Management International Review

, Volume 58, Issue 4, pp 605–631 | Cite as

Hybrid State-Owned Enterprises and Internationalization: Evidence from Emerging Market Multinationals

  • Nan ZhouEmail author
Research Article


This article examines the internationalization strategy of hybrid state-owned enterprises (SOEs). Hybrid SOEs with mixed state and private ownership adopt different strategies in the internationalization process as the level of state ownership changes. In particular, we compare majority SOEs and minority SOEs and examine the moderating role of majority SOEs in different relationships. First, majority SOEs are more likely than minority SOEs to react favorably to the government’s advocacy of going abroad. Second, majority and minority SOEs utilize different types of resources when they enter foreign markets. While majority SOEs are more likely to rely on external resources such as debts to go abroad, minority SOEs are more likely to rely on internal resources such as intangible assets. An empirical investigation of Chinese-listed hybrid SOEs between 1991 and 2016 supports these arguments.


Hybrid SOEs Majority SOE Minority SOE Resources Emerging markets 



This research was supported by Nankai University 100 Young Academic Leaders Plan and National Nature Science Foundation of China (Project number: 7187020236). I am grateful to Marshall Meyer, Mauro Guillen, Felipe Monterio, and Vit Henisz for their comments and advice on previous versions of this manuscript.


  1. Andrews, W. A., & Dowling, M. J. (1998). Explaining performance changes in newly privatized firms. Journal of Management Studies, 35(5), 601–617.CrossRefGoogle Scholar
  2. Bai, C. E., & Xu, L. C. (2005). Incentives for CEOs with multitasks: Evidence from Chinese state-owned enterprises. Journal of Comparative Economics, 33(3), 517–539.CrossRefGoogle Scholar
  3. Bai, B., Yen, J., & Yang, X. (2008). False financial statements: Characteristics of China’s listed companies and cart detecting approach. International Journal of Information Technology and Decision Making, 7(2), 339–359.CrossRefGoogle Scholar
  4. Bascle, G. (2008). Controlling for endogeneity with instrumental variables in strategic management research. Strategic Organization, 6(3), 285–327.CrossRefGoogle Scholar
  5. Bergh, D. D. (1997). Predicting divestiture of unrelated acquisitions: An integrative model of ex ante conditions. Strategic Management Journal, 18(9), 715–731.CrossRefGoogle Scholar
  6. Boddewyn, J. J., & Brewer, T. L. (1994). International–business political behavior: New theoretical directions. Academy of Management Review, 19(1), 119–143.CrossRefGoogle Scholar
  7. Boisot, M., & Meyer, W. M. (2008). Which way through the open door? Reflections on the internationalization of Chinese firms. Management and Organization Review, 4(3), 349–366.CrossRefGoogle Scholar
  8. Bortolotti, B., & Faccio, M. (2009). Government control of privatized firms. Review of Financial Studies, 22(8), 2907–2939.CrossRefGoogle Scholar
  9. Boubakri, N., & Cosset, J. C. (1998). The financial and operating performance of newly privatized firms: Evidence from developing countries. Journal of Finance, 53(3), 1081–1110.CrossRefGoogle Scholar
  10. Boubakri, N., Cosset, J. C., Guedhami, O., & Saffar, W. (2011). The political economy of residual state ownership in privatized firms: Evidence from emerging markets. Journal of Corporate Finance, 17(2), 244–258.CrossRefGoogle Scholar
  11. Boubakri, N., Cosset, J. C., & Saffar, W. (2008). Political connections of newly privatized firms. Journal of Corporate Finance, 14(5), 654–673.CrossRefGoogle Scholar
  12. Boubakri, N., Cosset, J. C., & Saffar, W. (2013). The role of state and foreign owners in corporate risk-taking: Evidence from privatization. Journal of Financial Economics, 108(3), 641–658.CrossRefGoogle Scholar
  13. Brandt, L., & Li, H. (2003). Bank discrimination in transition economies: Ideology, information, or incentives? Journal of Comparative Economics, 31(3), 387–413.CrossRefGoogle Scholar
  14. Brouthers, L. E., O’Donnell, E., & Hadjimarcou, J. (2005). Generic product strategies for emerging market exports into triad nation markets: A mimetic isomorphism approach. Journal of Management Studies, 42(1), 225–245.CrossRefGoogle Scholar
  15. Bruton, G. D., Ahlstrom, D., & Li, H. L. (2010). Institutional theory and entrepreneurship: Where are we now and where do we need to move in the future? Entrepreneurship Theory and Practice, 34(3), 421–440.CrossRefGoogle Scholar
  16. Bruton, G. D., Peng, M. W., Ahlstrom, D., Stan, C., & Xu, K. (2015). State-owned enterprises around the world as hybrid organizations. The Academy of Management Perspectives, 29(1), 92–114.CrossRefGoogle Scholar
  17. Buckley, P. J., & Casson, M. (1976). The future of the multinational enterprise. New York: Holmes & Meier Publishers.CrossRefGoogle Scholar
  18. Buckley, P. J., Cross, A. R., Hui, T., Liu, X., & Voss, H. (2008). Historic and emergent trends in Chinese outward direct investment. Management International Review, 48(6), 715–747.CrossRefGoogle Scholar
  19. Cauley, J., & Sandler, T. (2001). Agency cost and the crisis of China’s SOEs: A comment and further observations. China Economic Review, 12(4), 293–297.CrossRefGoogle Scholar
  20. Chang, S. J., & Singh, H. (1999). The impact of modes of entry and resource fit on modes of exit by multibusiness firms. Strategic Management Journal, 20(11), 1019–1035.CrossRefGoogle Scholar
  21. Chi, J., & Padgett, C. (2006). Operating performance and its relationship to market performance of Chinese initial public offerings. Chinese Economy, 39(5), 28–50.CrossRefGoogle Scholar
  22. Claessens, S., Djankov, S., & Lang, L. H. P. (2000). The separation of ownership and control in east asian corporations. Journal of Financial Economics, 58(1–2), 81–112.CrossRefGoogle Scholar
  23. Cuervo-Cazurra, A., Inkpen, A., Musacchio, A., & Ramaswamy, K. (2014). Governments as owners: State-owned multinational companies. Journal of International Business Studies, 45(8), 919–942.CrossRefGoogle Scholar
  24. Cui, L., & Jiang, F. (2012). State ownership effect on firms’ FDI ownership decisions under institutional pressure: A study of Chinese outward-investing firms. Journal of International Business Studies, 43(3), 264–284.CrossRefGoogle Scholar
  25. Delios, A., & Beamish, P. W. (1999). Geographic scope, product diversification and the corporate performance of Japanese firms. Strategic Management Journal, 20(8), 711–727.CrossRefGoogle Scholar
  26. Delios, A., & Beamish, P. W. (2001). Survival and profitability: The roles of experience and intangible assets in foreign subsidiary performance. Academy of Management Journal, 44(5), 1028–1038.Google Scholar
  27. Delios, A., Wu, Z. J., & Zhou, N. (2006). A new perspective on ownership identities in China’s listed companies. Management and Organization Review, 2(3), 319–343.CrossRefGoogle Scholar
  28. Diefenbach, T., & Sillince, J. A. A. (2011). Formal and informal hierarchy in different types of organization. Organization Studies, 32(11), 1515–1537.CrossRefGoogle Scholar
  29. Dierickx, I., & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35(12), 1504–1511.CrossRefGoogle Scholar
  30. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.CrossRefGoogle Scholar
  31. Dong, X.-Y., & Putterman, L. (2003). Soft budget constraints, social burdens, and labor redundancy in China’s state industry. Journal of Comparative Economics, 31(1), 110–133.CrossRefGoogle Scholar
  32. Doukas, J. A., & Lang, L. H. P. (2003). Foreign direct investment, diversification and firm performance. Journal of International Business Studies, 34(2), 153–172.CrossRefGoogle Scholar
  33. Economist (2012). Special report: State capitalism. Google Scholar
  34. Edwards, J. S. S., & Weichenrieder, A. J. (2009). Control rights, pyramids, and the measurement of ownership concentration. Journal of Economic Behavior and Organization, 72(1), 489–508.CrossRefGoogle Scholar
  35. Fan, J. P. H., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84(2), 330–357.CrossRefGoogle Scholar
  36. Feinberg, S. E., & Gupta, A. K. (2009). MNC subsidiaries and country risk: Internalization as a safeguard against weak external institutions. Academy of Management Journal, 52(2), 381–399.CrossRefGoogle Scholar
  37. Ferguson, M. J., Lam, K. C. K., & Lee, G. M. (2002). Voluntary disclosure by state-owned enterprises listed on the stock exchange of Hong Kong. Journal of International Financial Management and Accounting, 13(2), 125–152.CrossRefGoogle Scholar
  38. Fortune (2017). Fortune 500 2017 Report. Google Scholar
  39. Garcia-Canal, E., & Guillen, M. F. (2008). Risk and the strategy of foreign location choice in regulated industries. Strategic Management Journal, 29(10), 1097–1115.CrossRefGoogle Scholar
  40. Gaur, A. S., & Kumar, V. (2009). International diversification, business group affiliation and firm performance: Empirical evidence from India. British Journal of Management, 20(2), 172–186.CrossRefGoogle Scholar
  41. Greenwood, R., Raynard, M., Kodeih, F., Micelotta, E. R., & Lounsbury, M. (2011). Institutional complexity and organizational responses. The Academy of Management Annals, 5(1), 317–371.CrossRefGoogle Scholar
  42. Greve, H. R., & Zhang, C. M. (2017). Institutional logics and power sources: Merger and acquisition decisions. Academy of Management Journal, 60(2), 671–694.CrossRefGoogle Scholar
  43. GTA. (2006). CSMAR China stock market financial database (annual report) user guide. Google Scholar
  44. Gupta, N. (2005). Partial privatization and firm performance. Journal of Finance, 60(2), 987–1015.CrossRefGoogle Scholar
  45. Hannan, M. T., & Freeman, J. (1977). The population ecology of organizations. American Journal of Sociology, 82(5), 929–964.CrossRefGoogle Scholar
  46. He, L. (2010). On financial control and corporate governance structure. International Journal of Business and Management, 5(5), 215–218.CrossRefGoogle Scholar
  47. Hymer, S. H. (1976). The international operations of national firms: A study of direct foreign investment. Cambridge: MIT Press.Google Scholar
  48. Inoue, C. F. K. V., Lazzarini, S. G., & Musacchio, A. (2013). Leviathan as a minority shareholder: Firm-level implications of state equity purchases. Academy of Management Journal, 56(6), 1775–1801.CrossRefGoogle Scholar
  49. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323–329.Google Scholar
  50. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRefGoogle Scholar
  51. Jiang, K., & Wang, S. (2017). A contractual analysis of state versus private ownership. China Economic Review, 43, 142–168.CrossRefGoogle Scholar
  52. Khanna, T., & Palepu, K. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4), 41–51.Google Scholar
  53. Kogut, B., & Chang, S. J. (1991). Technological capabilities and Japanese foreign direct investment in the united states. Review of Economics and Statistics, 73(3), 401–413.CrossRefGoogle Scholar
  54. Koppell, J. G. S. (2007). Political control for China’s state-owned enterprises: Lessons from America’s experience with hybrid organizations. Governance, 20(2), 255–278.CrossRefGoogle Scholar
  55. Li, M. H., Cui, L., & Lu, J. (2014). Varieties in state capitalism: Outward FDI strategies of central and local state-owned enterprises from emerging economy countries. Journal of International Business Studies, 45(8), 980–1004.CrossRefGoogle Scholar
  56. Li, S., & Xia, J. (2008). The roles and performance of state firms and non-state firms in China’s economic transition. World Development, 36(1), 39–54.CrossRefGoogle Scholar
  57. Li, W., & Zhang, R. (2010). Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics, 96(4), 631–645.CrossRefGoogle Scholar
  58. Lu, J., Liu, X., & Wang, H. (2011). Motives for outward FDI of Chinese private firms: Firm resources, industry dynamics, and government policies. Management and Organization Review, 7(2), 223–248.CrossRefGoogle Scholar
  59. Lu, J., Liu, X., Wright, M., & Filatotchev, I. (2014). International experience and FDI location choice of Chinese firms: The moderating effects of home country government support and host country institutions. Journal of International Business Studies, 45(4), 428–449.CrossRefGoogle Scholar
  60. Luo, Y., Xue, Q., & Han, B. (2010). How emerging market governments promote outward FDI: Experience from China. Journal of World Business, 45(1), 68–79.CrossRefGoogle Scholar
  61. Meyer, M. W. (2002). Rethinking performance measurement: Beyond the balanced scorecard. Cambridge: Cambridge University Press.Google Scholar
  62. Ministry of Commerce. (2017). China outbound investments statistics report for 2016. Beijing: Ministry of Commerce and State Statistical Bureau.Google Scholar
  63. Montgomery, C. A., & Wernerfelt, B. (1988). Diversification, Richardian rents, and Tobin’s q. RAND Journal of Economics, 19(4), 623–632.CrossRefGoogle Scholar
  64. Musacchio, A., Lazzarini, S. G., & Aguilera, R. V. (2015). New varieties of state capitalism: Strategic and governance implications. Academy of Management Perspective, 29(1), 115–131.CrossRefGoogle Scholar
  65. Neter, J., Wasserman, W., & Kutner, M. H. (1990). Applied linear statistical models: Regression, analysis of variance, and experimental designs (3rd ed.). Homewood: Irwin.Google Scholar
  66. North, D. C. (1990). Institutions, institutional change, and economic performance. The political economy of institutions and decisions. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  67. Oliver, C. (1991). Strategic responses to institutional processes. Academy of Management Review, 16(1), 145–179.CrossRefGoogle Scholar
  68. Pache, A.-C., & Santos, F. (2013). Inside the hybrid organization: Selective coupling as a response to competing institutional logics. Academy of Management Journal, 56(4), 972–1001.CrossRefGoogle Scholar
  69. Perevalov, Y., Gimadii, I., & Dobrodei, V. (2000). Does privatisation improve performance of industrial enterprises? Empirical evidence from Russia. Post-Communist Economies, 12(3), 337–363.CrossRefGoogle Scholar
  70. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row.Google Scholar
  71. Prowse, S. D. (1992). The structure of corporate ownership in Japan. Journal of Finance, 47(3), 1121–1140.CrossRefGoogle Scholar
  72. Qin, J. Y. (2004). WTO regulation of subsidies to state-owned enterprises (SOEs)—a critical appraisal of the China accession protocol. Journal of International Economic Law, 7(4), 863–919.CrossRefGoogle Scholar
  73. Qu, Q. (2003). Corporate governance and state-owned shares in China listed companies. Journal of Asian Economics, 14(5), 771–783.CrossRefGoogle Scholar
  74. Scott, W. R. (2008). Institutions and organizations: Ideas and interests (3rd ed.). Los Angeles: Sage Publications.Google Scholar
  75. Skelcher, C., & Smith, S. R. (2015). Theorizing hybridity: Institutional logics, complex organizations, and actor identities: The case of nonprofits. Public Administration, 93(2), 433–448.CrossRefGoogle Scholar
  76. Sternquist, B., Chen, Z., & Huang, Y. (2003). Buyer–supplier relationships in China. The China Business Review, 30(5), 34–37.Google Scholar
  77. Sun, Q., Tong, W. H. S., & Tong, J. (2002). How does government ownership affect firm performance? Evidence from China’s privatization experience. Journal of Business Finance and Accounting, 29(1–2), 1–27.CrossRefGoogle Scholar
  78. Swaminathan, A., & Delacroix, J. (1991). Differentiation within an organizational population: Additional evidence from the wine industry. Academy of Management Journal, 34(3), 679–692.Google Scholar
  79. Tallman, S. B. (1991). Strategic management models and resource-based strategies among MNEs in a host market. Strategic Management Journal, 12, 69–82.CrossRefGoogle Scholar
  80. Tallman, S., & Li, J. (1996). Effects of international diversity and product diversity on the performance of multinational firms. Academy of Management Journal, 39(1), 179–196.Google Scholar
  81. Tan, J., Luo, Y., & Shenkar, O. (2005). Entrepreneurial strategies in a transitional economy: Chinese state and non-state enterprises compared and contrasted. International Journal of Entrepreneurship and Innovation Management, 5(5–6), 1.Google Scholar
  82. UNCTAD. (2009). World investment report 2009: Transnational corporations, agricultural production and development. New York: United Nations.Google Scholar
  83. Wang, C., Hong, J., Kafouros, M., & Wright, M. (2012). Exploring the role of government involvement in outward FDI from emerging economies. Journal of International Business Studies, 43(7), 655–676.CrossRefGoogle Scholar
  84. Wolfenzon, D. (1999). A theory of pyramidal structures. Unpublished working paper. Cambridge: Harvard University.Google Scholar
  85. Wu, H.-L. (2011). Can minority state ownership influence firm value? Universal and contingency views of its governance effects. Journal of Business Research, 64(8), 839–845.CrossRefGoogle Scholar
  86. Xiao, G. (2005). Nonperforming debts in Chinese enterprises: Patterns, causes, and implications for banking reform. Asian Economic Papers, 4(3), 61–113.CrossRefGoogle Scholar
  87. Xu, Y.-C. (1996). Deepening and widening the economic reform in China: From enterprise reform to macroeconomic. Journal of Developing Areas, 30(3), 361–383.Google Scholar
  88. Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341–363.Google Scholar
  89. Zahra, S. A., Ireland, R. D., Gutierrez, I., & Hitt, M. A. (2000). Privatization and entrepreneurial transformation: Emerging issues and a future research agenda. Academy of Management Review, 25(3), 509–524.Google Scholar
  90. Zeng, M., & Williamson, P. J. (2007). Dragons at your door: How Chinese cost innovation is disrupting global competition. Boston: Harvard Business School Press.Google Scholar
  91. Zhang, L., & Dong, X. Y. (2008). Male–female wage discrimination in Chinese industry investigation using firm-level data. Economics of Transition, 16(1), 85–112.CrossRefGoogle Scholar
  92. Zhang, J., & Keh, H. T. (2010). Interorganizational exchanges in China: Organizational forms and governance mechanisms. Management and Organization Review, 6(1), 123–147.CrossRefGoogle Scholar
  93. Zhou, N., & Delios, A. (2012). Diversification and diffusion: A social networks and institutional perspective. Asia Pacific Journal of Management, 29(3), 773–798.CrossRefGoogle Scholar
  94. Zhou, N., & Guillén, M. F. (2015). From home country to home base: A dynamic approach to the liability of foreignness. Strategic Management Journal, 36(6), 907–917.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Nankai University Business SchoolNankai UniversityTianjinChina

Personalised recommendations