A review of the internationalization of state-owned firms and sovereign wealth funds: Governments’ nonbusiness objectives and discreet power

Alvaro Cuervo-Cazurra (), Anna Grosman () and William L. Megginson ()
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Alvaro Cuervo-Cazurra: Northeastern University
Anna Grosman: Loughborough University London
William L. Megginson: The University of Oklahoma

Journal of International Business Studies, 2023, vol. 54, issue 1, No 7, 78-106

Abstract: Abstract We review and bridge the literature on the internationalization of state-owned firms and sovereign wealth funds to provide a novel understanding of how government ownership affects foreign investments in three ways. First, we explain how state-owned firms and funds behave differently from private ones because they need to balance governments’ nonbusiness objectives and firms’ business goals. This results in competing predictions on whether government ownership helps or hinders internationalization due to particular nonbusiness objectives. Second, building on the review, we provide suggestions on how to extend research topics and theories of the firm by incorporating these nonbusiness objectives in the internationalization decisions in four areas: home government’s endowments, characteristics, and attitudes; host-country expansion’s support, influence, and impact; home- and host-country relationship conflicts, mediation, and disguising; and management’s orientation, opacity, and arbitrage. Third, we capture how governments may use state-owned multinationals and sovereign wealth funds to nudge host-country governments by introducing the concept of discreet power and the use of four strategies (recognition, values, development, and supremacy) to achieve it. This helps to outline the beginning of a unified approach to how governments use their foreign investments to achieve nonbusiness goals.

Keywords: state-owned firms; state-owned multinationals; sovereign wealth funds; government ownership; firm’s objectives; internationalization; state capitalism; international finance; international business; power; corporate governance; political connections; political bias (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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DOI: 10.1057/s41267-022-00522-w

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