The Internationalization of Chinese State-owned Enterprises under Multiple Institutional Complexity

Abstract

An important emerging phenomenon is that a large number of state-owned enterprises begin to expand globally. Because SOEs have particular nature in that they do not obey the profit-maximizing logic but seek non-economic objectives, so the interesting question is that what different result will appear when SOEs internationalize? Will the state ownership have positive impact because of government-related advantages? Or will the impact be negative due to liability of stateness? In this paper we take Chinese listed firms as the sample in which SOEs occupy a considerable share to study the influence on internationalization by ownership. More important, the typical institutional complexity in China make it possible to further investigate its interactive effects with another two levels of institutional complexities besides the organization-level institutional complexity as profit-maximizing logic and non-economic motives conflict brought by state ownership: One is the field-level institutional complexity--the regional market of the headquarter as liberal market or coordinated market; Another is the individual-level institutional complexity--the governance attribute as the top management with particular overseas background or not. By these we enter a thicker institutional context with vertical nestedness, study the overlapped interplay by the triple institutional complexities (organization* field*individual), and obtain the following valuable conclusions: The degree of internationalization of SOEs is significantly lower than that of POEs (private-owned enterprises). Moreover, no matter the liberal market environment or the manager’s overseas background both promote POE’s internationalization more if they act respectively. However, their joint promotion to the SOE’s internationalization is larger than to the POE’s. This indicates that the vertical nestedness and complicated interaction by multiple institutional complexities will produce a totally different configurational effect from the thin institutional context. As for the deeply institutionalized organizations such as SOEs which have immense strategic inertia, their behavior can be effectively changed only under the functioning of multiple institutions combined as a system. Our paper contributes to the research of SOE’s internationalization, to the theory of institutional complexity, especially for the configurational effect by the vertical nestedness of multiple institutional complexity.