Institutional Logics and the Internationalization of a State-Owned Enterprise: Evaluation of International Venture Opportunities by Telecom Finland 1987–1998

Eero Aalto,Zeerim Cheung,Pasi Nevalainen

doi:10.1016/j.jwb.2020.101140

Abstract

We contribute to the research on internationalization of state-owned enterprises (SOEs) by studying the coevolution of state governance of SOEs and SOEs’ evaluation of international venture opportunities during a shift in dominant institutional logic from state to market logic. Using a novel digital historical method to study Telecom Finland, we argue that as state governance mechanisms change due to a logic shift, rationales underlying SOEs’ internationalization can significantly change and impact SOEs’ geographical and partner preferences. However, a logic shift also affords SOEs significant influence over the formation of new state governance policies under the new dominant logic.

Highlights

The wave of liberalization and large-scale privatization of stateowned enterprises (SOEs) that started in the late 1970s was predicted to end state capitalism in Western Europe (Toninelli, 2000), but instead, new varieties of state capitalism emerged (Cuervo-Cazurra, Inkpen, Musacchio, & Ramaswamy, 2014; Musacchio, Lazzarini, & Aguilera, 2015; Wood & Wright, 2015)
We present our findings regarding how the shift in the domi nant institutional logic from state to market logic in the tele communications market changed the relationship between the state and Telecom Finland (TF)
We found that as the dominant institutional logic shifted from state logic to market logic, the strategic rationales used by TF in evaluating international venture opportunities shifted from national to multi national rationales

Summary

Introduction

The wave of liberalization and large-scale privatization of stateowned enterprises (SOEs) that started in the late 1970s was predicted to end state capitalism in Western Europe (Toninelli, 2000), but instead, new varieties of state capitalism emerged (Cuervo-Cazurra, Inkpen, Musacchio, & Ramaswamy, 2014; Musacchio, Lazzarini, & Aguilera, 2015; Wood & Wright, 2015). We adopt the institutional logics perspective and focus on a fully-owned SOE during the transformation of Western European state capitalism during the 1980s to 1990s from state logic, i.e., SOEs as strictly-controlled extensions of the public bureaucracy operating mostly in markets considered natural monopolies, to market logic, i.e., SOEs as for-profit corporations in competitive markets (Megginson & Netter, 2001; Musacchio et al, 2015). Under this framing, we in vestigate how this societal-level logic shift influenced the rationales underlying SOE internationalization. We ask the following question: How does a shift in dominant institutional logic from state to market logic affect the coevolution of the state governance of SOEs and SOEs’ evaluation of international venture opportunities?

Objectives

Methods

Results

Conclusion