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The Differential Effects of Minority State Ownership Types on the Internationalization of Emerging Market Multinationals from Democratic States

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Abstract

We argue that governments use different types of minority state ownership in domestic multinationals to balance the provision of public and private goods and maximize political survival in emerging market democracies. Using a sample of Brazilian multinationals, we combine instrumental and fixed-effects regressions with an in-depth case study in order to measure and describe the effects of two types of ownership ties. We show that ownership through state-controlled institutional investors has a positive effect on the internationalization level of multinationals, whereas the ownership by state agencies and state-owned enterprises shows an opposite effect. By looking at these effects from the perspective of the political survival of democratic rulers, we contrast our results against the empirical research on multinationals from authoritarian states.

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Notes

  1. Another consequence of the provision of these private goods is corruption. The illegal money collected by corrupt leaders can be used for personal enrichment, as well as to finance their political campaigns.

  2. We also estimated Model 3 using the lagged (t − 1) values of the two types of state ownership for the transnationality index and each one of its components as dependent variables. The results did not change for any specification.

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Acknowledgements

We would like to thank the two anonymous reviewers. This research benefitted from funding from the Brazilian Agency CNPq.

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  1. Léonard de Vinci Pôle Universitaire Research Center, Paris La Défense, France

    Fernanda Arreola

  2. Girard School of Business, Merrimack College, North Andover, MA, USA

    Rodrigo Bandeira-de-Mello

  3. Fundaçao Getúlio Vargas, São Paulo, Brazil

    Rodrigo Bandeira-de-Mello

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  1. Fernanda Arreola
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Correspondence to Fernanda Arreola.

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Arreola, F., Bandeira-de-Mello, R. The Differential Effects of Minority State Ownership Types on the Internationalization of Emerging Market Multinationals from Democratic States. Manag Int Rev 58, 845–869 (2018). https://doi.org/10.1007/s11575-018-0352-4

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