The autocratic advantage: Internationalization of state-owned multinationals

Abstract

We offer a theoretical extension and empirical analysis of home country autocracy as a key determinant for the internationalization of state-owned enterprises (SOEs). Building on international business and international political economy theory, we argue that the pursuit of a mercantilist domestic agenda by autocratic governments is influential upon the magnitude and direction of stateowned multinational enterprises' (SOMNC) outward investment via acquisition. We conclude that autocratic home countries are 're-purposing' SOEs to pursue international nationalist objectivesand that autocracies can do so more effectively and purposefully than democracies, by maintaining effective control over their SOMNCs.

Bringing corporate governance into internalization theory: State ownership and foreign entry strategies

“…Using the Fraser Institute measures for Size of Government (measuring the role of the government in the home economy in various ways) and Economic Freedom however produces very strong and significant support for our Predictive Margins with 95% CIs Figure 6 Predictive margins for different levels of state ownership (Hypothesis 1a-b). Clegg et al, 2018), seem to have an important influence on the difference between SOE and POE entry modes. It is worth noting that the second category of institutional variables is relatively far removed from our theoretical arguments.…”

“…Although these arguments were developed based on democratic countries with free elections, the arguments are also applicable with some modification to more autocratic settings. While the scope for using SOEs for self-interested purposes may be even greater (Clegg, Voss, & Tardios, 2018), autocratic leaders still depend on political support. As for the bureaucrats tasked with the daily monitoring of SOEs, they have weak monetary incentives to devote effort to monitoring, as their financial stake is insignificant, while SOEs' multidimensional objectives make their governance more difficult.…”

Relational ownership, institutional context, and internationalization of state‐owned enterprises: When and how are multinational co‐owners a plus?

“…Third, a weakness of the literature on internationalization of SOEs is its excessive focus on Chinese firms and those of other transition economies (Bruton et al, 2015; Clegg et al, 2018). Our analysis based on a sample of OECD countries complements previous studies, so that it possibly paves the way for research with greater generalizability.…”

“…With reference to the emerging markets, they propose that different levels of state ownership modify the relationship between state ownership and the international expansion of SOEs as relevant private owners can correct or mitigate some of the state dysfunctionalities in the pursuit of profit‐oriented foreign investments (see also Estrin, Meyer, Nielsen, & Nielsen, 2016). Other scholars have argued that the way in which state ownership influences the willingness and ability of SOEs to internationalize depends on the institutional settings in which they are embedded (Clegg, Voss, & Tardios, 2018; Colli, Mariotti, & Piscitello, 2014; Estrin et al, 2016; Hennart, Sheng, & Carrera, 2017; Hoskisson, Wright, Filatotchev, & Peng, 2013). In particular, Mariotti and Marzano (2019) argue that the duality balance evolves from negative (against internationalization) to positive (in favor of internationalization) along a continuum between the paradigmatic forms of the liberal market economy (LME) and the coordinated market economy (CME).…”

Political governance, civil liberties, and human capital: Evaluating their effect on foreign direct investment in emerging and developing economies

“…However, Chinese FDI has a different pattern, with Chinese firms acquiring targets in developed economies. Clegg et al (2018) investigate the relationship between home country autocracy and the internationalisation of state-owned MNEs and find that such MNEs can become an autocratic government's instrument to get access to resources and to advance a mercantilist agenda. Because many Chinese MNEs are state owned, this accounts for a significant share of Chinese outward FDI.…”