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The Public Value Creation of State-Owned Enterprises

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Regulation of State-Controlled Enterprises

Part of the book series: International Law and the Global South ((ILGS))


This chapter aims to examine the value contribution of state-owned enterprises (SOEs) through the prism of public value theory so as to (1) situate SOEs more sturdily within the public administration literature and (2) to advance public value theory by addressing an institutional form that melds elements of both the state and the market. It considers various important rationales for SOE proliferation and highlights their growing international importance. The chapter then emphasises the need to go beyond the state vs market dichotomy, and applies public value’s strategic triangle to identify aspects of SOE legitimacy, recognition of value, and operational resources. The finds of the chapter suggest that SOEs offer an innovative public value lens for several reasons, and also that public value helps to explain important elements of SOE performance.

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  1. 1.

    Another chapter in this volume on the public value of sovereign wealth funds (SWFs), which may be treated a special form of SOEs, discusses various salient aspects of public value as well.

  2. 2.

    A comprehensive review of public value’s precepts can be found in Usman W Chohan, Public Value and Budgeting: International Perspectives. (Routledge 2019).

  3. 3.

    A useful review is presented in Talis Putniņš ‘Economics of state-owned enterprises’ (2015) 38(11) International Journal of Public Administration, 815–832.

  4. 4.

    However, practitioner expositions of SOEs’ public value have received some important attention, see for example Price Waterhouse Coopers ‘State-Owned Enterprises: Catalysts for public value creation?’ (2015) PWC Reports.

  5. 5.

    A review and critique of the strategic triangle is presented in John Alford and Janine O’Flynn, ‘Making sense of public value: Concepts, critiques and emergent meanings’ (2009) 32(3/4) International Journal of Public Administration, 171–191.

  6. 6.

    Other chapters in this volume discuss more nuanced attributes of what would qualify more technically as an SOE.

  7. 7.

    Some definitional ambiguities are addressed in Price Waterhouse Coopers (n 4) at 8.

  8. 8.

    OECD, ‘State-owned enterprise governance reform: An inventory of recent change’ (2011) OECD Working Papers.

  9. 9.

    OECD, ‘State-owned enterprise governance reform: An inventory of recent change’ (2011) OECD Working Papers.

  10. 10.

    Przemyslaw Kowalski; Max Büge; Monika Sztajerowska; and Matias Egeland, ‘State-Owned Enterprises: Trade Effects and Policy Implications’ (2013) OECD Trade Policy Paper, No. 147.

  11. 11.


  12. 12.

    The Economist., ‘Share of national/state-controlled companies to MSCI emerging market index’ (2012) Economist. The Visible Hand., 4.

  13. 13.

    World Bank. ‘World Bank Group Support for the Reform of State-Owned Enterprises, 2007–2018' An IEG Evaluation (World Bank Publications 2018).

  14. 14.


  15. 15.


  16. 16.

    This is particularly true of the financial services sector, where many large-scale insolvencies and acquisitions in the banking sector, along with declines in capitalization, led to a decline in the ranking or even removal of many private financial giants in both North America and Europe.

  17. 17.

    Price Waterhouse Coopers (n 4).

  18. 18.

    These are China, United Arab Emirates, Russia, Indonesia, Malaysia, Saudi Arabia, India and Brazil.

  19. 19.

    John Benington, ‘Creating the public in order to create public value?’ (2009) 32(3/4) International Journal of Public Administration, 232.

  20. 20.

    World Bank (n 13) (2018), 4.

  21. 21.

    The pioneering work on advisory-costings framework can be found in Usman Chohan and Kerry Jacobs, ‘Public value in politics: A legislative budget office approach’ (2017) 40(12) International Journal of Public Administration, 1063–1073.

  22. 22.

    Some of these issues are discussed at length in World Bank (n 13).

  23. 23.

    Discussions of value co-creation are given considerable treatment in Mark Moore and John Donahue, Ports in a Storm: Public Management in a Turbulent World (Brookings 2012).

  24. 24.

    Joe Wallis and Robert Gregory, ‘Leadership, accountability and public value: Resolving a problem in “new governance”?’ (2009) 32(3–4) International Journal of Public Administration, 250–273.

  25. 25.

    See Mark Moore, Creating Public Value: Strategic Management in Government (Harvard University Press 1995), 22.

  26. 26.

    Chohan (n 2).

  27. 27.

    See OECD, OECD Guidelines on Corporate Governance of State-Owned Enterprises, (2015 edn, OECD Publishing 2015), 17.

  28. 28.

    Scott Douglas and Albert Meijer, /Transparency and public value: Analyzing the transparency practices and value creation of public utilities’ (2016) 39(12) International Journal of Public Administration, 940–951.

  29. 29.

    See OECD (n 29), 31.

  30. 30.

    World Bank (n 13).

  31. 31.

    By “central,” it is not necessarily meant here that it is the federal centralized bureaucracy that is in charge. In fact, many subnational, regional, and local municipal entities also create and manage SOEs. See Price Waterhouse Coopers (n 4), 11.

  32. 32.

    Moore and Donahue (n 25).

  33. 33.

    See Usman W. Chohan, ‘Independent Budget Offices and the Politics–Administration Dichotomy’ (2018) 41(12) International Journal of Public Administration, 1009–1017.

  34. 34.

    See OECD (n 29), 20.

  35. 35.

    See Moore (n 27). 114.

  36. 36.

    See Benington (n 19), 240.

  37. 37.

    Chohan (n 2), 98.

  38. 38.

    Donna Bahry, ‘Measuring communist priorities: Budgets, investments, and the problem of equivalence’ (1980) 13(3) Comparative Political Studies, 267–292.

  39. 39.

    See post-communist public value in Chohan (n 2), 62–77.

  40. 40.

    See Fukuyama’s assertion about the “end of history in” Francis Fukuyama, ‘The end of history?’ 1989) The National Interest 16, 3–18.

  41. 41.

    This has been discussed in John Benington (2009). Creating the public in order to create public value? International Journal of Public Administration, 32(3/4), p.232–249.

  42. 42.

    SWFs may in fact be described as a “special kind of SOE,” see Price Waterhouse Coopers (n 4), 12.

  43. 43.

    It is certainly true that some SOEs do not engage with the market logic, but the degree to which they can withdraw from this raises questions about whether they can really be called ‘enterprises’ in that case.

  44. 44.

    Some of these perspectives receive detailed treatment in other chapters of this book.

  45. 45.

    See OECD (n 29), 31.

  46. 46.

    Price Waterhouse Coopers (n 4).

  47. 47.

    For a discussion of market inconsistencies as reflected in Chinese SOE balance sheets, see Benno Ferrarini and Marthe Hinojales, ‘State-Owned Enterprises Leverage as a Contingency in Public Debt Sustainability Analysis: The Case of the People's Republic of China’ (2018) Asian Development Bank Economics Working Papers N0. 534.

  48. 48.


  49. 49.


  50. 50.

    See another chapter in this volume for an extensive discussion of the measurement of value by SWFs.

  51. 51.

    World Bank (n 13).

  52. 52.

    Uwe Bower, ‘State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly’ (2017) IMF Working Papers. Paper 17/221.

  53. 53.


  54. 54.

    It may be observed that the PPP model also challenges the old dichotomy between the state and the market.

  55. 55.

    Stephen Osborne, Public-private partnerships: Theory and practice in international perspective (Routledge 2000).

  56. 56.

    See for example Sami Ullah Bajwa, Naveda Kitchlew, Khuram Shahzad, and Khaliq Ur Rehman, ‘Public–Private Partnership (PPP) as an interdependent form (I-Form) organization’ (2018) 41(11) International Journal of Public Administration, 859–867.

  57. 57.

    The characterization of the strategic triangle as central symbol is attributable to Alford and O’Flynn (n 5), 173.

  58. 58.

    See Moore (n 27), 22.

  59. 59.

    See Usman Chohan, ‘Public value and bureaucratic rhetoric’ in Ali Farazmand (ed) Global Encyclopedia of Public Administration, Public Policy, and Governance (Springer 2017).

  60. 60.

    World Bank (n 13).

  61. 61.

    See Ferrarini and Hinojales (n 49).

  62. 62.

    These perspectives have been alluded to in earlier sections of this chapter.

  63. 63.

    See Graeme Hodge, Privatization: An international review of performance (Routledge 2018).

  64. 64.

    A recent analysis which considers this factor is in Ezra Suleiman, and John Waterbury, The political economy of public sector reform and privatization (Routledge 2019).

  65. 65.

    James Rickards, Currency Wars: The Making of the Next Global Crisis (Portfolio 2011).

  66. 66.

    Chong-En Bai, Lu Jiangyong and Zhigang Tao, ‘The multitask theory of state enterprise reform: empirical evidence from China’ (2006) 96(2) American Economic Review, 353–357.

  67. 67.

    The history of the tumultuous Russian transition to privatization is well explained in Michael McFaul, ‘State power, institutional change, and the politics of privatization in Russia’ (1995) 47(2) World Politics,, 210–243.

  68. 68.

    This discussion is presented in a nuanced manner by Andrei Shleifer, ‘State versus private ownership’ (1998) 12(4) Journal of economic perspectives, 133–150.

  69. 69.

    Rickards (n 67).

  70. 70.

    The World Bank has expressed its cognizance of this sustained interest in SOEs, see some of these issues are discussed at length in World Bank (n 13).

  71. 71.

    Moore (n 27), 22.

  72. 72.

    Price Waterhouse Coopers (n 4).

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Correspondence to Usman W. Chohan .

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Chohan, U.W. (2022). The Public Value Creation of State-Owned Enterprises. In: Chaisse, J., Górski, J., Sejko, D. (eds) Regulation of State-Controlled Enterprises. International Law and the Global South. Springer, Singapore.

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