Varieties in state capitalism: Outward FDI strategies of central and local state-owned enterprises from emerging economy countries

Abstract

Institutional diversity characterizing state-owned enterprises (SOEs) from emerging economies holds critical but under-examined implications for their internationalization activities. Different types of SOEs can exhibit distinct motivations, strategic resources, and adaptive capabilities for penetrating foreign markets. To understand how such idiosyncratic differences emerge, we conceptualize the heterogeneity of SOEs as an outcome of multiple institutional reform processesadministrative and fiscal decentralization, industrial restructuring, and market liberalization -which create diversity between SOEs affiliated with central and local levels of government. Building on the idea of "institutions-asconfigurations", we elucidate how such reforms reconfigure SOEs' constellation of resources, capabilities, and priorities which shape the parameters of their ability to negotiate for home and host country institutional legitimacy. Specifically, we propose that the restructuring of central SOEs into "national champions" exposes them to stronger institutional pressures from home and host country governments while local SOEs which have fewer obligations to serve national strategic prerogatives display greater managerial autonomy and market orientation, but lower levels of monopolistic behavior. We discuss how such contrasting attributes contribute to variations in SOEs' international business diversification patterns, foreign subsidiary establishment and ownership modes, and overseas location preferences. Recognition of SOEs' organizational diversity holds important implications for theories on state-owned multinationals.

Home country institutions and the internationalization of state owned enterprises: A cross-country analysis

“…This approach makes at least two important contributions. First, existing studies have predominantly utilized institutional theory to explain home country institutional context in single country studies, notably China (Buckley et al, 2007;Cui & Jiang, 2012;Li et al, 2014;Wang et al, 2012c) or India (Choudhury & Khanna, 2014). Our study extends this literature to study the influence of home country institutional context on firm internationalization in a comprehensive sample of 40 countries, spanning both developing and developed economies with a wide variety of institutional and political configurations.…”

“…In a free market economy, SOEs tend to be restricted to specific areas where pure market outcomes are considered either inefficient or socially undesirable (Vickers and Yarrow, 1992), such as industries with natural monopolies or providing a socially-desired basic service. In other countries, the state plays a direct role in economic development, and strategically deploys SOEs to achieve such political objectives (Aharoni 1981;Li, Cui, & Lu, 2014;Wang et al, 2012b). In this view, state ownership addresses the market failures of under-development by enabling funding of key industrialization or infrastructure projects (George & Prabhu, 2000), or even by guiding the process of market driven economic development, as is the case in Singapore and China (Redding & Witt, 2009;Tipton, 2009).…”

RevisitingFDIStrategies and the Flow of Firm‐Specific Advantages: A Focus on State‐Owned Enterprises

“…() . Moreover, it provides a contrast to FDI studies by Bass and Chakrabarty (), Cui and Jiang (), Deng (), Li, Cui, and Lu (), and Wang et al . (), which focused on mixed ownership enterprises that are only partially owned by the state.…”

When are emerging market multinationals more risk taking?

“…We validate that strategic intent, financial abundance, and inward internationalization background affect individual EMNE's risk‐taking behaviors, including risky entry mode via acquisition and rapid global dispersion. We are not the first to propose or study strategic intent, financial resources, and inward internationalization in articulating international expansion of EMNEs (see Buckley et al, ; Child & Rodrigues, ; Cui & Jiang, ; Li et al, ; Luo & Tung, ; Rui & Yip, ; Wang et al, ; and Xia et al, for example). But, we are among the first to establish the link between these endogenous forces and specific risk behavior of these firms.…”

“…Prior studies of how organizational and environmental conditions influence internationalization have generally focused on conditions such as international experience and learning (Barkema, Bell, & Pennings, ; Carpenter et al, ; Chang, ; Davidson, ; Erramilli, ; Johanson & Vahlne, ), governmental support (Ahmed et al, ; Bass & Chakrabarty, ; Cuervo‐Cazurra, Inkpen, Musacchio, & Ramaswamy, ; Duanmu, ; Li, Cui, & Lu, ; Peng, ), psychic distance (Evans & Mavondo, ; Johanson & Vahlne, ; O'Grady & Lane, ), cultural distance (Kogut & Singh, ), and institutional distance (Berry, Guillén, & Zhou, ; Xu & Shenkar, ).…”