An anatomy of state control in the globalization of state-owned enterprises

Hao Liang, Bing Ren and Sunny Li Sun
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Hao Liang: CentER for Economic Research, Tilburg University, Tilburg, The Netherlands
Bing Ren: School of Business, Nankai University, Tianjin, China
Sunny Li Sun: Henry W Bloch School of Management, University of Missouri – Kansas City, Kansas City, USA

Journal of International Business Studies, 2015, vol. 46, issue 2, 223-240

Abstract: 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 non-financial, 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.

Date: 2015
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