Overcoming Distrust: How State-Owned Enterprises Adapt Their Foreign Entries to Institutional Pressures Abroad

Klaus E. Meyer (First Author), Yuan Ding (Participant Author), Hua Zhang (Participant Author), Jing Li (Participant Author)

Research output: Contribution to journalJournal

175 Citations (Web of Science)

Abstract

State-owned (SO) enterprises are subject to more complex institutional pressures in host countries than private firms. These institutional pressures arise from a weak legitimacy of "state ownership" in some countries, which arises from a combination of ideological conflicts, perceived threats to national security, and claimed unfair competitive advantage due to support by the home country government. These institutional pressures directed specifically at SO firms induce them to adapt their foreign entry strategies to reduce potential conflicts and to enhance their legitimacy. Testing hypotheses derived from this theoretical argument for subsidiaries of listed Chinese firms, we find that SO firms adapt mode and control decisions differently from private firms to the conditions in host countries, and these differences are larger where pressures for legitimacy on SO firms are stronger. These findings not only extend institutional theory to better explain differential effects on different entrants to an organizational field, but demonstrate how foreign investors of idiosyncratic origins may proactively build legitimacy in host societies.
Original languageEnglish
Pages (from-to)1005-1028
JournalJournal of International Business Studies
Volume45
Issue number8
DOIs
Publication statusPublished - 2014

Keywords

  • CHINESE FIRMS
  • Chinese multinationals
  • DIRECT-INVESTMENT
  • EMERGING ECONOMIES
  • HOST COUNTRY INSTITUTIONS
  • MODE CHOICE
  • MULTINATIONAL-CORPORATIONS
  • OUTWARD FDI
  • OWNERSHIP
  • TRANSACTION COST INFLUENCES
  • UNITED-STATES
  • control mode
  • establishment mode
  • foreign market entry
  • institutional theory
  • state-owned enterprises

Indexed by

  • FT
  • ABDC-A*
  • Scopus
  • SSCI

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