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State ownership of Chinese firms and their outward foreign direct investment: Political and economic contingencies

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Abstract

The extant literature offers inconsistent predictions and conflicting evidence regarding the relationship between state ownership and the internationalization of emerging market firms (EMFs). Drawing on institutional theory, we examine the moderating roles of political and economic institutions at the subnational and national levels in the link between state ownership and EMFs’ outward foreign direct investment (OFDI). Based on a sample of 1421 OFDI projects involving 286 Chinese listed firms in 115 host countries between 2003 and 2016, we find that state ownership can scale up OFDI when Chinese firms are headquartered in subnational regions with high institutional development or low economic development, or when political relationships between home and host countries are amicable or market growth in a host country is slow; otherwise, state ownership hinders OFDI. These findings offer new insights into the relationship between state ownership and the internationalization of EMFs.

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Acknowledgements

We would like to thank the support of the National Natural Science Foundation of China under Grant No. 71972150.

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Authors and Affiliations

  1. UniSA Business, University of South Australia, Adelaide, SA, 5001, Australia

    Ryan W. Tang

  2. School of Management, Xi’an Jiaotong University, Xi’an, Shaanxi, 710049, People’s Republic of China

    Chengli Shu

  3. Faculty of Business and Economics, University of Hong Kong, Hong Kong, SAR, People’s Republic of China

    Kevin Z. Zhou

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Tang, R.W., Shu, C. & Zhou, K.Z. State ownership of Chinese firms and their outward foreign direct investment: Political and economic contingencies. Asia Pac J Manag 39, 1097–1123 (2022). https://doi.org/10.1007/s10490-021-09756-y

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