A double-edged sword: the impact of institutions and political relations on the international market expansion of Chinese state-owned enterprises

Abstract

This study examines how home country government involvement and host country institutions, as well as bilateral political relations, affect the post-entry market expansion of Chinese state-owned enterprises (SOEs) in emerging and developing countries, and developed countries, using the case study method. The findings show that home country government involvement can either support or constrain SOEs' subsequent market expansion. In emerging and developing countries, under-developed institutions create difficulties which can deter the market expansion of Chinese SOEs, whereas in developed host countries the challenges associated with unfamiliar institutions can be overcome through experiential learning. The impact of host country institutions on the market expansion of Chinese SOEs is contingent on political relations between host and home countries.

Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms

“…It is evident that Chinese firms have encountered U-turns in governmental policy towards foreign investments in some African countries when there has been a change of regime (Gao, Liu, & Lioliou, 2015). Therefore, future…”

“…Specifically, well-established rules and regulations help Chinese MNEs reduce the regulatory ambiguity associated with cross-border investments (Gao, Liu, & Lioliou, 2015).…”

“…The host country government can enhance its country's location advantages by improving its institutions in order to attract foreign firms (Guler & Guillen, 2010;Witt & Lewin, 2007). Thus, the institutional environment in a host country has important implications for MNEs' internationalization outcomes (Chung & Beamish, 2005;Cui & Jiang, 2012;Gao, Liu, & Lioliou, 2015;Holmes, et al, 2013;Kostova, Roth, & Dacin, 2008;Pangarkar & Lim, 2003;Wang, et al, 2012).…”

“…However, this may raise political and public concern in the host countries which they target, especially in developed countries (Cui & Jiang, 2012;Gao, Liu, & Lioliou, 2015 …”

Strategic decisions in Chinese state-owned enterprises as outcome of the sensemaking of the CEO: the case of COSCO’s emerging involvement in the Port of Piraeus

“…Chinese SOEs are supported by their government and enjoy favourable treatment, while this is not always the case for non-SOEs. It is speedy government approval for OFDI and financial support from the home government that encourage Chinese SOEs to expand overseas (Gao, Liu, & Lioliou, 2015).…”