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The Annals of Regional Science

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01-12-2005 | Original Paper

Inter-regional corporate ownership and regional autonomy: the case of Switzerland

Authors: Olivier Crevoisier, Frédéric Quiquerez

Published in: The Annals of Regional Science | Issue 4/2005

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Abstract

By using a unique database on the ownership relations of Swiss firms, this article proposes a study of specific regional characteristics in that it reveals the way in which ownership is structured. The paper clearly highlights the different ways that regions behave regarding their involvement in these ownership structures, on a national and international level. The types of behaviour can be associated with the various economic specialisations of Switzerland’s regions. Firstly, it appears that the most frequent ownership links occur among firms within the same Regional Production System. It is then noted that the links between the Swiss regions are far less numerous than international links. The international links, by their number and their distribution throughout Switzerland, constitute the main source of discrimination between the regions. The financial region of Zurich masters this ownership issue most competently. It is the most autonomous region in that it is able to maintain control over its economy, to become highly involved in other spaces, and attract the most investments. It would appear that the regions that are the best integrated within the network are those that have been best able to take advantage of the evolution of the Swiss financial system. The low density of the links between the various Swiss regions suggests that these regions organise their relations on scales that are different to that of the nation. This clearly raises questions regarding the policies based on the principle that the growth of the main centres affects the rest of the country positively.

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Regional Production Systems, industrial districts, innovative milieus, etc. For a review of literature on these approaches, see in particular Benko and Lipietz (1992); Rallet and Torre (1995).

Some heterodox approaches strongly criticise this concept of the choices by investors. A preference for liquid assets (Dow, 1999) or mimetic mechanisms (Orléan, 1999) constitutes factors that question the pertinence of the classical explanatory factors of capital allocation. This article does not take the alternative approaches into consideration, since it is not a study of the allocation process but rather its implications on the systems (regional autonomy).

Approximately EUR 320,000.- .

If A owns (>50%) B and B owns (>50%) C, the final relations are between A and B and between A and C. The relation between B and C disappears since, logically, B no longer has decision-taking autonomy.

If A_Switzerland owns B_Switzerland and B_Switzerland owns C_Foreign, the relation between B_Switzerland and C_Foreign is deleted in order to retain only the relations between the final owner (A_Switzerland) and what it owns (B_Switzerland and C_Foreign).

Civil population, federal population census, 2000.

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In a first stage (section 3.1), the way in which the Swiss regions are integrated within the national network is evaluated. Then, in section 3.2, it is the international relations of the Swiss regions that are handled.

Thus T _j – U _j = S _j.

The guiding principle in these analyses is always the concept of final control. For example, if A_RPS owns B_{outside RPS} and B_{outside RPS} owns C_RPS, the relations A_RPS-B_{outside RPS} and B_{outside RPS}-C_RPS are ignored, preserving only the relation between A_RPS-C_RPS.

We do not have the data on the possible possession of foreign firms under Swiss control. If A_Switzerland owns B_Foreign and B_Foreign owns C_Foreign, it is not possible to identify the final relationship between A_Switzerland and C_Foreign.

Again respecting the principle of the final owner, if A_Foreign owns B_Switzerland and B_Switzerland owns C_Switzerland, it is the relations A_Foreign-B_Switzerland and A_Foreign-C_Switzerland that are taken into consideration.

However, the number of companies controlled indirectly could also be considerable. In the case of Switzerland, for example, some 2,482 firms are directly controlled from abroad, with 1,227 being controlled indirectly. Moreover, it should be recalled that via these 3,709 companies, 1,299 foreign companies are indirectly controlled by foreign firms.

For own control, the results presented here are global, i.e. national and international. Thus, the number of internal links was considered as compared with the total (internal, inter-regional and international) of owned companies in the territory.

3,709 branches controlled from abroad, 1,913 branches that have an owner situated in a Swiss region other than their own, and 5,225 branches that have an owner in the same region.

In the national analysis, only the domestic links are taken into consideration. For example, firms in the Valais control 72 branches out of 156 (46.2%). Then, in the international section, the range of branches included in the calculation of the own ownership index is widened. In this way, and still in the case of the Valais, the 39 branches controlled from abroad are added to the 156 Swiss branches of firms. Valais thus controls 36.9% (72/(156+39)) of the branches on its territory.

The main bloc of activities of Geneva’s economy is that of the international organisations such as the UNO or the Red Cross. The second bloc is that of the financial sector, with international asset management in particular.

The giants Novartis and Roche are the concerns that inflate the indices for the region to the greatest extent.

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Title: Inter-regional corporate ownership and regional autonomy: the case of Switzerland
Authors: Olivier Crevoisier
Frédéric Quiquerez
Publication date: 01-12-2005
Publisher: Springer-Verlag
Published in: The Annals of Regional Science / Issue 4/2005
Print ISSN: 0570-1864
Electronic ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-005-0017-7

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