Skip to main content

Thanks but no thanks: State-owned multinationals from emerging markets and host-country policies

Abstract

I study the impact of the internationalization of state-owned companies from emerging markets on host-country government policy. Whereas the literature commonly recommends that host-country governments design policies to attract foreign direct investment, governments instead question or block investments by state-owned firms from emerging markets. I address this conflict between theory and practice by separating the causes of this behavior into six types depending on the characteristics of the firm (i.e., state ownership and emerging market origin) and the logic (i.e., economics, politics, and psychology). I suggest the development of ex-ante rule-based policies that provide clarity, address concerns, and support the benefits of inward investments, while limiting state capture by domestic interests. Thus, I explain how economic concerns over national security sectors and strategic technologies can be dealt with via exclusion, the political worries over opacity and weak governance can be addressed through monitoring, and the psychological anxieties of unfriendly governments and loss of relative status can be ameliorated using controls.

This is a preview of subscription content, access via your institution.

References

  • Abrams, R. 2014. Fiat completes acquisition of Chrysler. New York Times, January 21. https://dealbook.nytimes.com/2014/01/21/fiat-completes-acquisition-of-chrysler/. Accessed April 18 2017.

  • Aguilera, R. V., Capapé, J., & Santiso, J. 2016. Sovereign wealth funds: A strategic governance view. Academy of Management Perspectives, 30(1): 5–23.

    Google Scholar 

  • Aharoni, Y. 1982. State-owned enterprise: An agent without a principal. In L. Jones (Ed.), Public enterprise in less-developed countries. New York: Cambridge University Press.

    Google Scholar 

  • Aharoni, Y. 1986. The evolution and management of state-owned enterprises. Cambridge, MA: Ballinger Publishing.

    Google Scholar 

  • Aharoni, Y. 2018. The evolution of state-owned multinational enterprise theory. In A. Cuervo-Cazurra (Ed.), State-owned multinationals: Governments in global business. Cham, Switzerland: Springer International Publishing.

    Google Scholar 

  • Aharoni, Y., & Lachman, R. 1982. Can the manager’s mind be nationalized? Organization Studies, 3(1): 33–46.

    Google Scholar 

  • Amsden, A. H. 2001. The rise of “the rest”: Challenges to the west from late-industrializing economies. New York: Oxford University Press.

    Google Scholar 

  • Anastassopoulos, J. P., Blanc, G., & Dussauge, P. 1987. State-owned multinationals. New York: Wiley.

    Google Scholar 

  • Anderson, R. C., & Reeb, D. M. 2003. Founding-family ownership, corporate diversification, and firm leverage. Journal of Law and Economics, 46(2): 653–680.

    Google Scholar 

  • AP. 1991. Japan’s car export limit. New York Times, January 12. https://www.nytimes.com/1991/01/12/business/japan-s-car-export-limit.html. Accessed September 13 2017.

  • Austen, I. 2012. Canada clears $15 billion Chinese takeover of an energy company. New York Times, December 7. https://dealbook.nytimes.com/2012/12/07/canada-clears-15-billion-chinese-takeover-of-an-energy-company/. Accessed April 18 2017.

  • Awate, S., Larsen, M., & Mudambi, R. 2012. EMNE catch-up strategies in the wind turbine industry: Is there a trade-off between output and innovation capabilities? Global Strategy Journal, 2(3): 205–223.

    Google Scholar 

  • Barboza, D., & Sorkin, A. R. 2005. Chinese company drops bid to buy U.S. oil concern. New York Times, August 3. http://www.nytimes.com/2005/08/03/business/worldbusiness/chinese-company-drops-bid-to-buy-us-oil-concern.html. Accessed April 18 2017.

  • Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17(1): 99–120.

    Google Scholar 

  • Bass, E., & Chakrabarty, S. 2014. Resource security: Competition for global resources, strategic intent, and governments as owners. Journal of International Business Studies, 45(8): 961–979.

    Google Scholar 

  • BCG. 2006. The new global challengers: How 100 top companies from rapidly developing economies are changing the world. Boston, MA: Boston Consulting Group.

    Google Scholar 

  • BCG. 2016. Global leaders, challengers, and champions: the engines of emerging markets. Boston Consulting Group. https://www.bcgperspectives.com/content/articles/globalization-growth-global-challengers-2016-leaders-challengers-champions/. Accessed September 13 2017.

  • Beisecker, R. 2006. DP World and U.S. port security. NTI, March 1. http://www.nti.org/analysis/articles/dp-world-and-us-port-security/. Accessed September 13 2014.

  • Benito, G. R., Rygh, A., & Lunnan, R. 2016. The benefits of internationalization for state-owned enterprises. Global Strategy Journal, 6(4): 269–288.

    Google Scholar 

  • Berger, D., Easterly, W., Nunn, N., & Satyanath, S. 2013. Commercial imperialism? Political influence and trade during the Cold War. American Economic Review, 103(2): 863–896.

    Google Scholar 

  • Blomstrom, M., & Kokko, A. 2003. The economics of foreign direct investment incentives. NBER Working Paper No. 9489. http://www.nber.org/papers/w9489

  • Blomström, M., & Kokko, A. 1998. Multinational corporations and spillovers. Journal of Economic Surveys, 12(3): 247–277.

    Google Scholar 

  • Bloom, M., & Grant, M. 2008. “Hollowing Out''Myth and Reality: Corporate Takeovers in an Age of Transformation. Ottawa, ON: The Conference Board of Canada.

  • Boubakri, N., & Cosset, J. 1998. The financial and operating performance of newly privatized firms: Evidence from developing countries. Journal of Finance, 53(3): 1081–1110.

    Google Scholar 

  • Boubakri, N., Cosset, J. C., & Guedhami, O. 2004. Privatization, corporate governance and economic environment: Firm-level evidence from Asia. Pacific-Basin Finance Journal, 12(1): 65–90.

    Google Scholar 

  • Boycko, M., Shleifer, A., & Vishny, R. W. 1995. Privatizing Russia. Cambridge, MA: MIT Press.

    Google Scholar 

  • Bremmer, I. 2010. The end of the free market: Who wins the war between states and corporations?. London: Penguin Books.

    Google Scholar 

  • Bromfield, T., & Barnard, H. 2010. The evolution of the intellectual property management strategy of an emerging multinational. IEEE Transactions on Engineering Management, 57(1): 118–137.

    Google Scholar 

  • Bruton, H. J. 1998. A reconsideration of import substitution. Journal of Economic Literature, 36(2): 903–936.

    Google Scholar 

  • Bruton, G. D., Peng, M. W., Ahlstrom, D., Stan, C., & Xu, K. 2015. State-owned enterprises around the world as hybrid organizations. Academy of Management Perspectives, 29(1): 92–114.

    Google Scholar 

  • Byrne, M. R. 2006. Protecting national security and promoting foreign investment: Maintaining the Exon-Florio balance. Ohio State Law Journal, 67(4): 849–910.

    Google Scholar 

  • Chari, A., Chen, W., & Dominguez, K. 2012. Foreign ownership and firm performance: Emerging-market acquisitions in the United States. IMF Economic Review, 60: 1–42.

    Google Scholar 

  • Chittoor, R., Sarkar, M., Ray, S., & Aulakh, P. S. 2009. Third-world copycats to emerging multinationals: Institutional changes and organizational transformation in the Indian pharmaceutical industry. Organization Science, 20(1): 187–205.

    Google Scholar 

  • Choudhury, P., & Khanna, T. 2014. Toward resource independence: Why state-owned entities become multinationals: An empirical study of India’s public R&D laboratories. Journal of International Business Studies, 45(8): 943–960.

    Google Scholar 

  • Coffee, J. C., Jr. 2002. Racing towards the top?: The impact of cross-listings and stock market competition on international corporate. Columbia Law Review, 102: 1757–1831.

    Google Scholar 

  • Cuervo-Cazurra, A. 2006. Who cares about corruption? Journal of International Business Studies, 37(6): 803–822.

    Google Scholar 

  • Cuervo-Cazurra, A. (Ed.). 2018. State-owned multinationals: Governments in global business. Cham: Springer International Publishing.

    Google Scholar 

  • Cuervo-Cazurra, A., Ciravegna, L., Melgarejo, M., & Lopez, L. 2018a. Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability. Journal of World Business, 53(2): 209–221.

    Google Scholar 

  • Cuervo-Cazurra, A., & Genc, M. 2008. Transforming disadvantages into advantages: Developing-country MNEs in the least developed countries. Journal of International Business Studies, 39(6): 957–979.

    Google Scholar 

  • 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.

    Google Scholar 

  • Cuervo-Cazurra, A., Luo, Y., Ramamurti, R., & Ang, S. H. 2018b. The impact of the home country on internationalization. Journal of World Business, 53(5): 593–604.

    Google Scholar 

  • Cuervo-Cazurra, A., Narula, R., & Un, C. A. 2015. Internationalization motives: Sell more, buy better, upgrade and escape. Multinational Business Review, 23(1): 25–35.

    Google Scholar 

  • Cuervo-Cazurra, A., Newburry, W., & Park, S. H. 2016. Emerging market multinationals: Managing operational challenges for sustained international growth. New York: Cambridge University Press.

    Google Scholar 

  • Cuervo-Cazurra, A., & Ramamurti, R. (Eds.). 2014. Understanding multinationals from emerging markets. Cambridge: Cambridge University Press.

    Google Scholar 

  • Cuervo-Cazurra, A., & Ramamurti, R. 2017. Home country underdevelopment and internationalization: Innovation-based and escape-based internationalization. Competitiveness Review, 27(3): 217–230.

    Google Scholar 

  • 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.

    Google Scholar 

  • Davies, P. 2013. Alibaba abandons $60bn Hong Kong listing. Financial Times, September 25. https://www.ft.com/content/525f4bc2-25ae-11e3-aee8-00144feab7de. Accessed September 13 2017.

  • de la Merced, M. J., & Barboza, D. 2013. Needing pork, China is to buy a U.S. supplier. New York Times, May 29. https://dealbook.nytimes.com/2013/05/29/smithfield-to-be-sold-to-shuanghui-group-of-china/. Accessed April 18 2017.

  • de la Merced, M. J., & Picker, L. 2016. Starwood bidding war ends abruptly, yielding a merger and a puzzle. New York Times, March 31. https://www.nytimes.com/2016/04/01/business/dealbook/starwood-hotels-chinese-suitor-backs-out-of-bidding.html. Accessed September 13 2017.

  • Desai, M. A., Dyck, A., & Zingales, L. 2007. Theft and taxes. Journal of Financial Economics, 84(3): 591–623.

    Google Scholar 

  • Desai, M. A., Foley, C. F., & Hines, J. R., Jr. 2005. Foreign direct investment and the domestic capital stock. American Economic Review, 95(1): 33–38.

    Google Scholar 

  • Duanmu, J. L. 2014. State-owned MNCs and host country expropriation risk: The role of home state soft power and economic gunboat diplomacy. Journal of International Business Studies, 45(8): 1044–1060.

    Google Scholar 

  • Dunning, J. 1977. Trade, location of economic activity and the MNE: A search for an eclectic approach. In B. Ohlin, P. O. Hesselborn, & P. M. Wijkman (Eds.), The international allocation of economic activity (pp. 395–418). London: Macmillan.

    Google Scholar 

  • Dutton, J. 1982. The optimal taxation of international investment income: A comment. Quarterly Journal of Economics, 97(2): 373–380.

    Google Scholar 

  • Easterly, W., & Levine, R. 2003. Tropics, germs, and crops: How endowments influence economic development. Journal of Monetary Economics, 50(1): 3–39.

    Google Scholar 

  • Economist. 2008. Ins and outs. The Economist, September 18. http://www.economist.com/node/12080703

  • Economist. 2012. Emerging-market multinationals: The rise of state capitalism. The Economist, January 21. www.economist.com/node/21543160‎. Accessed October 17 2013.

  • Elia, E., & Santangelo, G. D. 2017. The evolution of strategic asset-seeking acquisitions by emerging market multinationals. International Business Review, 26(5): 855–866.

    Google Scholar 

  • Elliott, K. A., & Bayard, T. O. 1994. Reciprocity and retaliation in US trade policy. Washington, DC: Peterson Institute Press.

    Google Scholar 

  • Energy Business Review. 2016. World’s largest oil and gas companies. http://explorationanddevelopment.energy-business-review.com/news/worlds-largest-oil-and-gas-companies-5870469. Accessed September 17 2017.

  • Energy Intelligence. 2016. Petroleum Intelligence Weekly Top 50. http://www2.energyintel.com/l/19202/2016-12-01/bfx33f. Accessed May 17, 2017.

  • Engerman, S., & Sokoloff, K. 1997. Factor endowments, institutions, and differential paths of growth among new world economies. In S. Haber (Ed.), How Latin America fell behind (pp. 260–304). Stanford, CA: Stanford University Press.

    Google Scholar 

  • Findlay, R., & O’Rourke, K. H. 2007. Power and plenty: Trade, war, and the world economy in the second millennium. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Fisman, R. 2001. Estimating the value of political connections. American Economic Review, 91(4): 1095–1102.

    Google Scholar 

  • Fisman, R., & Miguel, E. 2007. Corruption, norms and legal enforcement: Evidence from diplomatic parking tickets. Journal of Political Economy, 115(6): 1020–1048.

    Google Scholar 

  • FitzGerald, V. 2001. Regulatory investment incentives. Paris: OECD. http://www.oecd.org/daf/inv/investmentstatisticsandanalysis/2510459.pdf

  • Forbes. 2017. The world’s biggest public companies. Forbes, https://www.forbes.com/global2000/list/2/#industry:Oil%20%26%20Gas%20Operations. Accessed September 13 2017.

  • Foster, V. 2008. Africa infrastructure country diagnostic. Overhauling the engine of growth: infrastructure in Africa. World Bank background paper. http://siteresources.worldbank.org/EXTPRAL/Resources/africa_country_diagnostic.pdf. Accessed April 18 2018.

  • Friedman, T. L., & Mandelbaum, D. 2011. That used to be us: How America fell behind in the world it invented and how we can come back. New York: Picador.

    Google Scholar 

  • Fuchs, A., & Klann, N. 2013. Paying a visit: The Dalai Lama effect on international trade. Journal of International Economics, 91(1): 164–177.

    Google Scholar 

  • Gallup. 2013. U.S.-Global Leadership Project: a partnership between the Meridian International Center and Gallup. Gallup: Washington, DC.

  • Gerard, L. 2007. State capitalism: The rise of sovereign wealth funds. Journal of Management Research, 7: 119–146.

    Google Scholar 

  • Ghauri, P. N., & Yamin, M. 2009. Revisiting the impact of multinational enterprises on economic development. Journal of World Business, 44(2): 105–107.

    Google Scholar 

  • Ghemawat, P., & Khanna, T. 1998. The nature of diversified business groups: A research design and two case studies. Journal of Industrial Economics, 46(1): 35–61.

    Google Scholar 

  • Görg, H., & Strobl, E. 2001. Multinational companies and productivity spillovers: A meta-analysis. Economic Journal, 111(475): 723–739.

    Google Scholar 

  • Guillen, M., & Garcia-Canal, E. 2012. Emerging markets rule: Growth strategies of the new global giants. New York: McGraw Hill.

    Google Scholar 

  • Gupta, N. . 2005. Partial privatization and firm performance. Journal of Finance, 60(2): 987–1015.

    Google Scholar 

  • Hefetz, A., & Warner, M. 2004. Privatization and its reverse: Explaining the dynamics of the government contracting process. Journal of Public Administration Research and Theory, 14(2): 171–190.

    Google Scholar 

  • Henisz, W. J. 2000. The institutional environment for multinational investment. Journal of Law Economics and Organization, 6(2): 334–364.

    Google Scholar 

  • Henisz, W. J. 2014. Corporate diplomacy: Building reputations and relationships with external stakeholders. New York: Taylor and Francis.

    Google Scholar 

  • Hufbauer, G. C., Schott, J. J., & Elliott, K. A. 1990. Economic sanctions reconsidered: History and current policy. Washington: Institute for International Economics.

    Google Scholar 

  • IMF. 2013. World economic outlook, database-WEO groups and aggregates information. Washington, D.C.: IMF. http://www.imf.org/external/pubs/ft/weo/2014/01/weodata/groups.htm. Accessed September 13 2017

  • Janssen, P. 2017. Land-locked Laos on track for controversial China rail link. Nikkei Asia Review, June 24. https://asia.nikkei.com/Politics-Economy/International-Relations/Land-locked-Laos-on-track-for-controversial-China-rail-link. Accessed September 13 2017.

  • Jaslowitzer, P., Megginson, W. L., & Rapp, M. S. 2018. State Ownership and Corporate Investment. Available at SSRN: https://ssrn.com/abstract=2735698. Accessed September 13 2018.

  • Karolyi, G. A., & Liao, R. C. 2017. State capitalism’s global reach: Evidence from foreign acquisitions by state-owned companies. Journal of Corporate Finance, 42: 367–391.

    Google Scholar 

  • Kaufmann, D. 2007. Corruption: The Facts. Foreign Policy, 107(Summer): 114–131.

    Google Scholar 

  • Kaul, I., Grunberg, I., & Stern, M. (Eds.). 1999. Global public goods: International cooperation in the 21st century. Oxford: Oxford University Press.

    Google Scholar 

  • Khanna, T., & Palepu, K. 2010. Winning in emerging markets: A road map for strategy and execution. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Kikeri, S., Nellis, J., & Shirley, M. 1992. Privatization: the lessons of experience. Washington, DC: World Bank.

    Google Scholar 

  • Kirkpatrick, C., Parker, D., & Zhang, Y.-F. 2006. Foreign direct investment in infrastructure in developing countries: Does regulation make a difference? Transnational Corporations, 15(1): 144–171.

    Google Scholar 

  • Knoerich, J. 2017. How does outward foreign direct investment contribute to economic development in less advanced home countries? Oxford Development Studies, 45(4): 443–459.

    Google Scholar 

  • Kornai, J., Maskin, E., & Roland, G. 2003. Understanding the soft budget constraint. Journal of Economic Literature, 41(4): 1095–1136.

    Google Scholar 

  • Kowalski, P., Büge, M., Sztajerowska, M., & Egeland, M. 2013. State-owned enterprises: Trade effects and policy implications. OECD Trade Policy Papers, No. 147. OECD Publishing: Paris. http://dx.doi.org/10.1787/5k4869ckqk7l-en. Accessed May 17 2018.

  • Krugman, P. 1991. The move toward free trade zones. Economic Review, 76: 5–25.

    Google Scholar 

  • Laffont, J. J., & Tirole, J. 1993. A theory of incentives in regulation and procurement. Cambridge, MA: MIT Press.

    Google Scholar 

  • Lawson, C. 1994. The theory of state-owned enterprises in market economies. Journal of Economic Surveys, 8(3): 284–309.

    Google Scholar 

  • Lazzarini, S. G., Musacchio, A., Bandeira-de-Mello, R., & Marcon, R. 2015. What do state-owned development banks do? Evidence from BNDES, 2002–2009. World Development, 66: 237–253.

    Google Scholar 

  • Levy, B. 1987. A theory of public enterprise behavior. Journal of Economic Behavior & Organization, 8(1): 75–96.

    Google Scholar 

  • 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(4): 980–1004.

    Google Scholar 

  • Lim, E.-G. 2001. Determinants of, and the relation between, foreign direct investment and growth: A summary of the recent literature. IMF Working Paper WP/01/175. Washington, DC: IMF.

  • Lindsay, C. M. 1976. A theory of public enterprise. Journal of Political Economy, 84(1): 1061–1077.

    Google Scholar 

  • Lohr, S. 2005. Unocal bid opens up new issues of security. New York Times, July 13. http://www.nytimes.com/2005/07/13/business/worldbusiness/unocal-bid-opens-up-new-issues-of-security.html?mtrref=www.google.com&auth=login-email. Accessed April 18 2017.

  • Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. 1997. Privatization in the United States. Rand Journal of Economics, 28(3): 447–471.

    Google Scholar 

  • Luo, Y. D., Sun, J., & Wang, S. L. 2011. Emerging economy copycats: capability, environment and strategy. Academy of Management Perspectives, 25(2): 37–56.

    Google Scholar 

  • Luo, Y., & Tung, R. L. 2007. International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies, 38(4): 481–498.

    Google Scholar 

  • 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.

    Google Scholar 

  • Madhok, A., & Keyhani, M. 2012. Acquisitions as entrepreneurship: asymmetries, opportunities, and the internationalization of multinationals from emerging economies. Global Strategy Journal, 2(1): 26–40.

    Google Scholar 

  • Marshall, M. G., & Elzinga-Marshall, G. C. 2017. Global report 2017: Conflict, governance, and state fragility. Vienna, VA: Center for Systemic Peace.

    Google Scholar 

  • Marshall, M., Gurr, T. R., & Jaggers, K. 2017. POLITY™ IV PROJECT. Political regime characteristics and transitions, 18002016. Vienna, VA: Center for Systemic Peace.

  • Mazzolini, R. 1979. European government-controlled enterprises: Explaining international strategic and policy decisions. Journal of International Business Studies, 10(3): 16–27.

    Google Scholar 

  • McAnelly, J., & Sweeney, D. H. 2007. Eni acquires Dominion offshore Gulf of Mexico assets. Oil & Gas Financial Journal, August 1. http://www.ogfj.com/articles/print/volume-4/issue-8/capital-perspectives/eni-acquires-dominion-offshore-gulf-of-mexico-assets.html. Accessed April 18 2017.

  • McMullen, S. M., Mauch, J. E., & Donnorummo, B. 2000. The emerging markets and higher education: Development and sustainability. New York: RoutledgeFalmer.

    Google Scholar 

  • Megginson, W., & Fotak, V. 2015. Rise of the fiduciary state: A survey of sovereign wealth fund research. Journal of Economic Surveys, 29(4): 733–778.

    Google Scholar 

  • Megginson, W. L., Nash, R., & van Randenborgh, M. 1994. The financial and operating performance of newly privatized firms: An international empirical analysis. Journal of Finance, 49(2): 403–452.

    Google Scholar 

  • Megginson, W. L., & Netter, J. M. 2001. From state to market: A survey of empirical studies on privatization. Journal of Economic Literature, 39(2): 321–389.

    Google Scholar 

  • Meyer, K., Ding, Y., Li, J., & Zhang, H. 2014. Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad. Journal of International Business Studies, 45(8): 1005–1028.

    Google Scholar 

  • Murtha, T., & Lenway, S. 1994. Country capabilities and the strategic state: How national political institutions affect multinational corporations’ strategy. Strategic Management Journal, 15(2): 113–129.

    Google Scholar 

  • Musacchio, A., & Lazzarini, S. G. 2014. Reinventing state capitalism: Leviathan in business, Brazil and beyond. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Nash, R. 2017. Contracting issues at the intersection of the public and private sectors: New data and new insights. Journal of Corporate Finance, 42: 357–366.

    Google Scholar 

  • North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.

    Google Scholar 

  • Nye, J. S., Jr. 1990. Bound to lead: the changing nature of American power. New York: Basic Books.

    Google Scholar 

  • Nye, J. S., Jr. 2004. Soft power: The means to succeed in world politics. New York: PublicAffairs.

    Google Scholar 

  • O’Neill, J., Wilson, D., Purushothaman, R., & Stupnytska, A. 2005. How solid are the BRICs? Goldman Sachs Global Economics Paper No: 134. http://www2.goldmansachs.com/ideas/brics/how-solid-doc.pdf. Accessed November 3.

  • OECD. 2001. Checklist for foreign direct investment incentive policies. Paris: OECD Publishing. http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?doclanguage=en&cote=daffe/clp(2001)24. Accessed May 17 2017.

  • OECD. 2003. Competition policy in subsidies and state aid. Paris: OECD Publishing. https://www.oecd.org/investment/investment-policy/2506900.pdf. Accessed May 17 2017.

  • OECD. 2010. Accountability and transparency: a guide for state ownership. Paris: OECD Publishing. http://dx.doi.org/10.1787/9789264056640-en. Accessed May 17 2017.

  • OECD. 2014. Database on national practices and regulations with respect to state enterprises. Paris: OECD Publishing. https://qdd.oecd.org/subject.aspx?Subject=8F22EF7D-B780-4570-A4B1-7E0CB3AD7E04. Accessed May 17 2017.

  • OECD. 2015. SOE guidelines on corporate governance of state-owned enterprises. Paris: OECD Publishing. http://www.oecdilibrary.org/docserver/download/2615061e.pdf?expires=1464278519&id=id&accname=guest&checksum=7DC2E24520AED00EA026F6648638A13B. Accessed May 17 2017.

  • OECD. 2016. State-owned enterprises as global competitors: A challenge or an opportunity?. Paris: OECD Publishing. https://doi.org/10.1787/9789264262096-en.

    Book  Google Scholar 

  • Oman, C. 2000. Policy competition for foreign direct investment: A study of competition among governments to attract FDI. Paris: OECD Development Centre. http://www.oecd.org/mena/competitiveness/35275189.pdf. Accessed May 17 2017.

    Google Scholar 

  • Pan, Y., Teng, L., Supapol, A. B., Lu, X., Huang, D., & Wang, Z. 2014. Firms’ FDI ownership: The influence of government ownership and legislative connections. Journal of International Business Studies, 45(8): 1029–1043.

    Google Scholar 

  • Pape, R. A. 1997. Why economic sanctions do not work. International Security, 22(2): 90–136.

    Google Scholar 

  • Parker, L. 2007. Eni to pay $4.8 billion for Dominion’s assets in Gulf of Mexico. Wall Street Journal, May 1. https://www.wsj.com/articles/SB117791897931286729. Accessed April 18 2017.

  • PBS Newshour, 2014. Who’s behind the Chinese takeover of world’s biggest pork producer? PBS Newshour, Sept 12. https://www.pbs.org/newshour/show/whos-behind-chinese-takeover-worlds-biggest-pork-producer. Accessed April 18 2017.

  • Peng, M. W., Wang, D. Y. L., & Jiang, Y. 2008. An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5): 920–936.

    Google Scholar 

  • Penrose, E. T. 1959. The theory of the growth of the firm. Oxford: Oxford University Press.

    Google Scholar 

  • Prahalad, C. K. 2005. The fortune at the bottom of the pyramid: Eradicating poverty through profits. Philadelphia, PA: Wharton Business School Press.

    Google Scholar 

  • Prebisch, R. 1950. The economic development of Latin America and its principal problems. New York: United Nations.

    Google Scholar 

  • PWC. 2015. State-owned enterprises: Catalysts for public value creation? PWC. https://www.pwc.com/gx/en/psrc/publications/assets/pwc-state-owned-enterprise-psrc.pdf. Accessed May 17 2017.

  • Ramamurti, R. 2000. A multilevel model of privatization in emerging economies. Academy of Management Review, 25(3): 525–550.

    Google Scholar 

  • Ramamurti, R. 2001. The obsolescing ‘bargaining model’? MNC-host developing country relations revisited. Journal of International Business Studies, 32(1): 23–39.

    Google Scholar 

  • Ramamurti, R., & Singh, J. V. (Eds.). 2009. Emerging multinationals in emerging markets. Cambridge: Cambridge University Press.

    Google Scholar 

  • Ramasamy, B., Yeung, M., & Laforet, S. 2012. China’s outward foreign direct investment: Location choice and firm ownership. Journal of World Business, 47(1): 17–25.

    Google Scholar 

  • Reuters. 2013. U.S. Clears Smithfield’s acquisition by China’s Shuanghui. Reuters, September 6. https://www.reuters.com/article/us-usa-china-smithfield/u-s-clears-smithfields-acquisition-by-chinas-shuanghui-idUSBRE98513I20130907. Accessed April 18 2017.

  • Rossi, S., & Volpin, P. 2004. Cross-country determinants of mergers and acquisitions. Journal of Financial Economics, 74(2): 277–304.

    Google Scholar 

  • Roth, K., & O’Donnell, S. 1996. Foreign subsidiary compensation strategy: An agency theory perspective. Academy of Management Journal, 39(3): 678–703.

    Google Scholar 

  • Rugman, A. M. 2009. Theoretical aspects of MNEs from emerging economies. In R. Ramamurti & J. V. Singh (Eds.), Emerging multinationals from emerging markets. New York: Cambridge University Press.

    Google Scholar 

  • Russett, B. 1994. Grasping the democratic peace: principles for a post-Cold War world. Princeton: Princeton University Press.

    Google Scholar 

  • Rutenberg, J., & Vlasic, B. 2009. Chrysler files to seek bankruptcy protection. New York Times, April 30. http://www.nytimes.com/2009/05/01/business/01auto.html. Accessed April 18 2017.

  • SAIC. 2017. SAIC Motor Corporation Limited annual report 2016. http://www.saicmotor.com/english/images/investor_relations/annual_report/2017/7/5/AC326D76FD294F1A8A3C5CCA1155403D.pdf. Accessed September 13 2017.

  • Sauvant, K. P., Sachs, L., & Schmit Jongbloed, W. P. F. (Eds.). 2012. Sovereign investment: Concerns and policy reactions. New York: Oxford University Press.

    Google Scholar 

  • Sauvant, K. P., & Strauss, J. 2012. State-controlled entities control nearly US$ 2 trillion in foreign assets. Perspectives on topical foreign direct investment issues by the Vale Columbia Center on Sustainable International Investment, No. 64, April 2, 2012. http://www.vcc.columbia.edu/content/state-controlled-entities-control-nearly-us-2-trillion-foreign-assets. Accessed April 18 2014.

  • Schubert, S., & Millerdec, T. C. 2008. At Siemens, bribery was just a line item. New York Times, December 20. http://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html. Accessed September 13 2016.

  • SEPI. 2016. Economic and social key facts. Madrid: SEPI. http://www.sepi.es/img/resources/publicaciones/Ing/Economicandsocialkeyfacts.pdf. Accessed September 13 2016.

  • Sevastopoulo, D. 2014. Huawei pulls back the curtain on ownership details. Financial Times, February 27. https://www.ft.com/content/469bde20-9eaf-11e3-8663-00144feab7de. Accessed April 18 2017.

  • Sharman, J. C. 2010. Shopping for anonymous shell companies: An audit study of anonymity and crime in the international financial system. Journal of Economic Perspectives, 24(4): 127–140.

    Google Scholar 

  • Shleifer, A., & Vishny, R. 1994. Politicians and firms. Quarterly Journal of Economics, 109(4): 995–1025.

    Google Scholar 

  • Shleifer, A., & Vishny, R. 1997. A survey of corporate governance. Journal of Finance, 52(2): 737–777.

    Google Scholar 

  • Spencer, J. W. 2008. The impact of multinational enterprise strategy on indigenous enterprises: Horizontal spillovers and crowding out in developing countries. Academy of Management Review, 33(2): 341–361.

    Google Scholar 

  • Stevens, G. V. G., & Lipsey, R. E. 1992. Interactions between domestic and foreign investment. Journal of International Money and Finance, 11(1): 40–62.

    Google Scholar 

  • Stopford, J., & Strange, S. 1992. Rival states, rival firms: Competition for world market shares. New York: Cambridge University Press.

    Google Scholar 

  • Sultan Balbuena, S. 2016. Concerns related to the internationalisation of state-owned enterprises: Perspectives from regulators, government owners and the broader business community. OECD Corporate Governance Working Papers, No. 19. Paris: OECD Publishing. http://dx.doi.org/10.1787/5jm0xvx0b223-en. Accessed May 17 2017.

  • Tavares-Lehmann, A. T. 2016. Types of investment incentives. In Tavares-Lehmann, A. T., Toledano, P., Johnson, L., & Sach, L. (eds.). Rethinking investment incentives: trends and policy options. New York: Columbia University Press. Accessed May 17, 2017.

  • Tavares-Lehmann, A. T., Toledano, P., Johnson, L., & Sachs, L. 2016. Rethinking investment incentives: Trends and policy options. New York: Columbia University Press.

    Google Scholar 

  • UNCTAD. 2000. Tax incentives and foreign direct investment: A global survey. Geneva: UNCTAD. http://unctad.org/en/Docs/iteipcmisc3_en.pdf. Accessed April 18 2017.

  • UNCTAD. 2008. Evaluating investment promotion agencies. Geneva: UNCTAD. http://unctad.org/en/Docs/diaepcb20082_en.pdf. Accessed May 17 2017.

  • UNCTAD. 2016. Investment laws: A widespread tool for the promotion and regulation of foreign investment. Geneva: UNCTAD. http://unctad.org/en/PublicationsLibrary/webdiaepcb2016d5_en.pdf. Accessed April 18 2017.

  • UNCTAD. 2017a. Foreign direct investment (FDI). http://unctad.org/en/Pages/DIAE/Foreign-Direct-Investment-(FDI).aspx.

  • UNCTAD. 2017b. Investment facilitation: A review of policy practices. Geneva: UNCTAD.

    Google Scholar 

  • US Joint Committee on Taxation. 1991. Factors affecting the international competitiveness of the United States. Washington DC: Government Printing Office, https://ia600408.us.archive.org/10/items/factorsaffecting691unit/factorsaffecting691unit.pdf. Accessed May 17 2017.

  • Vernon, R. 1979. The international aspects of state-owned enterprises. Journal of International Business Studies, 10(3): 7–14.

    Google Scholar 

  • Vieira, P., & Dummett, B. 2015. Canada sells remaining stake in General Motors. Wall Street Journal, April 6. https://www.wsj.com/articles/canada-sells-remaining-shares-in-general-motors-1428363868. Accessed May 17 2017.

  • Volkswagen. 2017. Shareholder Structure. https://www.volkswagenag.com/en/InvestorRelations/shares/shareholder-structure.html. Accessed April 18 2017.

  • Wang, S., & Cuervo-Cazurra, A. 2017. Overcoming human capital voids in underdeveloped countries. Global Strategy Journal, 7(1): 36–57.

    Google Scholar 

  • Wang, S. L., Luo, Y., Lu, X., Sun, J., & Maksimov, V. 2014. Autonomy delegation to foreign subsidiaries: An enabling mechanism for emerging-market multinationals. Journal of International Business Studies, 45(2): 111–130.

    Google Scholar 

  • Warner, M. E. 2008. Reversing privatization, rebalancing government reform: Markets, deliberation and planning. Policy and Society, 27(2): 163–174.

    Google Scholar 

  • Wayne, L., & Barboza, D. 2005. Unocal deal: a lot more than money is at issue. New York Times, June 24. http://www.nytimes.com/2005/06/24/business/worldbusiness/unocal-deal-a-lot-more-than-money-is-at-issue.html. Accessed April 18 2017.

  • Wehrlé, F., & Pohl, J. 2016. Investment policies related to national security: A survey of country practices. OECD Working Papers on International Investment, No. 2016/02. Paris: OECD Publishing.

  • Wildau, G. 2018. US tariffs target China industrial policy, not trade deficit. Financial Times, March 23. https://www.ft.com/content/bd61c23a-2e62-11e8-9b4b-bc4b9f08f381. Accessed April 18 2018.

  • Williamson, P. J., Ramamurti, R., Fleury, A., & Fleury, M. T. L. 2013. The competitive advantage of emerging market multinationals. New York: Cambridge University Press.

    Google Scholar 

  • World Bank. 1999. World development report 1998/99: Knowledge for development. New York: Oxford University Press.

    Google Scholar 

  • World Bank. 2017. World Governance Indicators. http://info.worldbank.org/governance/wgi/#home. Accessed September 13 2017.

  • Zhao, M. 2006. Conducting R&D in countries with weak intellectual property rights protection. Management Science, 52(8): 1185–1199.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Alvaro Cuervo-Cazurra.

Additional information

Accepted by Narjess Boubakri, Area Editor, 23 August 2018. This article has been with the author for two revisions.

I thank the encouragement of Editor Ari van Assche to write this article. I also thank Associate Editor Narjess Boubakri for managing the review process and two anonymous reviewers for providing very detailed and useful suggestions for improvement. I am grateful for useful comments on previous versions of the article from Jonathan Doh (for the title), Tim Devinney, Rian Drogendijk, Sergio Lazzarini, Arie Lewin, Marjorie Lyles, William Newburry, Sam Park, Bertrand Quelin, and participants at the CEIBS emerging market conference and the Strategic Management Society special conference in Sao Paulo and the Academy of International Business annual conference in Minneapolis. I also thank the Lloyd Mullin fellowship for financial support. This article was written while on sabbatical at Northeastern University.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Cuervo-Cazurra, A. Thanks but no thanks: State-owned multinationals from emerging markets and host-country policies. J Int Bus Policy 1, 128–156 (2018). https://doi.org/10.1057/s42214-018-0009-9

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s42214-018-0009-9

Keywords

  • State-owned firms
  • multinationals
  • policy
  • agency problems
  • strategic industries