With the takeover of BOC, O2, P&O and with the LSE under siege, the question on everybody’s lips is whether U. K.  companies are particularly vulnerable and if this has negative consequences for the U. K. corporate sector.

The U. K. has traditionally been the bastion of international trade in Europe.  By and large, it has not placed restrictions on foreign investors buying U. K. assets and has benefited, enormously, from foreign investor inflows.

The doom mongers predicting the annihilation of the U. K. corporate sector have turned out to be wrong. Most of the traditional merchant banks and brokers have been acquired by the large U.S., Swiss and German banks; yet, the city is going from strength to strength.  Most British car manufacturers have disappeared and yet, Britain manufactures and exports more cars today, than at any other time in its history.

However, there are some consequences which are undesirable.  From a management point of view, one of the biggest consequences is that the main board of a company is based in its home country. Secondly, the culture of the group is also, essentially, that of the home country.  This makes it very difficult for British executives to make it to the top role. Not only do they have to overcome cultural inertia, but they usually also have to spend several years in the home country of the company in order to be merely considered.  These years usually coincide with a growing family and so the decisions are even more complicated.  People like Howard Stringer of Sony are the exception rather than the rule.

There is also perhaps a case for a handful of companies being protected due to their national importance.  However, the problem is that when they are protected, they usually deliver a dreadful service.  Furthermore, once the government starts intervening, it is very difficult to control the areas of intervention.

Most Chairman and Chief Executives seem to feel that, on balance, it is better for our companies to operate in an unrestricted environment rather than with governmental interference, as on the continent.

We must also remember that the records of Lord Browne at BP Plc and Gareth Davis at Imperial Tobacco Plc, of creating value through overseas acquisitions of their own, are second to none.

Samuel Johar is Chairman of Buchanan Harvey & Co., an executive search and evaluation firm.

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