Overcoming distrust: How state-owned enterprises adapt their foreign entries to institutional pressures abroad

By K. Meyer, Yuan Ding, Jing Li, Hua Zhang. Multinational Enterprises and Emerging Economies, 2014

333 citations recorded by the source corpus.

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.

Subfields: Accounting, Sociology and Political Science, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/4923f6f4862ce20c7934bfab85fcebd82408f089

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Citations in the corpus

State ownership reinvented? Explaining performance differences between state‐owned and private firms (2018, positive): “The institutional context of the country should also highly influence SOEs (Meyer et al., 2014).”
State capitalism in international context: Varieties and variations (2020, background): “Meyer, Ding, Li and Zhang (2014), for instance, demonstrated how Chinese SOEs signaled adherence to the role of law and shareholder protection to compensate for the SOE legitimacy deficit.”
A review of research on outward foreign direct investment from emerging countries, including China: what do we know, how do we know and where should we be heading? (2018, background): “There have been several efforts to examine the strategic reasons for OFDI from Chinese MNEs and to build theoretical models (Cui, Meyer, and Hu 2014; Huang and Wang 2011; Hong and Sun 2006; Kevin 1999; Liang, Lu, and Wang 2012; Lu, Liu, and Wang 2011; Meyer et al. 2014; Tung 2007; Zhan 1995; Wang et”