Theories of the (state-owned) firm

Firm Characteristics, Business Environment, Strategic Orientation, and Performance

The purpose of this study is to empirically examine the influence of firm characteristics (size, age, industry type, and ownership) on a firm’s strategic orientation. The business environment, namely market uncertainty and competition intensity, is also analysed in association with the firm’s strategic orientation. Furthermore, the implication of strategic orientation for performance is tested. The study used 1024 data sets of 128 manufacturing firms listed on the Indonesia stock exchange from 2014 to 2021. Data panel regression and independent t-tests were employed for statistical analysis. Adopting Miles and Snow’s strategy typology framework, the findings indicated that the firm size, industry type, and competition intensity significantly influence the firm’s strategic orientation. Small firms preferred to adopt a proactive strategic orientation (prospector and analyser). Firms in the fast-moving consumer goods (FMCG) industry tended to adopt a proactive strategic orientation (prospector and analyser). Strategic orientation was found to positively and significantly influence firm performance. Firms that adopt a proactive strategic orientation (analyser and prospector) showed better performance than defensive ones (reactor and defender).

Toward an institution-based paradigm

As part of the broader intellectual movement throughout the social sciences that is centered on new institutionalism, the institution-based view has emerged as a leading perspective in the strategic management literature. This article (1) traces the emergence of the institution-based view, (2) reviews its growth in the last two decades, and (3) responds to three of its major criticisms. We also identify four promising research directions—deglobalization and sanctions, competitive dynamics, hybrid organizations, and corporate social responsibility. Overall, we demonstrate that the thriving research on institutions has culminated in an institution-based paradigm, which has significant potential for future growth.

Crude oil price uncertainty and corporate carbon emissions

Low-carbon transformation has become a key priority in China, as demonstrated in the implementation of the Carbon Peak, Carbon Neutralization policy, leading to increasing concern of environmental performance at the corporate level. This paper measures the carbon emission of 1,089 Chinese companies through the EIO-LCA-based approach. Then we examine the impacts of international crude oil price fluctuations and the corporate development level on carbon emissions of individual companies. Our results indicate that an increase in international crude oil price uncertainty could inhibit the company's carbon emission. In parallel, we find that there might exist an environmental Kuznets curve (EKC) inverted U-shaped correlation between the company's development level and its environmental performance. However, some exceptions to corporate carbon performance may emerge, resulting from specific corporate characteristics such as the state-owned nature and whether the firm is listed on the stock exchange. Our results could help companies optimize their internal carbon emission structure during the low-carbon transition process and contribute to effective policy regulations towards the target of carbon reduction.

Can the media breed CEO overconfidence? A sociocognitive perspective in the Chinese context

Purpose

Anchored in the role of a social arbiter, the purpose of this study is to examine whether and how media coverage has an impact on CEO overconfidence and further explore how media ownership and Confucianism affect the relationship in the Chinese context.

Design/methodology/approach

Using a sample of 1,492 Chinese listed companies from 2010 to 2015, the study adopts random effects models to empirically analyze the effect of media coverage on CEO overconfidence and the roles of media ownership and Confucianism.

Findings

The paper finds that media coverage is significantly and positively associated with CEO overconfidence, and the positive relationship between media coverage and CEO overconfidence becomes stronger for state-controlled media. What is more, the influence of media coverage on CEO overconfidence is attenuated for those firms located in stronger Confucianism atmosphere. A further analysis reveals that different tenors of media coverage yield asymmetric effects.

Originality/value

The paper provides a new and solid support for the argument that media praise stimulates CEO overconfidence and increases the knowledge about under what conditions CEO overconfidence varies, broadly speaking which fosters the development of upper echelons theory (UET). Meanwhile, the results extend the literature on media effect and information processing. The findings are also beneficial to improve corporate decisions and government regulation on Chinese media systems.

Governmental goals and the international strategies of state-owned multinational enterprises: a conceptual discussion

State owned multinational enterprises (SOMNEs) have received extensive attention in recent research in international business and corporate governance, which demonstrates effects of state ownership on a range of international strategic decisions such as the degree of internationalization, foreign entry modes, and host country location choices. Such effects are explained by factors such as SOMNEs’ non-financial goals, corporate governance, and institutional pressures. However, results are mixed and context-dependent, and overall we still have an incomplete understanding of what governments aim to achieve through SOMNEs, and how these goals in turn lead to different international strategies. This conceptual article aims to explore how specific government goals may affect international strategies. We provide a more fine-grained view on SOMNE financial and non-financial goals and link them to key international strategic decisions such as the degree of internationalization, entry and establishment modes, and host country location choice. We review and extend previous literature and identify novel theoretical arguments, leading to an extensive set of propositions. We also sketch ideas for empirical studies of SOMNE objectives.

Inward FDI spillovers and emerging multinationals’ outward FDI in two directions

Inward foreign direct investment (IFDI) carries critical implications for emerging market multinational enterprises’ (EMNEs’) outward foreign direct investment (OFDI). While extant research provides evidence for the positive linkage between IFDI and EMNEs’ OFDI, less is known about the directionality of such OFDI—where to go. This study aims to extend the IFDI-OFDI linkage by differentiating EMNEs’ upward and downward OFDI (i.e., OFDI projects in more and less advanced host countries than their home markets). Using panel data on 1334 Chinese multinationals, I find that IFDI promotes EMNEs’ upward OFDI, but this effect is weakened by state ownership and industry competition. Moreover, my findings show that although IFDI is not related to EMNEs’ downward OFDI in general, their linkage becomes positive in the conditions of higher state ownership or weaker industry competition. This study advances our understanding of the directionality (i.e., where to go) of EMNEs’ OFDI in the face of IFDI spillovers.

Internationalization speed and firm innovation: the moderating roles of negative attainment discrepancy and state-ownership

Purpose

This paper aims to investigate the moderating roles of negative attainment discrepancy and state ownership in the relationship between internationalization speed and firm innovation.

Design/methodology/approach

Panel fixed-effects regressions model was applied to test the influence of internationalization speed on firm innovation using data collected from Chinese listed companies between 2003 and 2017.

Findings

The internationalization speed can positively promote firm innovation. Moreover, negative attainment discrepancy enhances the effect of internationalization speed on firm innovation. The effect of negative attainment discrepancy on internationalization speed and firm innovation performance is more positive in state-owned firms than in non-state-owned firms.

Research limitations/implications

A suitable time of internationalization speed to affect firm innovation is obtained.

Practical implications

This paper suggests that decision-makers should set an appropriate aspiration to internationalize firms and increase firm innovation. Moreover, state-owned enterprises should pay attention to negative attainment discrepancies.

Originality/value

The study revealed the boundary conditions of negative attainment discrepancy and state ownership on the relationship between internationalization speed and firm innovation, contributing to the theoretical advancements in internationalization speed.

State-Owned Enterprises as Institutional Actors: A Hybrid Historical Institutionalist and Institutional Work Framework

Although state-owned enterprises (SOEs) are recognized as important economic actors, the literature to date has assumed close state control over SOEs and, therefore, their passive stance towards institutions. Drawing on the institutional work and historical institutionalism literatures, we challenge this view. We develop a multilevel framework of SOE top management teams’ (TMTs’) embedded agency, spanning the national macro-institutional level, the meso-level of regimes of state-SOE relations, and sector-specific institutions. We then derive propositions regarding the factors across these multiple levels that shape SOE TMTs’ motivation, resources, and scope for institutional work. This framework allows us to explain the leeway for and likelihood of SOE TMTs’ engagement in institutional work across institutional contexts.

Leadership, religiousness, state ownership of an enterprise and unethical pro-organizational behavior: The mediating role of organizational identification

This study proposes a model in which organizational identification mediates the correlations among state-owned enterprises (SOEs), authentic leadership, Christian religiousness, and unethical pro-organizational behavior (UPB). The proposed theoretical framework is based on moral identity theory, social identity theory, and social exchange theory. We tested the hypothesized model using data (N  =  389) from employees of various companies and industries in Poland. Of the respondents, 49.1% worked in SOEs. The reliability and validity of the measures were established. The correlation coefficients among the analyzed variables were obtained using the bootstrap confidence interval method. To thoroughly examine the causal relationships among the variables, covariance-based structural equation modeling (CB-SEM) was adopted. Path analysis was conducted and used to verify a model in which organizational identification mediated the correlations among state involvement in the ownership of an enterprise, authentic leadership, Christian religiousness, and UPB. State involvement in the ownership of an enterprise, authentic leadership, and Christian religiousness were linked to increased organizational identification, which in turn was linked to the intensification of UPB. With the level of organizational identification controlled, state ownership of an enterprise was linked to lower UPB intensity. Limitations, implications and future research directions are discussed.

The State-Owned Enterprise as an Identity: The Influence of Institutional Logics onGuanxiBehavior

Previous research has debated whetherguanxipersists or declines with the development of formal institutions. This study addresses this debate by investigating how the development of formal institutions in China's state-owned organizations influences employees’guanxibehavior. Building on institutional logics theory, I propose thatguanxibehavior is a reaction to the socialist institutions adopted by state-owned enterprises (SOEs) and is associated with the collective identity of SOEs. Thus, employees’ identification with SOEs is the mechanism that influences theirguanxibehavior. A survey of 721 employees from 12 organizations comparedguanxibehavior across three types of organizations with different degrees of state ownership: SOEs, public firms, and joint ventures. The results showed that the employees of joint ventures identify less with SOEs and engage in lessguanxibehaviors than do SOE employees. The employees of public firms still identify with SOEs, and theirguanxibehavior did not differ from that of SOE employees. Identification with SOEs mediated the effect of organizational type onguanxibehavior, whereas formalization did not. Therefore, the development of formal institutions does not necessarily decreaseguanxibehavior, and its effect depends on whether the collective identity underlyingguanxiis changed. This study has important implications forguanxiresearch, institutional logics theory, and transition economies.

When Are Pay Gaps Good or Bad for Firm Performance? Evidence from China

There is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

Exports’ effects on productivity from the view of industry heterogeneity

Purpose

The relationship between exports and productivity has always been a hot topic for scholars, but no unified conclusions have been made by theory and empirical research so far. There is no denying that the relationship between the two is important though, exploring the factors affecting the relationship can bring much more reflection and inspiration.

Design/methodology/approach

After using stochastic frontier analysis which includes stochastic factors to calculate total factor productivity, this paper makes regressions on the panel data of Chinese manufacturing industries from 2004 to 2013. In addition, it also tests the roles of industry heterogeneity plays in analyzing the relationships between exports and productivity.

Findings

It turns out that in China, exports inhibit the growth of productivity overall, and scale effect is not reflected in the export sector. From the perspective of sub-sectors, exports dampen the productivity significantly in labor-intensive industries, which may be because of low learning ability. In industries with low R&D investment, exports also have significant and negative effects on industry productivity, which is because the R&D capital is not efficient and sufficient to be converted to productivity. In industries with high foreign capital rate, exports prohibit the growth of productivity because of the existence of much processing trade. In industries with low competition pressure, exports hinder the productivity because firms in such industries are possibly not competitive enough to survive in the fierce international market.

Originality/value

To the best of the authors’ knowledge, previous research studies did not take the industry heterogeneity into consideration when discussing the effects of exports on productivity. In this paper, cost types, R&D investment, energy consumption efficiency, export destination, foreign investment rate, state-owned ratio, competition pressure and international competitiveness are all discussed in the analysis of export and productivity. This study provides new insights to help understand the mechanism of export and productivity and the conclusions are of rich policy implications.

Organizational characteristics of cross-border mergers and acquisitions

Purpose

Given that several publicly announced international merger and acquisition deals have been abandoned in recent years, the purpose of this paper is to present a synthesis of influential articles that examine organizational characteristics of cross-border acquisition transactions. The synthesis is framed through general traits and resources, learning and prior acquisition experience, and top-level management and governance attributes. Specifically, the paper conceptualizes key organizational attributes influencing the propensity of cross-border negotiations, and the most common characteristics and post-deal effects by illustrating several case examples from around the world.

Design/methodology/approach

Owing to fairness and integrity principles of the literature survey studies, the paper adopts an exploratory review design to present a synthesis of several influential articles published in strategy, international business and corporate finance journals. Since case method and storytelling are the best qualitative approaches to conceptualizing extant theoretical contributions, a number of case examples—successful, delayed and abandoned—from around the world have been discussed by leveraging the case information from archival sources.

Findings

Drawing on resource-based view, organizational learning, upper echelons and agency theory perspectives, the paper underscores three observations. First, organizational characteristics such as firm age, firm size, ownership structure, slack resources, marketing resources, technological intensity, export intensity and business group affiliation have different impacts on the propensity of publicly announced cross-border deals. Second, firm’s prior acquisition experience and firm’s acquisition experience in the target country have positive or moderating effects on the success of a cross-border merger. Third, top-level management characteristics such as CEO foreign nationality and CEO international career experience, and governance characteristics such as board size, the number of independent directors and directors with overseas experience, have mixed effects on the incidence of cross-border acquisitions.

Practical implications

The paper puts forth several recommendations for top-level managers participating in cross-border acquisition negotiations, such as learning from peers in the same industry, learning from predecessors in the target country and learning from failure negotiations in the same industry and other industries.

Originality/value

Nested within the organizational, international business strategy and corporate finance literature, the paper presents a synthesis of influential publications that study organizational characteristics affecting the propensity of cross-border acquisitions. The cases discussed in this paper are unique examples from around the world.

Foreign sequential entry mode choice

Purpose

The purpose of this paper is to use the theoretical perspective of structural inertia as a unique lens to study foreign sequential entry mode choices of multinational firms.

Design/methodology/approach

It adopts quantitative analysis of a sample of 121 Chinese publicly listed firms with 564 foreign entry incidents in the 2001-2012 period to test the hypotheses.

Findings

The empirical results show that multinational firms have a tendency to adopt the same mode in the subsequent entry as the number of prior entry mode choice of a given type (joint venture (JV) in this study) increases. The results support the theoretical prediction that organizations repeat their past activities due to structural inertia. Moreover, such an inertia effect in foreign sequential entry mode choices becomes stronger for older multinational firms, larger multinational firms and state-owned multinational firms.

Research limitations/implications

Consistent with existing research, this study focuses on the entry mode choice between JV and wholly owned subsidiaries. However, it is better to examine the relationship identified in the study for different types of entry mode choices to assess result generalizability.

Practical implications

It reminds managers of multinational firms that they should be cautious to the influence of structural inertia that can be a barrier to strategic flexibility when they make entry mode choices.

Originality/value

The main contribution of this study resides in introducing structural inertia perspective to help understand the determinants of foreign sequential entry mode choices of multinational firms.

Revisiting the Relationship between Justice and Extra-Role Behavior: The Role of State Ownership

State ownership is an important phenomenon in the world economy, especially in transition economies. Previous research has focused on how state ownership influences organizational performance, but few studies have been conducted on how state ownership influences employees. I propose that different ownership structures trigger different relational models among employees who pay attention to organizational justice consistent with their model to guide their extra-role behavior. Specifically, state-owned organizations reinforce employees’ relational concern and direct employees’ attention to procedural justice, whereas privatized organizations highlight employees' instrumental concern and direct their attention to distributive justice. I leverage a sample of organizations in China to explore how different ownership structures activate different relational models among employees and alter the relationship between organizational justice and employees’ extra-role behaviors. I find that state ownership attenuates and even reverses the positive relationship between distributive justice and extra-role behaviors. Conversely, state ownership exaggerates the positive relationship between a critical procedural justice dimension (participation in decision making) and employee extra-role behaviors. Implications for the micro-foundations of corporate governance and institutional change, organizational justice literature, and cross-cultural research are developed. This study also generates new insights for transition economies such as China.

Formal and informal governance mechanisms in state-owned enterprises

Purpose

The purpose of this paper is to shed light on the formal and informal governance mechanisms of state-owned enterprises operating in a post-transitional economy of Poland.

Design/methodology/approach

The study combines legal analysis of Polish regulations in force, review of literature on the Poland’s institutional legacy, and a statistical analysis, based on a data set of 204 management board members, 180 external supervisory board members, and 114 state officials supervising Polish SOEs in 2011.

Findings

Legally designed relationships among the management board, supervisory board, and the state treasury, represented by the minister and ministry officials, constitute the key formal governance mechanisms in Polish SOEs. They are, however, complemented by relationships between SOEs and their stakeholders and distorted by other informal phenomena, including informal noninstitutional behavior, mechanisms grounded in cognitive and normative institutions, and perception of the relationship structure by the actors themselves. As a result, key corporate governance actors differ in their perception of governance influences upon SOEs.

Practical implications

This study contributes to policymaking by helping authorities gain a better understanding of the governance challenges in SOEs.

Originality/value

This paper is one of the first and few empirical studies investigating the issue of formal and informal governance mechanisms in SOEs in post-transitional economies of CEE.

The causes and consequences of delayed/abandoned cross-border merger & acquisition transactions

Purpose

Drawing attention to the significant number of unsuccessful (abandoned) cross-border merger and acquisition (M&A) transactions in recent years, the purpose of this paper is to analyze three litigated cross-border inbound acquisitions that associated with an emerging economy – India, such as Vodafone-Hutchison and Bharti Airtel-MTN deals in the telecommunications industry, and Vedanta-Cairn India deal in the oil and gas exploration industry. The study intends to explore how do institutional and political environments in the host country affect the completion likelihood of cross-border acquisition negotiations.

Design/methodology/approach

Nested within the interdisciplinary framework, the study adopts a legitimate method in qualitative research, that is, case study method, and performs a unit of analysis and cross-case analysis of sample cases.

Findings

The critical analysis suggests that government officials’ erratic nature and ruling political party intervention have detrimental effects on the success of Indian-hosted cross-border deals with higher bid value, listed target firm, cash payment, and stronger government control in the target industry. The findings emerge from the cross-case analysis of sample cases contribute to the Lucas paradox – why does not capital flow from rich to poor countries and interdisciplinary M&A literature on the completion likelihood of international takeovers.

Practical implications

The findings have several implications for multinational managers who typically involve in cross-border negotiations. The causes and consequences of sample cases would help develop economy firms who intend to invest in emerging economies. The study also offers some implications of M&A for telecommunications and extractive industries.

Originality/value

Although a huge amount of extant research investigates why M&A fail to create value to the shareholders during the public announcement and post-merger stages, there is a significant dearth of research on the causes and consequences of delayed or abandoned national and international deals. The paper fills this knowledge gap by discussing an in-depth cross-case analysis of Indian-hosted cross-border acquisitions.