National institutions shape the ability of civil society and minority shareholders to monitor and influence decision-makers in listed state owned enterprises (SOEs), and thereby their strategies of ...internationalization. We argue that the weaker are such controls, the more likely such decision makers pursue self-serving motives, and thus shy away from international investment. Listed SOEs’ strategies will thus be more similar to those of wholly privately owned enterprises (POEs) when these controls are more effective. Building on Williamson's (2000) hierarchy of institutions, we examine how home country institutions exerting normative, regulatory, and governance-related controls affect the comparative internationalization levels of listed SOEs and POEs. Based on a matched sample of 153 majority state owned and 153 wholly privately owned listed firms from 40 different countries, we confirm that, when home country institutions enable effective control, the internationalization strategies of listed SOEs and POEs converge.
State-owned enterprises represent approximately 10% of global gross domestic product. Yet they remain relatively underexplored by management scholars. Firms have often been viewed dichotomously as ...either state owned or privately owned. Today, however, we encourage a more nuanced view of state-owned enterprises as hybrid organizations, in which the levels of ownership and control by the state can vary. Drawing on 36 cases from four industries in 23 countries, we lay the groundwork for a richer understanding of state-owned enterprises by management scholars in the future.
State-owned (SO) enterprises are subject to more complex institutional pressures in host countries than private firms. These institutional pressures arise from a weak legitimacy of "state ownership" ...in some countries, which arises from a combination of ideological conflicts, perceived threats to national security, and claimed unfair competitive advantage due to support by the home country government. These institutional pressures directed specifically at SO firms induce them to adapt their foreign entry strategies to reduce potential conflicts and to enhance their legitimacy. Testing hypotheses derived from this theoretical argument for subsidiaries of listed Chinese firms, we find that SO firms adapt mode and control decisions differently from private firms to the conditions in host countries, and these differences are larger where pressures for legitimacy on SO firms are stronger. These findings not only extend institutional theory to better explain differential effects on different entrants to an organizational field, but demonstrate how foreign investors of idiosyncratic origins may proactively build legitimacy in host societies.
We add to the emerging literature on empirical asset pricing in the Chinese stock market by building and analyzing a comprehensive set of return prediction factors using various machine learning ...algorithms. Contrasting previous studies for the US market, liquidity emerges as the most important predictor, leading us to closely examine the impact of transaction costs. The retail investors’ dominating presence positively affects short-term predictability, particularly for small stocks. Another feature that distinguishes the Chinese market from the US market is the high predictability of large stocks and state-owned enterprises over longer horizons. The out-of-sample performance remains economically significant after transaction costs.
Expropriation risk has a binding effect on foreign direct investment (FDI). However, state-owned multinational corporations may counter the monopoly power of the host state by leveraging the ...political influence of their home government. The magnitude of this counter force, we argue, may vary, depending on the strength of political relations between the home and host state, and the level of economic dependence of the host country on the home market. We find supporting evidence of our hypotheses using Chinese firm-level FDI information between 2003 and 2010.
We analyze the new varieties of state capitalism in the 21st century and explore their implications in terms of both strategic and governance outcomes. We begin by discussing how the current ...theoretical perspectives conceptualize state-owned enterprises' strategic behavior. Then we introduce a stylized distinction between four broad, new varieties of state capitalism—wholly owned state-owned enterprises, the state as a majority investor, the state as a minority investor, and the state as a strategic supporter of specific sectors—and survey each type within the different theoretical perspectives. Last, we examine firm performance for each type of state capitalism relative to private firms and contingent on country-level institutional contingencies. This article contributes to existing debates on comparative capitalisms and the current role of the state.
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 processes – administrative 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.
We explore the effect of green credit policy on firm performance of listed firms in China. We find that green credit policy reduces firm performance in heavily polluting industries. This effect is ...more prominent in state-owned enterprises, firms with large size, high institutional ownership, high analyst coverage and during high economic policy uncertainty period. Moreover, we observe that green credit policy decreases heavily polluting firms' performance by increasing firm financing constraints and decreasing investment level. Our results help to restrain heavily polluting enterprises and promote industrial transformation in developing markets.
•We explore the effect of green credit policy on firm performance in China.•Green credit policy reduces firm performance in heavily polluting industries.•This policy effect is more prominent in SOEs and large-cap firms.•This policy effect is more significant in firms with stronger external supervision.•EPU enhances the restraining effect of green credit policy.•Financial constraints and investment level play crucial economic channels.
Integrating agency theory with institutional analysis in international business, we propose a state-control perspective to analyze government-control mechanisms in emerging economies' globalization ...of state-owned enterprises (SOEs). We identify two types of state control that influence SOEs' globalization decisions and the degree of globalization (DOG): state ownership control and executives' political connections, both of which are contingent upon the home country's evolving institutional environments. Using a two-step corporate globalization decision model and 17,272 firm -year observations of nonfinancial, Chinese-listed companies, we find a strong impact of both types of state control on SOEs' globalization, although the impacts differ between the periods before and after domestic governance reform and across different globalization decision steps. The diminishing impact of executives' political connections and the increasing impact of state ownership control on firms' DOG demonstrate the evolving relationship between the state and the managers, as well as the dynamics of state control in globalizing SOEs.
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