A review of the internationalization of state-owned firms and sovereign wealth funds: Governments' nonbusiness objectives and discreet power

We review and bridge the literature on the internationalization of state-owned firms and sovereign wealth funds to provide a novel understanding of how government ownership affects foreign investments in three ways. First, we explain how state-owned firms and funds behave differently from private ones because they need to balance governments' nonbusiness objectives and firms' business goals. This results in competing predictions on whether government ownership helps or hinders internationalization due to particular nonbusiness objectives. Second, building on the review, we provide suggestions on how to extend research topics and theories of the firm by incorporating these nonbusiness objectives in the internationalization decisions in four areas: home government's endowments, characteristics, and attitudes; host-country expansion's support, influence, and impact; home- and host-country relationship conflicts, mediation, and disguising; and management's orientation, opacity, and arbitrage. Third, we capture how governments may use state-owned multinationals and sovereign wealth funds to nudge host-country governments by introducing the concept of discreet power and the use of four strategies (recognition, values, development, and supremacy) to achieve it. This helps to outline the beginning of a unified approach to how governments use their foreign investments to achieve nonbusiness goals.

SUPPLEMENTARY INFORMATION

The online version contains supplementary material available at 10.1057/s41267-022-00522-w.

State ownership and stock liquidity: Evidence from privatization

We provide unique firm-level evidence of the relation between state ownership and stock liquidity. Using a broad sample of newly privatized firms (NPFs) from 53 countries over the period 1994–2014, our study identifies a non-monotonic association between state ownership and stock liquidity. The inverse U-shaped relation is consistent with trade-offs between costs and benefits of state ownership and suggests an optimal level of government shareholdings that maximizes stock liquidity of NPFs. We further identify that the inflection point from the cost/benefit trade-off is contingent upon characteristics of the nation's institutional environment.

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We study how state ownership affects stock liquidity.

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We identify a non-monotonic relation between state ownership and stock liquidity.

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This relation is consistent with trade-offs between costs/benefits of state ownership.

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The inflection point from this trade-off depends on the institutional environment.

Integration of health solutions into government systems: a tool for assessing readiness

Government partnerships are essential for many health solutions to sustain impact at scale, particularly in low-resource settings where strengthening health systems is critical for Universal Health Coverage. Many non-governmental organizations (NGOs) and funders ultimately want solutions to be integrated into public health systems by transitioning solution ownership, management and/or operation to government. However, NGOs and their government partners have limited guidance on how to effectively determine when a solution is ready to transition in a way that will maintain impact long term. To address this need, VillageReach developed the Transition Readiness Assessment (TRA) based on our transition to government theoretical framework. The framework was developed to define both factors related to a solution, as well as external influences that affect a solution's success.  The framework identifies seven dimensions of solution readiness: the political, economic, and social context; solution design; resource availability; financial management; government strategy; government policy and regulations; and organizational management. The TRA measures those dimensions and assigns each one a readiness score. We developed the framework and TRA for VillageReach solutions, as well as to share with government partners and stakeholders. This Open Letter outlines the TRA development, details empirical examples from applying the tool on two VillageReach solutions, and presents recommendations based on our lessons learned. Stakeholders working to transition solutions to government can utilize both the TRA and our lessons.