanish researchers in the 1980s:

“The enterprises invest in new sectors where they have no competence when they both cannot

realistically resolve the structural problems of their current activities and they weaken their already

16

precarious financial condition, confiding in the idea that the diversification can be the universal

solution to every problem27.”

In the United States, besides, the diversification of the great enterprises implicated an evolution of

the structure, that had learned to adapt to the new productive procedure. The multidivisional

structure is based on the coexistence of various divisions (each specific of a product or of a

geographical market) having its own business functions (production, finance, marketing, etc.) but

integrated and coordinated from only one general quarter with strategic task and a system coherence

guarantee aim. The sharing of the enterprise control became fundamental for an efficient

management: a form of “managerial capitalism” was born, characterized by the power distribution

inside the firm, in which who didn't possess any shares of the firm, had the means to decide its fate.

The multidivisional structure remained the “one best way” for the management of the diversified

enterprises until the 1970s and it is still the predominant structure among the great Western

enterprises28. In Spain, in the 1980s, no great firm had adopted this type of structure and the lack of

rationality was evident in the confused and not coordinated decisions that characterized the more

diversified firms, with strong repercussions on their performance. The structure of greater success

was that of the groups described by Guillén, which allowed them to maximize the contacts and the

cross participations more than the managerial efficiency.

The failure of diversification of the enormous chemical industries, that aroused great clamor in

Spain in the 1980s, fully illustrates all these circumstances. The origins of the Unión Española de

Explosivos and of the Compañía Española de Minas Río Tinto respectively dated the end of the

XIX and of the XVIII century; the former company developed in the chemical industry as the

Spanish branch of the Trust Nobel, and the latter, after having been of the English Riotinto

Company Ltd. property, active in the mining explorations of the copper sector, became of Spanish

banking property in 195429. In 1970 these two companies decided to merger, giving birth to

Explosivos Río Tinto, and this fusion constituted the beginning of the growth, pursued through a

series of acquisitions that made ERT the most diversified private Spanish enterprise. Its activities

belonged to different sectors that concerned chemistry, petroleum, food industry, hotel activity and

book industry. The intense growth of ERT, protected thanks to the good relationships with the

political system, occurred, however, without the contextual construction of an organizational

structure suitable to the necessities of central coordination and without the development of the

organizational capabilities. The entrance in new sectors, instead of producing those advantages that

were thought to conduct to a growth of the enterprise, involved huge outlays of resources carelessly

done, and a politics of strong foreign indebtedness. Before the coming of the crisis of the 1970s,

27 E. Bueno, P. Morcillo e I. de Pablo, Dimensiones competitivas de la empresa española, cit.28 R. Whittington e M. Mayer, The European Corporation, cit. 29 E. Buenos Campos, Dirección estrategica de la empresa – Metodología, técnicas y casos, Piramide, Madrid, 1993

17

ERT was already heavily indebted, with a strong decrease of product demand and with a structure

that was incapable to face the situation created30. The crisis influenced not only the results of the

unrelated activities, but also those of the activities related with the principal one, undertaken when

looking for scale and scope economies, that could not enjoy any resources not even of the necessary

rational management to get favorable results. At the end of 1982 the communication was sent to all

the creditors saying that the enterprise would not to be able to pay all its debts31. In January 1983,

Escondrillas, an industrial engineer imposed by the Minister of the Industry, Solchaga, was elected

president, and began a plan of radical restructuring. The Escondrillas rebirthing project allowed a

gradual restarting guaranteeing the survival of ERT, despite the pressure practiced by the banks

worried about not receiving their credits and desirous to intervene in the management of the

group32. ERT rationalized its productive activity and put thirty enterprises in sale33, arousing a

clamor well described by a journalist of “Mercado”:

“Within a couple of years, the major Spanish petrochemical group will be reduced to a modest

mini- holding, with a modest perspective of profitability. In the meantime, the multinationals in the

chemistry-pharmaceutics branch, will have obtained half of ERT at an excellent price34.”

In 1987, ERT had transformed fundamentally into a petrolchemistry enterprise and even the sold

companies had recovered the level of profitability lost in the preceding years. In the same year

started the negotiations in order to effect a new, great merger: the one between ERT and the second

Spanish chemical colossus, Cros. Cros was born as a sulphuric acid production enterprise in 1817.

Subsequently it had entered the fertilizing sector and it had quickly grown, building a series of

factories and entering new productive areas35. In 1982 Cros was diversified in many activities

unrelated with the core one, but the results of the group weren’t positive and the loss of the

chemical firms had increased, passing from 164 to 1.918 million pesetas36, in a sector that didn't

show signs of resumption from the crisis that had invested it in the 1970s. Only in 1985 Cros,

favored by the change of the economic cycle and by a program of rationalization, restarted growing

and increasing its sales37. While the two greater chemical enterprises were recovering from the

respective crises and returning to produce the core products after the projects of diversification the

group of kuwaitian investors KIO, that was buying shares in different Spanish firms in those years,

intervened. They purchased a packet of Cros shares and subsequently, through this, of ERT, until,

30 R. Tamames, Estructura Económica de España, Alianza, Madrid, 1992, p. 38731 E. Bueno Campos, Dirección estrategica de la empresa, cit., pp. 380-39532 J. Cacho, “ERT – La banca reta al Gobierno”, in “Mercado”, no. 90, 1983, pp. 10-1433 Divisiones ricas, divisiones pobres, in “Mercado”, no. 87, 1983, pp. 3634 C. García – Abadillo, Ventas de primavera en ERT, in “Mercado”, no. 116, 1983, pp. 36-3935 A. Carreras and X. Tafunell, National enterprise, National Enterprise. Spanish big manufacturing firms (1917-1990) between State and Market, Economics Working Paper 93, Universitat Pompeu Fabra, 1994, p. 3436 Cros, 2.000 millones de pérdidas, in “Mercado”, no. 98, 1983, p.3637 Francisco Godía: “La entrada al Mercado Común nos va a exigir un esfuerzo enorme en los próximos años”, in “Fomento de la producción”, no. 889, 1985, pp. 26-27

18

after a real battle with the biggest Spanish banks, they obtained the control of the companies and

tied them throughout cross participations. Together with the entry of the Kuwaitian investors in the

Board of Directors of the firm, Escondrillas sent in the resignations together with eight advisers

who were those who had mostly contributed to the restructuring of the group. In 1988 KIO ended

the merger between ERT and Cros creating the ERCROS Group, “… a great industrial group,

structured in different areas of activity arisen from mergers, divisions, disinvestments and

transfers38.” The group dealt with fertilizers, electrochemistry and elettrotecnics, mining activities,

agricultural machineries, alimentaries, real estate activities, food for animals, scientific research,

engineering consultations and financial activities. Even in this case however, the results were

different from those desidered: ERCROS had a crisis in 1992 because of the loss coming from the

fertilizing sector and for the global mismanagement of the KIO Group in Spain. The Gulf War and

the Kuwaitans’ intentions of disinvestment created a lot of confusion, increased by the inactivity of

the Industry Office39. The attempt to compensate the bad performances and the financial difficulties

of these enterprises throughout a strategy of diversification based on the interacting of the political

world, of the banks and of the foreign investors, proved to be disastrous once again.

Also for the public enterprises the pushing towards diversification was beyond economic rationality

and followed social and political priorities. The INI entered different sectors in some cases to save

enterprises in difficulty, and in others to promote the development of strategic sectors. In 1983, the

assets of INI, through the enterprises directly possessed, originated above all from the electric

energy sector followed by the automobile industry, the aerial transport, the iron metallurgy industry,

and the Defense. The other sectors of activity were: mining industry, naval constructions,

equipments, aluminum, food industry, electronics and computer science, fertilizers, maritime

transport, textiles, tourism and culture40. The consequences of this diversification, dictated from

social and political aims were never positive, especially in the industrial sectors that were the

principal goal of the rescues: the charge in dealing with the activities for which the companies had

no financial resources or competences brought to the crisis of the “rescuing” companies together

with the “rescued” ones. The lack of a unitary strategy coordinating the enterprises made it

impossible to manage a situation in which different firms, that absorbed resources without returning

suitable levels of profit, cohabited in an incoherent way.

Another case of diversification imposed by political motives is the one of the public enterprise

Tabacalera, monopolist of tobacco and stamped values. Since the 1980s this company suffered from

a pressure practiced by two parts: on one hand there was the State which, being present in its Board

of Directors through a representative of the goverment, asked Tabacalera to intervene in sectors

38 Ercros, Memoria 1993, p. 4 e p. 1139 R. Tamames, Estructura Económica de España, cit., p. 38740 INI Informe Anual 1983, p.12

19

unrelated with its activities, in order to save enterprises in crisis; on the other hand, there was a

series of factors that brought the company to question on the future profitability of its activities and

to take an interest in other businesses. The Law on Publicity in 1988 made some anti - smoke

tendencies concrete, prohibiting the publicity of products for smokers on television. In addition to

this, Tabacalera had to bear an increasing prohibition of the use of tobacco in public places, that

obviously repressed the demand of it41. Such forecasts and the pressures practiced by the goverment

brought Tabacalera in 1985 to decide to diversificate its activities moving in the food industry

sector. The level of diversification of the group grew in a remarkable way: if in 1983 the SIC codes

that described its activities were only two, in 1993 they had become nineteen. Nevertheless in the

following years the firms of the group didn’t obtain good results and Tabacalera was forced to sell

many parts of the group, also some of the largest ones42. The orders coming from the goverment had

imposed the acquisition of enterprises in difficulty to a rather solid company, making the

performance of the same enterprise negative as well. Besides, the choice of diversifying rose the

moment the incomes of the main activity were decreasing and the probability to help enterprises in

difficulty with success was consequently low, just as the probability to save themselves from the

crisis through a unrelated diversification effected without the resources and the suitable

competences.

7) NEW OPPORTUNITIES FOR THE GREAT ENTERPRISES?

The missed convergence of strategies of the largest industrial Spanish enterprises towards the model

of great enterprise or diversified group that dominates today the big American, European and

Asians firms is an indisputable fact. Different factors have contributed to this result, inserted in the

economic and political context of a country in late industrialization, that finds itself competing with

great multinationals with more efficient strategies and structures, already strong before the national

enterprises started to grow. These competitors' presence on the foreign market and on the domestic

one, has radically changed the competitive conditions, and for the Spanish companies in the 1970s

the same organizational abilities were difficult to create under such different contexts in comparison

to those in which their rivals had developed theirs. The abilities that allowed some great groups to

diversify in the 1970s, were not based on the pursuit of efficiency but on the ability in crossing

relationships among national resources, foreign investors and political actors, and they didn’t reveal

themselves so competitive when the integration in Europe forced Spain to eliminate the

asymmetries that had characterized its own commercial relationships and the capital flows with the

foreign countries up to that moment. The lack of resources, the role of the State, of the banks and of

the entrepreneurs, the low level of innovation and a naïve trust in capabilities that soon would have

become obsolete, converged, in a context of crisis, to prevent the creation of organizational 41 R. Tamames, Estructura Económica de España, cit.42 Tabacalera – cuidado con el descontrol de los costes, in “Inversión”, no. 10, 1993, p. 25

20

capabilities on which to form a solid strategy of such diversification, that would guarantee the

success at the end of the asymmetries. The creation of the great diversified groups didn’t conduct to

steady results and to a good performance, while the success of the industrial enterprises of the other

countries revealed conclusive in allowing them to conquer the great Spanish firms: the diversified

multinationals have conquered the great industry of the countries that did not do it.

Nevertheless, the empirical analysis of the sample doesn't consider the role of other fundamental

actors in the economic growth and in the development of the country. For instance it cannot be said

that the missed convergence towards that model and the different administration followed by the

economy and by the Spanish enterprises, prevented other organizational forms to be successful in

different sectors from those studied in this project or in enterprises of smaller dimensions. Small

and medium sized firms run by single entrepreneurs or families revealed themselves key actors for

the development of the economy, with greater propensity to the internationalization and a definite

push towards innovation. These firms have often been successful not “despite” the foreign

multinationals, but thanks to them, showing how, in a global economy, the model of development

of a country also inserts itself on the foundations thrown by others, branching according to an

original path and favouring the opportunity to develop alternative solutions towards the economic

growth. But above all, this analysis doesn’t consider the great non industrial enterprises, that at the

end of the century followed a growth in which the strategy of product or geographical market

diversification had a conclusive role in making them great multinationals and the main source of the

wealth of the nation. The non industrial enterprises are a point of departure also for the economic

growth of other nations of late industrialization: in some cases they have been so important to have

created around themselves, with a process of unrelated diversification of product, great industrial

groups. Three of the four greater chaebol of South Korea, for instance, had non industrial origins:

Samsung, Hyundai and Daewoo. Samsung grew thanks to the importation of sugar that gave it the

push to integrate vertically in the refinement activity. In this case organizational capabilities were

created, and conditions of technical efficiency were reached, even if its main activity was not

industrial but commercial. A strong diversification also interested Hyundai, who originally dealt

with constructions and that was able to develop the abilities to create and maintain a large

industrial group43.

An interpretation drawn by the empirical evidence on the great Spanish industry can suggest that, if

during the opening of the Spanish economy at the end of the 1970s the historical moment and the

economic cycle were not propitious for a growth through diversification for the late industrial

enterprises any more, it has not been so for those of services, which started to conquer the scene in

the 1980s and 1990s. In a world already dominated by the most efficient foreign multinationals 43 A. Amsden, “South Korea: groups and entrepreneurial government”, in A. Chandler, F. Amatori and T. Hikino, Big business and the wealth of nations, cit.

21

since the end of the War, in which the national industrial companies had not reached dimensions

and competitive levels favorable to the process of diversification, democratic Spain found new

markets in the services sector, in which it succeeded in developing great enterprises and

substantially followed the path of diversification pointed out by Chandler. The possibilities of

success were elevated above all on the growing markets that permitted the firms to find room to

compete. In some cases, the enterprises that participated to this growth could accumulate a great

surplus of resources and decide to continue their own development moving into related activities

and into industrial sectors. In the ranking by sales of the enterprises there are many non industrial

companies in pole position and their importance has meaningfully grown between 1983 and 1993.

In 1983, in order to identify the first one hundred firms in the industrial area, it has been necessary

to reach the 160th position on the chart of the enterprises with greater sales, excluding the

enterprises of the services sector. In 1993, the last firm taken in consideration in the industrial

sample, was the 195th, symptom of the fact that the proportions inside the ranking were changing,

showing a non industrial world in rapid rise. In 1999, it was necessary to reach the 225 th position to

be able to find one hundred industrial enterprises: the overtaking had happened and the greatest part

of the enterprises with the majority of sales inside the country, didn't belong to the industrial field.

This statement is strengthened considering the fact that inside the proposed rankings the banks, that

the recent fusions have made more and more protagonists of the country’s economy, are not

contemplated.

In 1993, a non industrial enterprise, Telefónica, had conquered the peak of the classification.

Telefónica constitutes one of the most evident examples of success: in 1998 it was positioned

among the first ten companies of telecommunication in the world, reaching the fifth place in

Europe44 and revealing itself one of the most innovative and versatile enterprises in a sector in

continuous expansion, despite it had lost its own position of monopolist in few years. A particular

political context and a development in the ownership of the enterprise, in strategy and structure,

extremely similar to the one described by Chandler, contributed to the attainment of comparable

results. Although also this enterprise has been of State-owned for a long time, it experimented a

process of privatization and contextual growth in the 1990s, that brought it in 1997 to have a

diffused and totally private shareholding. The control of the enterprise was submitted to a

managerial group that undertook a strategy of internationalization of its own activity (in Spain,

Portugal, United States, Porto Rico, El Salvador, Venezuela, Brazil, Peru, Argentina and Chile) and

of the proper shareholding: since 1985, the enterprise started to be rated in the Exchanges in

London, Tokyo, Paris and, subsequently, New York45. The strategy used was of related

44 “Telefónica, el crecimiento como lema”, in F. Mochón and A. Rambla, La creación de valor y las grandes empresas españolas, Ariel, Barcelona, 199945 Ibidem

22

diversification on the wave of the innovations favored by the development of the many discoveries

that, in those years, distinguished the telecommunications sector and that brought it to dominate the

domestic market of fixed and mobile telephony and reach fascinating results in the television,

satellite television, book industry and movie production sectors. The structure of Telefónica, even in

this case homogeneous to the indications of Chandler, changed together with the strategy endowing

itself of a general quarter and of a top management that guaranteed a suitable coordination among

the divisions of the group. At the end of the last century Telefónica had won the challenge in terms

of growth, strategy and structure, that brought it to the first position in the world in its sector,

despite it suffered the same difficulties of the industrial enterprises relative to the role of the State

and the lack of a free-market environment. During the Spanish economic opening and the

introduction of the mechanisms of free market, Telefónica found itself fighting in sectors in full

expansion and rich of opportunities, that, unlike the already mature industrial sectors, allowed

suitable returns on the investments and the possibility to reinvest, to subsequently grow, to move in

the branches that introduced possibility of sinergy and to structure itself in order to deal with the

change in the best way.

Also the energy sector has shown a great ability of growth, of internationalization and of versatility,

diversifying in industrial and non industrial activities, as happened in the ENDESA and

IBERDROLA cases. ENDESA was born as a public enterprise in the electric energy sector in 1944.

In the 1980s and 1990s just like other State-owned firms, it was denationalized and rated in

Exchange, having in 1998 only a 3% public share46. Today ENDESA is leader in the sector and

between 1992 and 1998 it saw its Exchange capitalization quadruple47 and increase its marktet value

on the base of a notable increase of efficiency. In these years it was necessary for it to adapt to the

new tendency of the sector, characterized by the progressive liberalization and by the increasing

competitiveness, but it can be said that ENDESA has won the challenge, and can currently be

considered one of the five greatest enterprises in its sector in the European Union48. The pursued

strategy was to diversify its own activity inside the domestic market, entering new sectors with

greater potentialities of growth (the telecommunication and gas ones) and moving into new

geographical markets, especially in Latin America. For what concerns the principal activity, the

company tried to increase its efficiency, pursuing the aim to strengthen its own presence in the

ownership of the greatest competitors (as happened with Sevillana de Electricidad, in which it was

the major stockholder in 2000 with 39,9%49) and above all, it aimed at internationalization: the

activity of the enterprise at the end of 1998 concerned European countries, Morocco and Latin

46 “El grupo Endesa: la capacidad de creación de flujos de cajay un programma agresivo de inversiones”, in F. Mochón and A. Rambla, La creación de valor y las grandes empresas españolas, cit., p. 16047 Ibidem, p. 15748 “Endesa”, in P. Nueno, Las 49 empresas con más futuro, cit., p. 10949 Ibidem, p. 106

23

American States, in which it maintained a leading position. The strategy of diversification of the

activity instead, focused itself on the sectors with greater perspectives of growth and in which it was

possible to exploit sinergies, as suggested by Chandler. In 1996, ENDESA and the Banco Central

Hispano signed an ambitious industrial plan, formalizing a series of joined sharing. In 1998, a

company (ENDESA Diversificación) was established inside the group that included the secondary

lines of product: gas, telecommunications (Auna for the fixed telephony, Auna-Amena for mobile,

Retevision - Auna Audiovisual and in minority Hispasat, Euskaltel, Tenaria), water and renewable

energy.

IBERDROLA, born in 1992 from the merger of the two electric companies Iberduero and

Hidroeléctrica Española, was, at the end of the last century, in second place in the electric energy

sector in Spain. Its greatest shareholder was the Banco Bilbao Vizcaya and the other shares were

largely spread. Just like ENDESA, also Iberdrola made diversification its greatest tool of growth,

strengthening its principal activity and focusing its own diversification of geographical market on

Latin America, but above all, creating an ample group active in the energy sector, in the engineering

and counselling one, in real estate, in telecommunications and in clientele services50. Also in this

case a virtuous circle was created among the increase of resources, that allowed the diversification

of market and product, and the further surplus coming from diversification, that this strategy once

more permitted.

Another group of great success excluded by the sample, is that of the construction and public works

enterprises which, also during the economic opening of the country, were able to protect themselves

effectively from the competition, thanks to their experience and their knowledge in the management

of relationships with political authorities, who gave the authorizations and the concessions often

preferring national enterprises to foreign ones. In this way they strengthened, succeeded in

internationalizing obtaining numerous charges for the construction of public works in foreign

countries and they diversified throughout the employment of profits coming from the new

geographical markets. The firm of constructions Fomento de Construcciones y Contratas, for

instance, in the year 2002, operated in almost all Europe, in America and in some Africans States.

Its production was for 53% unrelated to the native sector: it placed side by side to the main strategic

area an intense activity in other fields among which real estate, climatization, vehicle marketing,

computer systems, mobile telephony and insurances51.

A last example of success belongs to the commercial sector: El Corte Inglés was initially simply a

large scale retail trade company. Today it has been able to create around itself a real industrial

group that includes, apart from the group leader, other important enterprises like: Hipercor (net of

50 “Grupo Iberdrola, la diversificación como objetivo”, in F. Mochón and A. Rambla, La creación de valor y las grandes empresas españolas, cit.51 Fomento de construcciones y contratas, Informe Anual, 2002

24

shopping malls), Viajes El Corte Inglés (tourism), Informática El Corte Inglés (distribution of

computer products and related services), Telecor (distribution and service assistance on

telecommunications), Investrónica (manufacturing and I.T. distribution), Editorial Centro de

Estudios Ramón Areces (scientific publications), CESS El Corte Inglés (insurances, assets

mangement, real estate), Seguros El Corte Inglés (insurances), Financiera El Corte Inglés (group

financial firm), Opencor (distribution 365 days a year), Supercor (net of supermarkets), Sfera

(clothing and accessories production and distribution).

These great companies constitute only an example of the spectacular growth that invested the non

industrial sectors, and that allowed the firms protagonist to accumulate resources and develop in

rising sectors according to the prescriptions of economic rationality that the chandlerian enterprises

had indentified in the industrial area during the twentieth century. The relative decline of the

industrial sectors towards the ending of the century in comparison to these new opportunities and

the failure of the late industrial countries in catching up with the nations that already had

accumulated an inextinguishable discrepancy since the Postwar period, has probably prevented the

good results of the initiatives of growth and diversification in this field, suggesting the

entrepreneurs to surrender their enterprises to the big foreign competitors in order to permit their

survival. This failure on the other hand, could have represented, at least in Spain, a strong incentive

to invest especially in the companies of the always less emerging services sector, that developed

moving with success into industrial and non industrial activities, on the domestic and foreign

market.

APPENDIX

Main sector and strategy of the 100 largest industrial firms, 1983

GROUP ENTERPRISE LARGEST SECTOR OF ACTIVITY

TURNOVER (million of

pesetas)OWNERSHIP STRATEGY

INH

CAMPSA PETROLEUM 1.299.713

PUBLIC DOMINANT BUSINESS

ENPETROL PETROLEUM 605.675HISPANOIL PETROLEUM 143.407

BUTANO PETROLEUM 130.140PETROLÍBER PETROLEUM 119.648

ENIEPSA PETROLEUM 34.390ASFALTOS

ESPAÑOLES PETROLEUM 32.532

ALCUDIA RUBBER AND PLASTIC MATERIAL 27.580

25

CALATRAVA CHEMICALS AND PHARMACEUTICAL 23.613

INI

ENSIDESA MECHANICALS AND METALS 150.353

PUBLIC UNRELATED BUSINESS

SEAT TRANSPORATION EQUIPMENT 146.796

EN BAZÁN SHIPBUIDING INDUSTRY 76.382EN

AUTOCAMIONESTRANSPORATION

EQUIPMENT 75.147

ASTILLEROS ESPAÑOLES

SHIPBUILDING INDUSTRY 63.851

HUNOSA MINING INDUSTRY 48.606

ALUMINIO ESPAÑOL

MECHANICALS AND METALS 44.539

EN DI THE ALUMINIO

MECHANICALS AND METALS 44.013

OLEAGINOSAS ESPAÑOLAS

ALIMENTARY, DRINKS AND TOBACCO 42.138

CASA TRANSPORATION EQUIPMENT 40.158

ALTOS HORNOS DEL

MEDITERRANEANEO

MECHANICALS AND METALS 28.603

ALÚMINA ESPAÑOLA

MECHANICALS AND METALS 28.529

ALUMINIO DE GALICIA

MECHANICALS AND METALS 26.480

EN DE CELULOSAS PAPER 25.696

EN DE FERTILIZANTES

CHEMICALS AND PHARMACEUTICALS 24.837

MAQUINISTA TERRESTRE Y

MARÍTIMA

MECHANICALS AND METALS 22.240

BABCOCK & WILCOX

MECHANICALS AND METALS 18.297

CEPSACEPSA PETROLEUM 448.900 PRIVATE-

BANKINGDOMINANT BUSINESS

PETROQUÍMICA ESPAÑOLA

CHEMICALS AND PHARMACEUTICALS 18.102 PRIVATE-

ENTERPRISE

ERT

EXPLOSIVOS RÍO

TINTO

CHEMICALS AND PHARMACEUTICALS 187.836 PRIVATE-

BANKING

UNRELATED BUSINESSRÍO TINTO MINERA

CHEMICALS AND PHARMACEUTICALS 44.429 PRIVATE-

ENTERPRISE

RÍO RÓDANO CHEMICALS AND PHARMACEUTICALS 20.347 PRIVATE-

ENTERPRISE

FASA RENAULT FASA RENAULT TRANSPORATION EQUIPMENT 205.964 FOR. (FRANCE) ###

TABACALERA TABACALERA ALIMENTARY, DRINKS AND TOBACCO 152.928 PUBLIC UNRELATED BUSINESS

FORD ESPAÑA FORD ESPAÑA TRANSPORATION EQUIPMENT 136.691 FOR (USA) ###

GENERAL MOTORS ESPAÑA

GENERAL MOTORS ESPAÑA

TRANSPORATION EQUIPMENT 129.842 FOR. (USA) ###

PETROMED PETROMED PETROLEUM 107.021 PRIVATE-BANKING SINGLE BUSINESS

CITROËN ESPAÑA CITROËN ESPAÑA

TRANSPORATION EQUIPMENT 88.900 FOR. (FRANCE) ###

ALTOS HORNOS DE VIZCAYA

ALTOS HORNOS DE VIZCAYA

MECHANICALS AND METALS 83.744 PRIVATE-

BANKING DOMINANT BUSINESS

IBM IBM INFORMATION TECHNOLOGY 78.772 FOR. (USA) ###

26

MICHELIN MICHELIN RUBBER AND PLASTIC MATERIAL 75.101 FOR. (FRANCE) ###

DOW CHEMICAL DOW CHEMICAL CHEMICALS AND PHARMACEUTICALS 71.684 FOR. (SWISS) ###

NESTLÉ NESTLÉ ALIMENTARY, DRINKS AND TOBACCO 61.658 FOR. (SWISS) ###

CINDASA CINDASA ALIMENTARY, DRINKS AND TOBACCO 60.271 FOR. (USA) ###

TALBOT TALBOT TRANSPORATION EQUIPMENT 55.446 FOR. (FRANCE) ###

NISSAN NISSAN TRANSPORATION EQUIPMENT 50.767 FOR. (JAPAN) ###

GRUPO MARCHTRANSÁFRICA ALIMENTARY, DRINKS

AND TOBACCO 24.210 PRIVATE-ENTERPRISE

UNRELATED BUSINESSURALITA STONE, CLAY AND

GLASS 24.007 PRIVATE-ENTERPRISE

STANDARD ELÈCTRICA

STANDARD ELÈCTRICA

ELECTRONICS AND ELECTRICAL EQUIPMENT

47.758 FOR. (USA) ###

HOECHST IBERICA HOECHST IBERICA

CHEMICALS AND PHARMACEUTICALS 46.550 FOR.

(GERMANY) ###

SHELL SHELL PETROLEUM 43.684 FOR. (UK) ###FIRESTONE HISPANIA

FIRESTONE HISPANIA

RUBBER AND PLASTIC MATERIAL 37.735 FOR. (UK) ###

DISTRIBUIDORA INDUSTRIAL

DISTRIBUIDORA INDUSTRIAL

CHEMICALS AND PHARMACEUTICALS 35.547 PUBLIC RELATED BUSINESS

KOIPE KOIPE ALIMENTARY, DRINKS AND TOBACCO 34.705 PRIVATE SINGLE BUSINESS

CROS CROS CHEMICALS AND PHARMACEUTICALS 33.826 PRIVATE-

DIFFUSED UNRELATED BUSINESS

MERCEDES BENZ ESPAÑOLA

MERCEDES BENZ

ESPAÑOLA

TRANSPORATION EQUIPMENT 32.312 FOR.

(GERMANY) ###

S.E. METALES PRECIOSOS

S.E. METALES PRECIOSOS

MECHANICALS AND METALS 32.000 FOR. (FRANCE) ###

ELOSÚA ELOSÚA ALIMENTARY, DRINKS AND TOBACCO 31.938 PRIVATE-

FAMILY SINGLE BUSINESS

NANTA NANTA ALIMENTARY, DRINKS AND TOBACCO 30.292 PRIVATE SINGLE BUSINESS

DANONE DANONE ALIMENTARY, DRINKS AND TOBACCO 28.000 FOR. (FRANCE) ###

ACEITERÍAS REUN. LEVANTE

ACEITERÍAS REUN. LEVANTE

ALIMENTARY, DRINKS AND TOBACCO 27.864 FOR. (USA) ###

PRODUCTOS PIRELLI

PRODUCTOS PIRELLI

RUBBER AND PLASTIC MATERIAL 27.036 STR. (ITALY) ###

ACERINOX ACERINOX MECHANICALS AND METALS 26.773 PRIVATE-

BANKING SINGLE BUSINESS

ASLAND ASLAND STONE, CLAY AND GLASS 26.462 PRIVATE-

DIFFUSED SINGLE BUSINESS

BASF ESPAÑOLA BASF ESPAÑOLA CHEMICALS AND PHARMACEUTICALS 26.312 FOR.

(GERMANY) ###

CRISTALERÍA ESPAÑOLA

CRISTALERÍA ESPAÑOLA

STONE, CLAY AND GLASS 25.871 FOR. (FRANCE) ###

COMPAÑÍA INDUSTRIAS AGRÌCOLAS

COMPAÑÍA INDUSTRIAS AGRÍCOLAS

ALIMENTARY, DRINKS AND TOBACCO 25.705 PRIVATE-

BANKING SINGLE BUSINESS

PASCUAL DE ARANDA

PASCUAL DE ARANDA

ALIMENTARY, DRINKS AND TOBACCO 25.500 PRIVATE-

FAMILY RELATED BUSINESS

ROCA RADIADORES

ROCA RADIADORES

STONE, CLAY AND GLASS 25.051 PRIVATE-

FAMILY RELATED BUSINESS

LA SEDA DE BARCELONA

LA SEDA DE BARCELONA TEXTILES AND APPAREL 24.622 FOR.

(HOLLAND) ###

27

CAMP CAMP CHEMICALS AND PHARMACEUTICALS 24.433 PRIVATE-

FAMILY SINGLE BUSINESS

GENERAL AZUCARERA

GENERAL AZUCARERA

ALIMENTARY, DRINKS AND TOBACCO 24.350 PRIVATE-

BANKING RELATED BUSINESS

AGROPECUARIA DE GUISSONA

AGROPECUARIA DE GUISSONA

ALIMENTARY, DRINKS AND TOBACCO 23.996 PRIVATE-

COOPERATIVE SINGLE BUSINESS

SARRIÓ SARRIÓ PAPER 23.970 PRIVATE-FAMILY SINGLE BUSINESS

LAMPARAS ELÉCTRICAS" Z"

LAMPARAS ELÉCTRICAS" Z"

ELECTRONICS AND ELECTRICAL EQUIPMENT

23.755 FOR. (HOLLAND) ###

SOLVAY SOLVAY CHEMICALS AND PHARMACEUTICALS 23.700 FOR.

(BELGIUM) ###

ASTURIANA DE ZINC

ATURIANA DE ZINC

MECHANICALS AND METALS 23.586 PRIVATE-

BANKING SINGLE BUSINESS

HENKEL IBÉRICA HENKEL IBÉRICA

CHEMICALS AND PHARMACEUTICALS 23.573 FOR.

(GERMANY) ###

CARBONELL CARBONELL ALIMENTARY, DRINKS AND TOBACCO 23.400 PRIVATE-

BANKING RELATED BUSINESS

EBRO, COMPAÑÍA DE AZÚCARES Y

ALCOHOLES

EBRO, COMPAÑÍA DE AZÚCARES Y ALCOHOLES

ALIMENTARY, DRINKS AND TOBACCO 23.366 PRIVATE-

BANKING SINGLE BUSINESS

VALENCIANA DE CEMENTOS

VALENCIANA DE CEMENTOS

STONE, CLAY AND GLASS 22.956 PRIVATE-

BANKING SINGLE BUSINESS

ACEITE Y PROTEINAS

ACEITE Y PROTEINAS

ALIMENTARY, DRINKS AND TOBACCO 22.869 PRIVATE-

DIFFUSED SINGLE BUSINESS

FEMSA FEMSAELECTRONICS AND

ELECTRICAL EQUIPMENT

22.260 FOR. (GERMANY) ###

EL ÁGUILA EL ÁGUILA ALIMENTARY, DRINKS AND TOBACCO 22.166 PRIVATE-

BANKING SINGLE BUSINESS

SIEMENS SIEMENSELECTRONICS AND

ELECTRICAL EQUIPMENT

22.081 FOR. (GERMANY) ###

PROMP PROMP MECHANICALS AND METALS 22.000 PRIVATE RELATED BUSINESS

MINIWATT MINIWATTELECTRONICS AND

ELECTRICAL EQUIPMENT

20.775 FOR. (HOLLAND) ###

FORET FORET CHEMICALS AND PHARMACEUTICALS 20.764 FOR. (USA) ###

NUEVA MONTAÑA QUIJANO

NUEVA MONTAÑA QUIJANO

MECHANICALS AND METALS 20.159 PRIVATE-

BANKING SINGLE BUSINESS

CIBA-GEIGY CIBA-GEIGY CHEMICALS AND PHARMACEUTICALS 20.054 FOR. (SWISS) ###

LAND ROVER SANTANA

LAND ROVER SANTANA

TRANSPORATION EQUIPMENT 19.664 FOR. (JAPAN) ###

COOPERATIVAS ORENSANAS

COOPERATIVAS ORENSANAS

ALIMENTARY, DRINKS AND TOBACCO 19.549 PRIVATE-

COOPERATIVE SINGLE BUSINESS

OSCAR MAYER OSCAR MAYER ALIMENTARY, DRINKS AND TOBACCO 19.405 PRIVATE-

FAMILY SINGLE BUSINESS

JOSÉ MARÍA ARISTRAÍN

JOSÉ MARÍA ARISTRAÍN

MECHANICALS AND METALS 19.235 PRIVATE-

FAMILY SINGLE BUSINESS

HISPANO OLIVETTI

HISPANO OLIVETTI

INFORMATION TECHNOLOGY 18.922 FOR. (ITALY) ###

TARRAGONA QUÍMICA

TARRAGONA QUÍMICA

RUBBER AND PLASTIC MATERIAL 18.800 NATIONAL SINGLE BUSINESS

IBERCOBRE IBERCOBRE MECHANICALS AND METALS 18.676 NATIONAL SINGLE BUSINESS

ULGOR ULGORELECTRONICS AND

ELECTRICAL EQUIPMENT

18.671 PRIVATE-COOPERATIVE SINGLE BUSINESS

28

LEVER IBERICA LEVER IBERICA CHEMICALS AND PHARMACEUTICALS 18.500 FOR. (UK) ###

ABENGOA MONTAJES

ELÉCTS.

ABENGOA MONTAJES

ELÉCTS.

ELECTRONICS AND ELECTRICAL EQUIPMENT

18.111 PRIVATE SINGLE BUSINESS

TORRAS HERRERÍA

TORRAS HERRERÍA

MECHANICALS AND METALS 17.755 PRIVATE SINGLE BUSINESS

Main sector and strategy of the 100 largest industrial firms, 1993

GROUP ENTERPRISE SECTORTURNOVER

(million of pesetas)

OWNERSHIP STRATEGY

INH

REPSOL COMERCIAL PETROLEUM 1.214.232

PUBLIC DOMINANT BUSINESS

REPSOL PETROLEO PETROLEUM 634.536

PETRONOR PETROLEUM 187.215REPSOL BUTANO PETROLEUM 173.197

CLH PETROLEUM 89.148REPSOL

QUÍMICACHEMICALS AND

PHARMACEUTICALS 86.253

INI

ENSIDESA MECHANICALS AND METALS 175.645

PUBLIC UNRELATED BUSINESS

CASA TRANSPORATION EQUIPMENT 118.932

ALTOS HORNOS DE VIZCAYA

MECHANICALS AND METALS 108.200

ASTILLEROS ESPAÑOLES

SHIPBUILDING INDUSTRY 61.514

EN BAZÁN SHIPBUILDING INDUSTRY 55.811

RÍO TINTO MINERA MINING INDUSTRY 47.526

"INI" VARIOUS ACTIVITIES 46.424

BABCOCK & WILCOX

ESPAÑOLA

TRANSPORATION EQUIPMENT 39.721

ALUMINIO ESPAÑOL

MECHANICALS AND METALS 38.037

ACENOR MECHANICALS AND METALS 27.653

ENCE PAPER 25.754

VOLKSWAGEN AUDI

SEAT TRANSPORATION EQUIPMENT 548.446

FOR. (GERMANY) ###

VOLKSWAGEN AUDI

TRANSPORATION EQUIPMENT 192.511

GEARBOX DEL PRAT

MECHANICALS AND METALS 23.828

TABACALERATABACALERA ALIMENTARY, DRINKS

AND TOBACCO 625.675PUBLIC UNRELATED BUSINESS

LACTARÍA ESPAÑOLA

ALIMENTARY, DRINKS AND TOBACCO 35.544

CEPSA

CEPSA PETROLEUM 475.292 PRIVATE-BANKING

DOMINANT BUSINESSERTOIL PETROLEUM 98.218 PRIVATE-

ENTERPRISE

CEPSA ESTACIONES DE

SERVICIOPETROLEUM 42.084 PRIVATE-

ENTERPRISE

FASA RENAULT FASA RENAULT TRANSPORATION EQUIPMENT 482.928 FOR. (FRANCE) ###

29

VEHICULOS INDUSTRIALES

TRANSPORATION EQUIPMENT 28.500

GENERAL MOTORS ESPAÑA

GENERAL MOTORS ESPAÑA

TRANSPORATION EQUIPMENT 465.756 FOR. (USA) ###

FORD ESPAÑA FORD ESPAÑA TRANSPORATION EQUIPMENT 353.633 FOR. (USA) ###

CITROËN HISPANIA CITROËN HISPANIA

TRANSPORATION EQUIPMENT 305.214 FOR. (FRANCE) ###

IBM IBM INFORMATION TECHNOLOGY 219.520 FOR. (USA) ###

NISSAN MOTOR IBÉRICA

NISSAN MOTOR IBÉRICA

TRANSPORATION EQUIPMENT 190.324 FOR. (JAPAN) ###

PEUGEUT TALBOT PEUGEUT TALBOT

TRANSPORATION EQUIPMENT 185.379 FOR. (FRANCE) ###

NEUMÁTICOS MICHELIN

NEUMÁTICOS MICHELIN

RUBBER AND PLASTIC MATERIAL 152.572 FOR. (FRANCE) ###

NESTLÉ NESTLÉ ALIMENTARY, DRINKS AND TOBACCO 152.201 FOR. (SWISS) ###

BP OIL BP OIL PETROLEUM 136.022 FOR. (UK) ###

BAYER

BAYER CHEMICALS AND PHARMACEUTICALS 48.050

FOR. (GERMANY) ###

BAYER QUÍMICA

FARMACÉUTICA

CHEMICALS AND PHARMACEUTICALS 38.915

AGFA GEVAERT VARIOUS ACTIVITIES 27.634

MERCEDES-BENZ MERCEDES-BENZ

TRANSPORATION EQUIPMENT 103.141 FOR.

(GERMANY) ###

ROBERT BOSCH ROBERT BOSCHELECTRONICS AND

ELECTRICAL EQUIPMENT

84.719 FOR. (GERMANY) ###

EBRO AGRICOLAS EBRO AGRICOLAS

ALIMENTARY, DRINKS AND TOBACCO 81.219 FOR. (KUWAIT) ###

DANONE DANONE ALIMENTARY, DRINKS AND TOBACCO 80.776 FOR. (FRANCE) ###

DOW CHEMICAL IBÉRICA

DOW CHEMICAL IBÉRICA

CHEMICALS AND PHARMACEUTICALS 80.057 FOR. (SWISS) ###

ACERINOX ACERINOX MECHANICALS AND METALS 79.812 PRIVATE-

BANKING SINGLE BUSINESS

SHELL ESPAÑA SHELL ESPAÑA PETROLEUM 78.979 FOR. (UK) ###

HENKEL IBÉRICA HENKEL IBÉRICA

CHEMICALS AND PHARMACEUTICALS 76.630 FOR.

(GERMANY) ###

CRISTALERÍA ESPAÑOLA

CRISTALERÍA ESPAÑOLA

STONE, CLAY AND GLASS 43.446

FOR. (FRANCE) ###VICASA STONE, CLAY AND

GLASS 32.616

UNILEVER ESPAÑAAGRA ALIMENTARY, DRINKS

AND TOBACCO 38.662FOR. (UK) ###

LEVER ESPAÑA CHEMICALS AND PHARMACEUTICALS 33.168

IVECO PEGASO IVECO PEGASO TRANSPORATION EQUIPMENT 69.841 FOR. (ITALY) ###

CRUZCAMPO CRUZCAMPO ALIMENTARY, DRINKS AND TOBACCO 68.567 FOR. (UK) ###

HOECHST IBÉRICA HOECHST IBÉRICA

CHEMICALS AND PHARMACEUTICALS 67.372 FOR.

(GERMANY) ###

CARGILL ESPAÑA CARGILL ESPAÑA

ALIMENTARY, DRINKS AND TOBACCO 63.799 FOR. (USA) ###

SIEMENS SIEMENSELECTRONICS AND

ELECTRICAL EQUIPMENT

58.590 FOR. (GERMANY) ###

HEWLETT PACKARD ESPAÑOLA

HEWLETT PACKARD ESPAÑOLA

INFORMATION TECHNOLOGY 58.523 FOR. (USA) ###

30

BRIDGESTONE FIRESTONE ESPAÑOLA

BRIDGESTONE FIRESTONE ESPAÑOLA

RUBBER AND PLASTIC MATERIAL 58.249 FOR. (USA) ###

ACEPROSA ACEPROSA ALIMENTARY, DRINKS AND TOBACCO 49.715 FOR. (BRAZIL) ###

TOTAL ESPAÑA TOTAL ESPAÑA PETROLEUM 49.578 FOR. (FRANCE) ###PROCTER &

GAMBLEPROCTER &

GAMBLECHEMICALS AND

PHARMACEUTICALS 48.924 FOR. (SWISS) ###

AGROPECUARIA DE GUISSONA

AGROPECUARIA DE GUISSONA

ALIMENTARY, DRINKS AND TOBACCO 48.659 PRIVATE-

COOPERATIVE SINGLE BUSINESS

SANTANA-MOTOR SANTANA-MOTOR

TRANSPORATION EQUIPMENT 48.516 FOR. (JAPAN) ###

EL ÁGUILA EL ÁGUILA ALIMENTARY, DRINKS AND TOBACCO 47.373 FOR.

(HOLLAND) ###

GENERAL AZUCARERA ESPAÑOLA

GENERAL AZUCARERA ESPAÑOLA

ALIMENTARY, DRINKS AND TOBACCO 46.667 PRIVATE-

BANKING SINGLE BUSINESS

PESCANOVA PESCANOVA ALIMENTARY, DRINKS AND TOBACCO 46.225 PRIVATE RELATED BUSINESS

ZARDOYA OTIS ZARDOYA OTIS MECHANICALS AND METALS 41.058 FOR. (USA) ###

ALBILUX ALBILUXELECTRONICS AND

ELECTRICAL EQUIPMENT

40.931 FOR. (SWEDEN) ###

PETROGAL ESPAÑOLA

PETROGAL ESPAÑOLA PETROLEUM 40.028 FOR.

(PORTUGAL) ###

KOIPE KOIPE ALIMENTARY, DRINKS AND TOBACCO 39.571 FOR. (FRANCE) ###

SARRIÓ SARRIÓ PAPER 38.658 FOR. (KUWAIT) ###

RANK XEROX RANK XEROX INFORMATION TECHNOLOGY 37.643 FOR. (UK) ###

CIBA-GEIGY CIBA-GEIGY CHEMICALS AND PHARMACEUTICALS 36.522 FOR. (SWISS) ###

ASTURIANA DE ZINC

ASTURIANA DE ZINC

MECHANICALS AND METALS 36.128 PRIVATE-

BANKING SINGLE BUSINESS

SAN MIGUEL SAN MIGUEL ALIMENTARY, DRINKS AND TOBACCO 36.069 PRIVATE SINGLE BUSINESS

BENKISER BENKISER CHEMICALS AND PHARMACEUTICALS 35.058 FOR.

(GERMANY) ###

OLIVETTI ESPAÑA OLIVETTI ESPAÑA

INFORMATION TECHNOLOGY 33.777 FOR. (ITALY) ###

CENTRAL LECHERA

ASTURIANA

CENTRAL LECHERA

ASTURIANA

ALIMENTARY, DRINKS AND TOBACCO 33.579 PRIVATE SINGLE BUSINESS

BIMBO BIMBO ALIMENTARY, DRINKS AND TOBACCO 31.656 FOR. (USA) ###

MARCIAL UCÍN MARCIAL UCÍN MECHANICALS AND METALS 31.643 PRIVATE-

FAMILY SINGLE BUSINESS

DAMM DAMM ALIMENTARY, DRINKS AND TOBACCO 30.813 PRIVATE SINGLE BUSINESS

PULEVA-UNIASA PULEVA-UNIASA

ALIMENTARY, DRINKS AND TOBACCO 30.569 PRIVATE DOMINANT BUSINESS

PRODUCTOS CAPILARES

PRODUCTOS CAPILARES

CHEMICALS AND PHARMACEUTICALS 30.097 FOR. (FRANCE) ###

OMSA OMSA ALIMENTARY, DRINKS AND TOBACCO 28.899 PRIVATE SINGLE BUSINESS

CARBUROS METÁLICOS

CARBUROS METÁLICOS

CHEMICALS AND PHARMACEUTICALS 28.164 PRIVATE-

BANKING RELATED BUSINESS

S.E. METALES PRECIOSOS

S.E. METALES PRECIOSOS

MECHANICALS AND METALS 27.524 FOR. (FRANCE) ###

ERCROS ERCROS CHEMICALS AND PHARMACEUTICALS 27.020 FOR. (KUWAIT) ###

MOBIL OIL MOBIL OIL PETROLEUM 26.705 FOR. (USA) ###

SNACK VENTURES EUROPE

SNACK VENTURES

ALIMENTARY, DRINKS AND TOBACCO 26.639 FOR. (USA) ###

31

EUROPEMERK SHARP &

DHOMEMERK SHARP &

DHOMECHEMICALS AND

PHARMACEUTICALS 26.536 FOR. (USA) ###

GLAXO GLAXO CHEMICALS AND PHARMACEUTICALS 26.302 FOR. (UK) ###

ESSO ESSO PETROLEUM 26.094 FOR. (USA) ###

COPAGA COPAGA ALIMENTARY, DRINKS AND TOBACCO 25.944 PRIVATE-COO SINGLE BUSINESS

3M ESPAÑA 3M ESPAÑA CHEMICALS AND PHARMACEUTICALS 25.778 FOR. (USA) ###

URALITA URALITA STONE, CLAY AND GLASS 25.528 PRIVATE RELATED BUSINESS

ANTIBIÓTICOS ANTIBIÓTICOS CHEMICALS AND PHARMACEUTICALS 25.153 FOR. (ITALY) ###

PIRELLI NEUMÁTICOS

PIRELLI NEUMÁTICOS

RUBBER AND PLASTIC MATERIAL 24.537 FOR. (ITALY) ###

LABORATORIOS ALMIRALL

LABORATORIOS ALMIRALL

CHEMICALS AND PHARMACEUTICALS 23.283 PRIVATE SINGLE BUSINESS

FUJITSU ESPAÑA FUJITSU ESPAÑA

INFORMATION TECHNOLOGY 22.529 FOR. (JAPAN) ###

CODORNÍU CODORNÍU ALIMENTARY, DRINKS AND TOBACCO 22.337 PRIVATE-

FAMILY SINGLE BUSINESS

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